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Inside FHA/VA Lending

December 12, 2008

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FHA Fund Sees Sharp Declines, But Seems in ‘Reasonably Good Shape’

The sharp drop in home prices and skyrocketing demand for government-insured mortgages have taken a major toll on the FHA’s insurance fund, but the capital level should remain above the required minimum through the economic downturn, according to a recent audit by the Office of the Inspector General. The annual FHA audit by independent accountants found the fund’s capital ratio dropped... Read More

Auditors Find Lingering Systems Shortcomings

The FHA insurance fund got a satisfactory, if somewhat sobering, assessment of its financial condition, but auditors continue to find problems with often outdated technology and management processes.The fiscal 2008 audit of the FHA by the Office of the Inspector General indentified several “systems control deficiencies that need to be addressed,” adding that the surge of program changes... Read More

RBC Mortgage Settles FHA Lending Dispute

RBC Mortgage Company has agreed to pay nearly $11 million to settle a dispute with the government over allegedly fraudulent FHA mortgages the company originated between February 2001 and April 2004. The company, a subsidiary of the Royal Bank of Canada, agreed to pay $10.7 million to settle charges brought by the government under the federal False Claims Act, which allows for charges... Read More

Bernanke Suggests More H4H Changes

The HOPE for Homeowners program has endured intense scrutiny and a batch of improvements before the paint was even dry, but many observers say H4H still needs a lot of work before it can begin to generate much business. Some 180 H4H applications were filed during the first month and a half of the program’s existence, and federal regulators wasted no time making as many changes as they could... Read More

FDIC Loan Mod Plan May Outshine H4H

The fledgling HOPE for Homeowners FHA refinance program may find limited appeal in the industry, especially if better options look like they might become available to lenders. Moody’s Investors Service offered little enthusiasm about H4H in a new report assessing the relative merits of various loan modification programs – including the much-discussed proposal by... Read More

New H4H Solution to Launch in Early 2009

After the FHA announced changes to its HOPE for Homeowners program, an increasing number of lenders are beginning to see the loss mitigation tool as a more viable option to keep borrowers in their homes. As more and more industry professionals sign onto the program, compliance with its requirements is crucial. Wolters Kluwer Financial Services recently announced it is in the process of... Read More

DAP Providers Pin Hope on Next Congress

Providers of seller-funded downpayment assistance say their programs will remain in “hiatus” until they can secure legislation in the next Congress that would reform and reinstate such programs for FHA-insured mortgages. These providers have all but given up hope on H.R. 6694, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing... Read More

HUD Clarifies HECM Requirements

The Department of Housing and Urban Development has made changes in its handbook for the FHA Home Equity Conversion Mortgage program because some lenders had been misinterpreting key provisions in the existing guidance. Mortgagee Letter 2008-38 explains that a HECM is a “non-recourse loan,” which means simply that if the borrower does not pay the balance when due, the mortgagee’s remedy is limited... Read More

Midwest Counties Exempt from Flipping Ban

More than 100 counties in five Midwest states are exempt from the FHA property flipping prohibition until Sept. 30, 2009, the agency announced recently in Mortgagee Letter 2008-37. States that were declared disaster areas due to emergencies are exempted from the property flipping rule that prohibits FHA insurance on loans for properties sold within 90 days of a previous... Read More

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