HUD

Browse articles from all of our Newsletters related to HUD.

September 23, 2016 - Inside FHA/VA Lending

PACE Guidance Not Reassuring, Too Many Uncertainties, Pitfalls

New FHA guidance for dealing with mortgages with a Property Assessed Clean Energy (PACE) obligation went into effect last week but uncertainty lingers and its full impact remains to be seen, according to an industry attorney. The Department of Housing and Urban Development has issued guidance specifically allowing properties encumbered by a PACE lien to be eligible for FHA mortgage financing for both purchase and refinance loans. The department of Veterans Affairs has issued similar guidance. According to Erika Sonstroem, an attorney with the law firm Bradley Arant Boult Cummings, the PACE industry is touting the guidance in its pitches to lenders as posing no risk to mortgage investors. PACE is a program that lends money to homeowners for home-energy savings projects. It is treated much like a tax lien on a property and is included in the ...


September 23, 2016 - Inside FHA/VA Lending

HUD Poised to Collect Huge FCA Settlement Funds from Lenders

The Department of Housing and Urban Development is set to receive more than $140 million in settlements with three individual lenders in connection with defective loans they originated with FHA insurance. Freedom Mortgage Corp., M&T Bank, and Land Home Financial Services all reached separate agreements this year with the Department of Justice on behalf of the HUD Inspector General to resolve the allegations. On April 15, Freedom agreed to pay $113 million, in response to charges that “it engaged in certain conduct in connection with its origination, underwriting, property appraisal and quality of certain single-family mortgages insured by FHA.” The disputed forward loans were insured by FHA between Jan. 1, 2006, and Dec. 31, 2011, which resulted in claims submitted to HUD on or before June 15, 2015. HUD incurred substantial losses when it paid claims on the ...


September 9, 2016 - Inside FHA/VA Lending

Around the Industry

Tennessee Lender Agrees to $70 million Settlement to Resolve Alleged FHA Violations. Franklin American Mortgage of Franklin, TN, has agreed to pay the federal government $70 million to resolve allegations of failing to comply with FHA requirements. Specifically, the direct endorsement lender allegedly engaged in improper underwriting of FHA loans between Jan. 1, 2006, and Dec. 31, 2012, which later resulted in submission of claims and substantial losses to the FHA insurance fund. Franklin entered into a settlement agreement with the Department of Justice and the Department of Housing and Urban Development’s Inspector General. As part of the settlement, Franklin acknowledged “it engaged in certain conduct in connection with its origination, underwriting, and quality control of certain single-family residential mortgage loans insured by FHA.” The settlement was neither an admission of ...


September 9, 2016 - Inside FHA/VA Lending

FHA Seeks Comment on Proposed Update of 203(k) Consultant Fees

The FHA is seeking comment on proposals for revising the schedule of fees an agency-approved consultant may charge on a Section 203(k) property repair and rehabilitation mortgage. The agency wants public comment on whether fees charged by FHA 203(k) consultants should be based on the total cost of repairs, as they are currently, or on other metrics. Consultants charge varying fees on a standard 203(k) mortgage and a limited 203(k) mortgage. The standard FHA repair/rehab mortgage is designed for remodeling, rehabilitation and repairs that involve structural or more complex work that will cost more than $5,000. The limited 203(k) home loan is only for minor remodeling and non-structural repairs. An FHA-approved consultant is required for all standard 203(k) mortgages but not necessarily for a limited 203(k) home loan. FHA-approved 203(k) consultants who are placed on ...


September 9, 2016 - Inside FHA/VA Lending

IG Audit Finds Weak Spots in HUD Mortgage Data, Claims Systems

An internal compliance audit has uncovered weaknesses in the FHA’s information systems that could expose the agency to hacking. The Department of Housing and Urban Development’s Inspector General recently issued an audit report indicating that FHA’s Single Family Insurance System (SFIS) and Single Family Insurance Claims Subsystem could be in danger of security breaches. However, the report withheld details of the audit, saying the findings were not for public disclosure. The report explained that the audit was part of the internal-control assessments required for the FY 2015 financial statement audit under the Chief Financial Officer’s Act of 1996. The audit’s objective was to provide an assessment of SFIS control compliance with HUD’s information-technology policies and federal IT system security and financial management requirements. The SFIS contains information on FHA borrowers, including ...


