FHA, VA

Browse articles from all of our Newsletters related to FHA, VA.

July 22, 2016 - Inside MBS & ABS

Eleventh Circuit Opinion in GNMA-Related Case Shines Light on Two Important Securities Fraud Laws

Stakeholders in the MBS market should pay attention to a recent U.S. 11th Circuit opinion concerning a jury verdict in which the court focused on the similarities and differences between two kinds of securities fraud, suggested attorneys in their analysis of the case. Although the opinion in SEC v. Radius Capital Corp. is unpublished and not a binding precedent, it gives further clarity to two of the most important rules used by the Securities and Exchange Commission in targeting securities fraud, according to attorneys with the law firm Carlton Fields. The SEC sued...


July 22, 2016 - Inside MBS & ABS

Lenders Quietly Introducing Low-Downpayment Programs to Help Cash-Strapped Buyers

Mortgages that allow buyers to make low downpayments are making a quiet comeback, according to a recent analysis from Deutsche Bank. But do they have the staying power? So far, seven lenders have partnered with Fannie Mae and Freddie Mac in special programs to offer loans requiring anywhere from no money down to 3 percent down. Although the government-sponsored enterprises cap their high loan-to-value product at 97 percent, some lenders step in and subsidize the extra funds needed to make up the difference. The GSEs began...


July 22, 2016 - Inside MBS & ABS

Republican Platform 2016 Talks of Reduced Government Role, Ending Mandates

The Republican platform, released this week during the Republican National Convention, would scale back the government’s role in housing and make borrowers and lenders more responsible. But it offered a somewhat vague prescription for what to do with Fannie Mae and Freddie Mac. “Our goal is to advance responsible homeownership while guarding against the abuses that led to the housing collapse,” the platform states. The GOP said housing reform should include clear underwriting standards and guidelines on predatory and acceptable lending practices – standards that are arguably at the core of the Dodd-Frank Act that’s roundly criticized by the party. Republicans blamed...


July 21, 2016 - Inside Mortgage Finance

FHA to Insure Certain Mortgages with PACE Liens; MBA, California Realtors Dissatisfied with Guidelines

The FHA this week clarified its policy on insuring mortgages with PACE (Property Assessed Clean Energy) senior tax liens to make it easier for borrowers to obtain FHA financing for such mortgages, but the mortgage and real estate industries continue to have concerns. The new guidelines address state programs where the PACE obligation is treated like a property tax with priority over an FHA lien. The program provides financing for home-energy improvements and water conservation, and is repaid through an assessment added to the property’s tax bill. The guidelines are designed...


July 21, 2016 - Inside Mortgage Finance

Senate Unanimously Approves FHA Condominium Bill, But Industry Interest is on HUD Condo Reform Guidelines

The U.S. Senate last week passed legislation easing FHA rules on condominium financing even as condo reform rules are undergoing clearance at the Office of Management and Budget. H.R. 3700, the Housing Opportunity Through Modernization Act of 2016, was approved by unanimous consent. The bill passed in the House of Representatives by a vote of 427-0 back in February. Industry observers say the bill would essentially codify long-anticipated guidelines the Department of Housing and Urban Development has drafted. Among other things, the bill requires...


July 21, 2016 - Inside Mortgage Finance

Realtors Say FHA Loans and GSE Low-Downpayment Programs Seen as Readily Available for Homebuyers

While some banks have reduced their FHA lending in recent years and alternatives from the government-sponsored enterprises are still gaining traction, homebuyers still have access to low-downpayment mortgage programs, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. “Most real estate agents say high loan-to-value ratio mortgages are readily available, especially for homebuyers with good credit,” said Tom Popik, research director for Campbell Surveys. The HousingPulse survey covering activity in June included...


July 15, 2016 - Inside FHA/VA Lending

Around the Industry

CA Legislature Poised to Pass Protections for Widowed Homeowners. The California legislature is a step away from enacting legislation that would extend existing foreclosure protections in the state Homeowners Bill of Rights (HBOR) to widows, widowers and other heirs of deceased homeowners. The legislature passed the HBOR in 2012 to provide due process protections to homeowners and establish rules and procedures for communication between servicers and borrowers regarding options to avoid foreclosure. However, the bill’s protections did not extend to surviving spouses and successors-in-interest who may wish to continue paying the mortgage loan but could not assume the loan or afford the payment with the loss of the deceased homeowner’s income. Surviving family members may then seek a loan assumption or modification, only to be refused by the servicer because their names are not on the ...


July 15, 2016 - Inside FHA/VA Lending

VA Discusses Steps in Challenging, Resolving Adverse Audit Findin

The Department of Veterans Affairs has spelled out steps for disputing and resolving audit findings with the agency. The VA Home Loan Guaranty program has a policy-resolution protocol in place to increase both consistency among the VA regional loan centers (RLC) and responsiveness to lender inquiries. In seeking to resolve an audit dispute with an RLC, the lender should first consult the VA Lender’s Handbook before contacting the VA. Lenders also are encouraged to check with colleagues who might be familiar with issues underlying the dispute. The lender should contact the RLC with jurisdiction for an official response to case-specific questions. When disputing an audit finding or a deficiency letter, the lender should contact the loan specialist who conducted the audit. If, after communicating with the loan specialist, the dispute remains unresolved, the lender should take its concern to ...


July 15, 2016 - Inside FHA/VA Lending

VA Breaks Down, Explains NPS, Timely Payments, Handbook Issues

The Department of Veterans Affairs has clarified policies that have raised questions among VA lenders but were not addressed during the agency’s annual lender conference in San Diego, CA, back in May. ? What is the VA’s policy regarding a non-purchasing spouse’s (NPS) credit? VA: The NPS’s liabilities need to be considered but not its credit history. ? What is VA’s policy regarding a loss that an NPS reports on a joint tax return? If a joint tax return shows a business loss, then that loss will have to be deducted from the veteran’s income in both community and non-community property states. What is reported to the Internal Revenue Service must be used when applying for a federally guaranteed loan In a situation where a couple has been faced with business losses, the veteran and his or her spouse may want to consider both being on the loan in order to potentially qualify. ? The VA Pamphlet states: “Account balances reduced to ...


July 15, 2016 - Inside FHA/VA Lending

Senate Passes Legislation Easing Condo Recertification Process

The U.S. Senate this week passed legislation that includes reforms to current FHA restrictions on condominium financing, among other provisions. H.R. 3700, the Housing Opportunity Through Modernization Act of 2016, was approved without amendment by unanimous consent. The bill passed in the House of Representatives by a vote of 427-0 in February. The bill addresses problems facing buyers and sellers of condominiums. Specifically, the bill modifies the Department of Housing and Urban Development’s rental assistance and public housing programs, FHA’s requirements for condo mortgage insurance and the U.S. Department of Agriculture’s single-family housing guaranteed loan program. Among other things, the bill requires the FHA to make recertifications “substantially less burdensome,” while lowering the ownership-occupancy requirement from 50 percent to 35 percent. The current ...


July 15, 2016 - Inside FHA/VA Lending

Is an FHA Premium Cut Imminent? Lost Revenue Could Be a Factor

With the improvement in loan performance, credit quality and serious delinquency rate, some mortgage industry observers think the FHA is poised for another premium reduction before the end of the year. It is a better time for the Mutual Mortgage Insurance Fund, with fiscal year 2016 volume expected to exceed $220 billion, way more than the $170 billion the last independent actuarial report had predicted. Serious delinquency rates decreased in the first quarter to 5.31 percent, near the lowest level since 2008, according to FHA’s latest quarterly report to Congress. Rates for those vintages most affected by the recent economic recession (2006-2008) continue to decline. In addition, claims continue to be well below actuarial predictions – 32 percent less than predicted for the first quarter. Also, MMIF watchers are optimistic that the next actuarial report will show a higher capital cushion. According to the ...