September 9, 2016 - Inside FHA/VA Lending

CA Lender Exposed MMIF to Higher Risk, Ordered to Indemnify HUD

A California FHA lender could face monetary penalties totaling $242,828 for deficient mortgage underwriting and exposing the FHA insurance fund to increased risk of loss and fraud. A Department of Housing and Urban Development inspector general’s audit of Sun West Mortgage Co. of Cerritos, CA, also alleged unauthorized use of foreign staff in another country to “pre-underwrite” FHA loans. The audit was triggered by a complaint the IG Office received in November last year alleging that Sun West, an approved FHA lender since 1980, was not underwriting FHA loans properly. In addition, the complaint alleged that Sun West was having the loans pre-underwritten by a company in another country, in violation of HUD rules. Neither the company nor the country was identified in the audit report. The complaint further alleged that employees at Sun West shared user identification numbers for ...


September 9, 2016 - Inside FHA/VA Lending

FHA/VA: Financing of Choice for Purchase Borrowers in 13 States

Homebuyers in two housing markets encompassing 13 states relied more on FHA and VA than other types financing, according to a new industry study of new single-family homes started in 2015. A study by the National Association of Home Builders found, among other things, that government-backed purchase lending and other forms of non-conventional mortgage financing remained elevated in 2015. For example, homebuyers in the South Atlantic and West South Central regions favored FHA and VA loans over other types of home-purchase financing. States in the South Atlantic region include Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and West Virginia. Washington, DC, is also in this region. West South Central states are comprised of Arkansas, Louisiana, Oklahoma and Texas. Together, the two regions accounted for more than 26 percent and 21 percent of the ...


September 8, 2016 - Inside Mortgage Finance

U.S. Court Applies Landmark SCOTUS Decision in Latest Ruling on FHAct’s Disparate-Impact Provision

A federal court in Texas has dismissed a disparate-impact lawsuit against the Texas Department of Housing and Community Affairs, finding, after years of litigation, that the plaintiff had failed to show sufficient reason for a charge of unlawful discrimination under the Fair Housing Act. The recent decision in The Inclusive Communities Project, Inc. v. The Texas Department of Housing and Community Affairs, et al., is the latest in a series of decisions applying the landmark U.S. Supreme Court decision that found disparate impact is a cognizable claim under the FHAct. The court’s Aug. 26 decision basically reaffirms...


September 8, 2016 - Inside Mortgage Finance

Mortgage Servicing Sales Begin to Accelerate but a Tough Year Overall. Still, 4Q16 Could Mark a Turnaround

After a difficult year so far, sales of mortgage servicing rights are beginning to pick up a head of steam this fall with the hope that the fourth quarter could turn out be a barn-burner. According to interviews conducted by Inside Mortgage Finance this week, servicing advisors for the most part are feeling mildly optimistic about the final three months of the year, although they all admit the obvious: an unexpected drop in rates could spoil the party. But that may not...


August 26, 2016 - Inside FHA/VA Lending

Homeowners Allege Discrimination In Distressed-Loan Sales Program

African-American homeowners in New York City are seeking certification of a class action alleging that the government’s distressed-loan sale program discriminates against black homeowners. The suit alleges that black FHA homeowners in default are disproportionately affected by the Department of Housing and Urban Development’s note sale program and the subsequent “predatory” mortgage servicing. HUD Secretary Julian Castro, FHA Commissioner Ed Golding, Caliber Home Loans and U.S. Bank Trust were named defendants in the lawsuit filed in the U.S. District Court for the Eastern District of New York. The defendants’ business practices allegedly violated the plaintiffs’ due-process rights as well as the Fair Housing Act. Under the note sale program, delinquent FHA mortgages are pooled and auctioned off to the highest bidder. According to the plaintiffs, the bidders are usually private-equity firms or ...


August 26, 2016 - Inside FHA/VA Lending

Agency Updates Single-Family Property Disposition Regulations

The Department of Housing and Urban Development has issued a final rule aimed at improving its single-family property disposition program and minimizing losses to the FHA Mutual Mortgage Insurance Fund. The rule consolidates and reorganizes agency regulations pertaining to asset disposition to better reflect industry standards and enable HUD to get the greatest value for its real estate-owned properties. The goal of the asset disposition program is to shrink HUD’s REO inventory and at the same time reduce MMIF losses. The final rule mostly mirrors the proposed rule HUD published for comment in October last year. The department said it has made no substantive changes to the proposed draft. The codified changes include limiting the provision of settlement-cost assistance to owner-occupants. The final rule eliminates HUD’s obligation to pay the broker’s sales commission and clarifies that settlement-cost assistance is only available to owner-occupant purchasers and not investor purchasers. In addition, the ...