July 15, 2016 - Inside FHA/VA Lending

GOP Critics Blast DASP Changes, Claim Move is Politically Motivated

House Republicans this week accused the Department of Housing and Urban Development of giving preferential treatment to political favorites in changes to FHA distressed asset sales. House Financial Services Committee Chairman Jeb Hensarling, R-TX, denounced changes HUD Secretary Julian Castro made to the Distressed Asset Sale Program (DASP), saying the moves help liberal special interests at the expense of private investors. Hensarling said the changes would create “preferential bidding” for certain buyers and restrict investor options. HUD expanded DASP in 2012 as a conduit for selling nonperforming FHA loans to investors with the proviso they must first help borrowers save their homes from foreclosure and foreclose only if all loan-modification options have been exhausted. Distressed note sales also helped stabilize FHA’s Mutual Mortgage Insurance Fund and have contributed more than ...


July 15, 2016 - Inside FHA/VA Lending

Ginnie Mae Production Up Sharply Across the Board in Second Quarter

Ginnie Mae issuers produced a hefty $125.42 billion of new single-family mortgage-backed securities during the second quarter of 2016, according to a new Inside FHA/VA Lending analysis of MBS data. The government-insured market continued to run hotter than the Fannie Mae and Freddie Mac sector. Ginnie MBS issuance – including FHA’s home-equity conversion mortgage program – was up 31.1 percent from the first quarter, while single-family MBS issuance by the two government-sponsored enterprises rose 26.2 percent over the same period. Excluding HECM, Ginnie issuance was up 31.5 percent in the second quarter. While FHA forward mortgages continued to be the biggest source of collateral, the VA program actually produced a bigger gain, 42.4 percent, from the first to the second quarter. VA production saw a major boost in refinance activity, up 58.4 ... [Includes four charts ]


July 15, 2016 - Inside MBS & ABS

MBS Trading Declined in June as Rates Tumbled. Is the ‘Mother of All’ Bond Market Corrections Around the Corner?

The average daily trading volume in agency MBS totaled $212.6 billion in June, a slight decline from the month prior, according to the Securities Industry and Financial Markets Association. Still, that’s a far cry better than the low established back in December of 2015 when the reading came in at $149.2 billion. June’s performance came...


July 14, 2016 - Inside Mortgage Finance

HUD Secretary Fends Off Republican Attacks on Recent Changes to Distressed Note Sales Program

The Obama administration’s top housing official took a beating from Republicans on the House Financial Services Committee during a hearing this week over recent changes to the Department of Housing and Urban Development’s Distressed Asset Sales Program, also known as DASP. For more than two hours, HUD Secretary Julian Castro faced a relentless attack by Republicans angered by what they perceived as preferential treatment given to nonprofits and local government over private investors in the DASP bidding process. The federal program sells pools of severely delinquent FHA mortgages to investors to help distressed borrowers stay in their homes and, at the same time, minimize losses to the FHA Mutual Mortgage Insurance Fund. Most of the nonperforming loans in the DASP pools are...


July 14, 2016 - Inside Mortgage Finance

Flow of Private MI Loans Into Fannie/Freddie Market Up Sharply in 2Q16, But FHA/VA Markets Also Surged

Fannie Mae and Freddie Mac securitized $58.61 billion of single-family home loans that carried private mortgage insurance during the second quarter of 2016, a solid 33.0 percent increase over the first three months of the year, according to a new ranking and analysis by Inside Mortgage Finance. The boost in private MI business was slightly stronger than the 26.2 percent increase in overall single-family mortgage-backed securities issuance for the two government-sponsored enterprises during the same period. Overall, the biggest increase in GSE business during the second quarter was...[Includes two data tables]


July 8, 2016 - Inside MBS & ABS

Agency MBS Production Ramped Up Sharply in Second Quarter Despite Lackluster Finish in June

Mortgage lenders delivered big increases in purchase mortgages and refinance loans to Fannie Mae, Freddie Mac and Ginnie Mae during the second quarter of 2016, according to a new analysis and ranking by Inside MBS & ABS. The agencies securitized $100.05 billion of purchase mortgages and $118.24 billion of refinance loans during the second quarter, up 37.3 percent and 31.1 percent, respectively, from the first three months of the year. That brought total agency issuance of single-family MBS to $612.38 billion for the first six months of 2016, putting the market on target to match last year’s $1.261 trillion in production. Although second-quarter volume was a strong rebound from the first quarter, momentum seemed...[Includes two data tables]


July 7, 2016 - Inside Mortgage Finance

HUD’s Newly Improved Distressed Note Sale Program Gets Mixed Reviews from Community, Consumer Advocates

The Department of Housing and Urban Development last week announced stronger protections for homeowners and more favorable pricing for nonprofit participants in its Distressed Asset Stabilization Program but reactions from community and advocacy groups have been mixed. The program has been under fire because the bulk auctions of nonperforming mortgages have primarily benefited private equity firms and hedge funds, which bought the loans at a steep discount but did little to save homeowners from foreclosure or revitalize the communities where the properties backing the loans are located. HUD converted...


July 7, 2016 - Inside Mortgage Finance

Post-Election Wish List for Some Mortgage-Industry Interests: Pricing Cuts From FHA and the GSEs

Over the past year, mortgage lenders have been clamoring for pricing breaks from the government-sponsored enterprises as well as the FHA, but so far nothing has changed. But is the industry’s luck about to turn? A handful of GSE watchers interviewed by Inside Mortgage Finance believe there’s a greater likelihood of a cut in FHA premiums before the fall election as opposed to the Federal Housing Finance Agency doing something about loan-level price adjustments or guaranty fees. In general, it’s...


July 1, 2016 - Inside FHA/VA Lending

VA Aims to Garner Better Appraisal Reviews through CoreLogic’s LSAM

The Department of Veterans Affairs is planning to conduct computer-based training for appraisal managers to improve the way they assess the VA Home Loan Guaranty program’s appraisal process. The VA said it hopes to garner more positive feedback from staff appraisal reviewers this year by having them train with LoanSafe Appraisal Manager (LSAM). LSAM, an appraisal risk-analysis tool from CoreLogic, automatically evaluates all the data and form fields in an appraisal, quickly returning an easy-to-use summary of key valuation, market-risk factors and compliance issues. In June last year, the VA announced an automated Appraisal Management Service (AMS) that includes the LSAM product for use in enhancing the appraisal review process prior to issuance of the Notice of Value. The AMS system provides lender and servicer appraisal processing programs and staff appraisal reviewers (SARs), which will ...


July 1, 2016 - Inside FHA/VA Lending

Inflation Adjustments Raise Fines For Violating FHA, VA, GNMA Rules

Lenders will face higher penalties for violations of agency rules and regulations as the FHA and the Department of Veterans Affairs adjust their respective maximum civil monetary penalties for inflation. The adjustments are mandated by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which also requires publication of an interim final rule showing the current and adjusted penalty amounts. Effective June 22, 2016, VA’s maximum civil monetary penalties for false loan guaranty certification increased from $10,000 to $21,563, and from $5,500 to $10,781 for fraudulent claims or statements in any VA program. Comments on the VA interim final rule must be received on or before Aug. 22, 2016. Meanwhile, the FHA also is making inflation adjustments for its maximum civil penalties through an interim final rule that will take effect Aug. 15, 2016, the day before the ...


July 1, 2016 - Inside FHA/VA Lending

Delayed Closing, Repair Rules Still Hound FHA 203(k) Program

The FHA’s 203(k) Property Repair and Rehabilitation program could use some jolt as inflexible agency guidelines, construction inexperience and closing delays continue to constrain loan growth. Origination of FHA-insured fixer-upper loans fell 10.9 percent in the first quarter of 2016 to $762.7 million from $856.2 million in the previous quarter. It was a different story year-over-year, however, as volume during the first three months rose 20.8 percent compared to volume during the same period last year. The top five FHA 203(k) lenders struggled as their combined loan production dropped 9.4 percent quarter-over-quarter and by 3.0 percent on a year-to-year basis. Their combined originations accounted for $157.5 million of total FHA 203(k) loan production for the first quarter. Purchase loans accounted for $131.0 million of rehab loans originated during the period while refinance loans totaled a ... [ 1 chart ]


July 1, 2016 - Inside FHA/VA Lending

No-Down Option, Better Borrower Profile Help Fuel VA’s 1Q Growth

VA home loan guarantees reported modest growth in the first quarter of 2016 thanks to the program’s no-downpayment feature and higher-quality borrowers, according to Inside FHA/VA Lending’s analysis of agency data. The fourth quarter of 2015 was the worst quarter in an otherwise good year for VA lending, as lenders racked up $35.2 billion in total originations, down 21.0 percent from the third quarter, which was VA’s most productive for the year. However, the first three months of 2016 are off to a promising start with overall VA volume totaling $37.1 billion, a 5.5 percent improvement from the prior quarter. VA purchase volume was down 8.1 percent in the first quarter to $18.2 billion from the previous quarter, while VA IRRRL (interest rate reduction refinance loans) production rose 43.4 percent to $10.9 billion over the same period, data further showed. VA’s no-downpayment option in conjunction with the ... [ 1 chart ]


July 1, 2016 - Inside FHA/VA Lending

FHA Announces More Changes to DASP to Better Protect Borrowers

Investors in FHA’s distressed note sales program would be required to do more for homeowners to help them avoid foreclosure and keep their homes, thanks to improvements to FHA’s Distressed Asset Stabilization Program (DASP) announced this week by the agency. The changes appear aimed at consumer groups’ criticism of the Department of Housing and Urban Development for allowing profit-oriented investors to purchase the troubled HUD assets at a discount and flip the homes for a profit without ever helping the distressed homeowner. Although the transactions make good economic sense for investors and the government, struggling homeowners end up losing their homes without having tried any loan modification option that could have helped them avoid foreclosure. HUD launched the DASP in 2010 under pressure from Congress to help stabilize the FHA’s Mutual Mortgage Insurance Fund, which ...


July 1, 2016 - Inside FHA/VA Lending

Nonbanks’ Share of Government-Insured Market Growing Rapidly

Ginnie Mae has good reason to be concerned about rapid demographic change in its relatively small issuer community. Nonbank institutions – many of them relatively newly formed and based on nontraditional business models – are taking over the market. Nonbank issuers accounted for a whopping 69.4 percent of Ginnie’s issuance of single-family mortgage-backed securities during the first quarter of 2016. A year ago, their share was 64.6 percent. Two years ago it was 46.7 percent. With those kinds of gains on the production line, it’s not hard to see why nonbanks are claiming a growing share of Ginnie servicing outstanding. At the end of March, nonbanks owned 46.7 percent of Ginnie single-family mortgage servicing rights, up a hefty 11.5 percentage points in one year. That rate of growth can’t be accomplished just by producing new MBS because the servicing market simply doesn’t grow that fast. (Although the Ginnie market has grown significantly faster than any other segment of ... [ 2 charts ]


June 30, 2016 - Inside Mortgage Finance

NY Requires Servicers to Maintain Abandoned Properties, Less Onerous Legislation Introduced in Congress

The New York legislature approved a bill late last week that will require servicers handling loans in the state to maintain vacant properties in certain circumstances. The requirements were strongly opposed by the Mortgage Bankers Association. In general, the new law requires servicers of residential mortgages in New York to complete an exterior inspection of properties within 90 days of a borrower’s delinquency to determine the occupancy status of the property. The law also requires ongoing inspections of properties related to severely delinquent mortgages every 25 to 35 days. If the servicer has a reasonable basis to believe that a property is vacant and abandoned, the servicer is...


June 30, 2016 - Inside Mortgage Finance

Servicing Litigation Continues to Stalk the Industry: Ocwen, Nationstar and Cenlar Are Under Fire

Last week, Ocwen Financial agreed to a $30 million settlement with the Department of Justice regarding two lawsuits that alleged violations of the False Claims Act. The lawsuits alleged that Ocwen Loan Servicing and Ocwen’s Homeward Residential division violated the FCA by falsely certifying their compliance with the Home Affordable Modification Program and FHA insurance programs, thus rendering all HAMP incentive and FHA insurance payments on Ocwen- or Homeward-serviced loans false claims. One of the cases was scheduled...


June 30, 2016 - Inside Mortgage Finance

Quicken Loans and Guaranteed Rate Offer 1 Percent Mortgages With Homebuyer Grants in Freddie Program

A new 1 percent home loan product has quietly hit the market to help qualified, cash-strapped borrowers overcome one of the biggest obstacles to homeownership: downpayment. With significant variation in details, the 1 percent down mortgages offered by Quicken Loans and Guaranteed Rate stem from their partnerships with Freddie Mac and are structured as part of Freddie’s Home Possible Advantage program. In Quicken’s version, the borrower pays...


June 23, 2016 - Inside Mortgage Finance

VA Program’s IRRRL Production on Upward Swing, FHA Streamlined Refinancing Activity Slowing Down

Streamlined mortgage refinancing with FHA and VA guarantees continued its strong growth in the first quarter of 2016, thanks mainly to low interest rates and program features, according to an analysis of agency quarterly and monthly reports. Agency-backed streamlined refinancing refers to the refinance of an existing FHA or VA loan requiring limited borrower credit documentation and underwriting and no appraisal. Streamlining applies only to the amount of documentation and underwriting the lender must perform and not to the costs in the transaction. VA IRRRL (interest rate reduction refinance loans) production rose...


June 23, 2016 - Inside Mortgage Finance

Sales of Ginnie Servicing Prove Difficult; Deals Are Getting Done, But Risk of FHA MIP Cut Overhangs the Market

The sale of residential mortgage servicing rights has been gaining steam the past few weeks – unless you happen to be in the market for Ginnie Mae product. In particular, there’s a growing concern about price discounts on Ginnie servicing rights, and a strong belief that the agency – including its president, Ted Tozer – is once again getting anxious about so many nonbanks being such large players in the market. Tozer is so concerned about the matter that the agency – with the help of the Mortgage Bankers Association – is hosting what’s been described as a “liquidity summit” in Washington, DC, with several stakeholders and regulators, including officials from the Federal Reserve and U.S. Treasury. The summit, closed to the media, is scheduled for June 24. Ginnie issued...


June 23, 2016 - Inside Mortgage Finance

First-Time Homebuyer Share of Home Purchases Increases, Origination Volume Up Sharply in 1Q16

First-time homebuyers account for a growing share of home purchases, and even though housing inventory is limited, originations of mortgages for first-time homebuyers are up sharply. First-time homebuyers accounted for 40.8 percent of home purchases in May, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The share for first-time homebuyers, based on a three-month moving average, was the highest level seen in more than five years. “Demand from first-time homebuyers is...


June 23, 2016 - Inside Mortgage Finance

Jumbo Market Closely Tracked Overall Trends in 1Q16 Mortgage Originations, Non-Agency Fared Slightly Better

Jumbo mortgage originations declined by 2.0 percent during the first quarter of 2016, mirroring the modest downturn in overall mortgage lending from the previous quarter. Jumbo originations – including loans that were within the high-cost loan limits for Fannie Mae, Freddie Mac, FHA and VA – totaled $100.61 billion in the first quarter, according to a new analysis and ranking by Inside Mortgage Finance. The sector accounted for 26.5 percent of total originations during the first three months of the year, down slightly from a 26.7 percent share in the fourth quarter. The jumbo share of total originations has generally been...[Includes three data tables]


June 17, 2016 - Inside FHA/VA Lending

Around the Industry

FHA Revises TOTAL Mortgage Scorecard. Effective on June 11, 2016, the FHA’s TOTAL Mortgage Scorecard no longer returns either upfront or annual mortgage insurance premium factors to an automated underwriting system. The FHA directs lenders to consult Appendix I of its Single Family Housing Policy handbook for applicable MIP factors. AUS vendors have been notified of the change and have adjusted their systems accordingly. HUD, First Citizens Bank Settle Fair Lending Complaint. A South Carolina bank has agreed to correct its lending practices and allocate funding to resolve allegations that it denied more loans to minorities compared to similarly-situated white loan applicants. The settlement agreement stemmed from a complaint filed by the Department of Housing and Urban Development against First Citizens Bank and Trust Co. in 2011 after an analysis of ...


June 17, 2016 - Inside FHA/VA Lending

CA Realtors Seek Rule to Prohibit PACE Lien Seniority over FHA Lien

The California Association of Realtors renewed its push for rules addressing the proliferation of FHA-insured mortgages that have Property Assessed Clean Energy super liens. In a recent letter to Office of Management and Budget Director Shaun Donovan, the CAR requested that both FHA and the Department of Housing and Urban Development adopt policy that is consistent with the Federal Housing Finance Agency’s existing policy on PACE liens. Specifically, such a policy would prohibit the use of PACE encumbrances with a “super lien” priority over mortgage financing. The group also urged HUD to issue guidelines directing FHA lenders and servicers not to place PACE liens above any mortgage insured by FHA. The CAR expressed concern about how PACE liens might affect the FHA Mutual Mortgage Insurance Fund, which is currently recovering from years of losses. “If the ..


June 17, 2016 - Inside FHA/VA Lending

Court Finds No Violation of FDCPA, FHA Borrower Liable for Deficiency

A federal district court in Illinois recently dismissed a putative class action against a foreclosure firm, holding that an allegation in a foreclosure complaint that the borrower is personally liable for any deficiency on an FHA-insured mortgage is not a violation of the Fair Debt Collection Practices Act. In Justin Gierke v. Codilis and Associates, the plaintiff obtained an FHA loan in 2013 and subsequently defaulted due to financial hardship. The defendant, a law firm, filed a foreclosure action in state court against the plaintiff in February 2015. The complaint identified the plaintiff, the borrower, as personally liable for any deficiency. The plaintiff responded by filing a counter-complaint against the defendant alleging violation of the Fair Debt Collection Practices Act. He alleged that the FHA “narrowly limits the circumstances under which a deficiency will be sought to cases where the borrower committed fraud or engaged in ...


June 17, 2016 - Inside FHA/VA Lending

VA Servicer Reminders: Conveyance Guide, POC List, Compromise Sale

The Department of Veterans Affairs Home Loan Guaranty staff is reminding VA servicers of new title requirements taking effect this week for conveying properties to the VA. Under VA regulations, a conveyance or transfer of real property to the department is acceptable if the holders of the VA-guaranteed loan provide covenants or warranties against the acts of the holder and/or their agents. In addition, conveyances would be acceptable to the VA if it vests or entitles the agency to such title as is. In addition, the VA would take possession of collateral as long as it is acceptable to prudent lenders, informed buyers, title companies and attorneys in the community in which the property is located. However, the VA’s determination of clear and marketable title rests on state statutory requirements, the agency noted in its guidance. The VA is providing servicers a revised state-by-state list of ...


June 17, 2016 - Inside FHA/VA Lending

HOAs Required to Disclose VA, FHA Certification of Condo Projects

A new California law requiring condominium homeowner associations to disclose to their members whether the VA or the FHA has certified their buildings will soon take effect.Starting July 1, 2016, California HOAs will have to disclose in their annual budget report whether or not their condominium projects have been approved for VA or FHA financing. Gov. Jerry Brown, D, signed Assembly Bill 596 into law in August last year to encourage more veterans and first-time homebuyers to purchase condominiums and take advantage of the benefits of government-backed home financing. In signing the measure into law, Brown expressed hopes that condominium HOAs will step up their certification or recertification process. Assemblyman Tom Daly, D-Anaheim, author of the bill, estimates there are 28,000 condo projects in the Golden State, and only a third are FHA-certified. There are far fewer projects that are ...


June 17, 2016 - Inside FHA/VA Lending

Potential FHA Rate Cut Possible, Private MIs Have Nothing to Fear

An FHA price reduction remains a possibility but its impact is likely to be limited, according to analysts at Keefe, Bruyette & Woods. While some industry observers might think another mortgage insurance premium cut is inevitable, there is no broad pressure from any group or coalition that would compel FHA to do so, said KBW analysts Bose George and Chas Tyson, both panelists at KBW’s Mortgage Finance Conference recently. Given last year’s 50-basis-point cut, the FHA’s ability to cut rates meaningfully is somewhat limited, they said. The FHA annual MIP is currently 80 to/or 85 bps, down from the pre-reduction premium of 130 to/or 135 bps and higher compared to the average annual premium of 50 to/or 55 bps before the financial crisis. If FHA decides to reduce the premium again, George and Tyson believe the floor will likely be at the pre-crisis premium level, which would suggest a ...


June 17, 2016 - Inside FHA/VA Lending

FHA Production on a Positive Trend Despite Falling Endorsement Levels

FHA single-family forward endorsements fell by 8.0 percent in the first quarter of 2016 from the prior quarter, suggesting a continued slowing in endorsement in the latter part of 2015 and early 2016 compared to earlier quarters, according to the FHA’s latest quarterly report to Congress on the state of the Mutual Mortgage Insurance Fund. Overall though, the FHA MMIF report as well as FHA monthly production reports for March and April continued to show the very positive trends – rising volume, lower delinquencies and outstanding credit quality – that have been occurring in the FHA program since 2009. Endorsement volume for purchase and refinance loans was down to $53.5 billion during the first three months of 2016 from $58.1 billion in the fourth quarter of 2015, the MMI Fund report showed. Last year, forward endorsements soared in the second quarter and reached a record high in the ...


June 17, 2016 - Inside FHA/VA Lending

Maximum Civil Penalties for HUD, FHA Violations Set to Increase

FHA lenders will face stiffer maximum monetary penalties later this year for various violations of agency rules and regulations. The higher monetary penalties are the result of legislation signed into law late last year requiring federal agencies to adjust the current maximum penalty amounts for inflation in order to maintain their deterrent effect. Specifically, the Federal Civil Penalties Inflation Adjustment Act of 2015 (2015 Act) requires federal agencies to adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rule and subsequent annual adjustments for inflation. The interim final rules with the initial penalty adjustments must be published by July 1, 2016. The new penalty levels must take effect no later than Aug. 1, 2016. Additionally, agencies are required to make annual inflation adjustments, starting Jan. 15, 2017, and for each year going forward. The adjustments will ...


June 16, 2016 - Inside Mortgage Finance

Millennials, Mortgages and Mixers? Lenders Say Strong Need For Increased Borrower Education on Available Resources

Millennials are in the dark when it comes to knowing about mortgage resources, lenders said, and recent research shows that there are millions of millennials who could afford to buy a home today but don’t know it. “The problem isn’t always that they don’t qualify or have the credit scores, the big problem is they don’t know it,” said Rob Chrane, CEO of Down Payment Resource, speaking on a mortgage panel at the National Association of Real Estate Editors conference in New Orleans last week. “At the same time, we know from our database there are almost 2,500 different programs out there that represent billions of dollars in forms of downpayment assistance and other aid.” Paul Anastos, president of Mortgage Master, a subsidiary of loanDepot, said...


Poll

The yield on the benchmark 10-year Treasury fell to all-time low of 1.34% recently. How much better will originations be at your shop in the second half compared to 1H, if at all?

Better by 1% to 10%.
Better by 11% to 25%.
Off the charts better. Applications are great now.
Worse than 1H, but not by much.
A lot worse. But not sure on the damage.

vote to see results
Housing Pulse