August 26, 2016 - Inside FHA/VA Lending

Wait Time for Evaluating, Deploying Home-Retention Options Reduced

The FHA has announced new streamlined procedures to help delinquent homeowners avoid foreclosure and stay in their homes. The agency is revising loss-mitigation procedures servicers use when evaluating and choosing the best home-retention options for delinquent borrowers by reducing waiting time for results. The new streamlined procedures are designed to enhance servicers’ ability to evaluate foreclosure-avoidance alternatives, especially for the FHA-Home Affordable Modification Program (FHA-HAMP). Specifically, FHA will require servicers to convert successful three-month trial modifications into permanent modifications within 60 days instead of the average four to six months. Borrowers who have three missed mortgage payments would be able to opt for a partial claim to bring their arrearages current versus the previous four-month minimum. In addition, the FHA will eliminate the ...


August 26, 2016 - Inside FHA/VA Lending

HUD-IG Hammers Title II Lender for Poor Implementation of FHA HAMP

An FHA Title II lender in Atlanta is in trouble with the Department of Housing and Urban Development’s inspector general for not implementing FHA’s Home Affordable Modification Program (HAMP) in accordance with HUD’s requirements. As a result, HUD paid more than $1.1 million for 138 loans that were not eligible for modification under the FHA-HAMP. The lender, Georgia Housing and Finance Authority, could be facing $1.42 million in indemnifications and reimbursements because of its actions. The state housing finance agency provides low- and moderate-income people safe and affordable rental housing, and acquires and maintains housing for homeownership. Proceeds from the sale of mortgage revenue bonds, as well as federal and state allocations, fund its housing programs. GHFA also uses bond proceeds to purchase mortgages, which are serviced by mortgage affiliate. The cash flow from the ..


August 26, 2016 - Inside FHA/VA Lending

Groups Ask FHA, VA to Set Aside PACE Guide, Allow Comment Period

Major industry trade groups are asking FHA and VA to suspend proposed guidelines for energy-improvement loans and give stakeholders an opportunity to comment. In a joint letter, 11 trade groups warned that the proposed agency guidelines regarding Property Assessed Clean Energy (PACE) loans raises serious concerns that must be resolved before implementation of any PACE guidance. Prior to the issuance of the new guidelines, both FHA and VA prohibited the financing or refinancing if there was a lien other than the FHA-insured or VA-guaranteed mortgages. PACE programs are available in 19 states but most are in California. They provide financing for home improvements and clean-energy upgrades that would result in more efficient use of water and electricity, and ultimately savings for homeowners. The PACE obligation is repaid through a property-tax assessment, which takes a ...


August 26, 2016 - Inside FHA/VA Lending

FCC Issues TCPA ‘Exemption’ Rule, Lawyers Baffled by Rule’s Language

The Federal Communications Commission has issued a baffling final rule restricting the way servicers can collect on or service student loans, mortgages and other debts owed to the federal government. Specifically, the rule implements a key provision in the Bipartisan Budget Act of 2015 amending the Telephone Consumer Protection Act to exclude robocalls from the TCPA consent requirement if they are made solely to collect a debt owed to or guaranteed by the federal government. The TCPA generally requires a caller to obtain “prior express consent” from the call recipient before making a telemarketing call or an auto-dial call to the recipient’s landline or cell phone. However, the mortgage industry raised concerns that TCPA’s consent requirement could create potential liability for important servicing calls that could help homeowners save their homes, which prompted Congress to pass the Budget Act amendment. Last month, the FCC specifically excluded the federal government from the TCPA’s consumer protections by ruling that the government is not a “person” subject to the TCPA. Here is where the FCC rule gets confusing. commission is authorized to adopt rules to “restrict or limit the number and duration” of any wireless calls to collect debt owed to the federal government.”


August 26, 2016 - Inside FHA/VA Lending

HUD Urged to Pursue $21.5 Million In Uncollected Partial Claims

A new audit report from the Department of Housing and Urban Development’s inspector general recommended that the agency continue its efforts to collect millions of dollars in partial claims that came due during fiscal year 2015. According to a HUD IG report, the department left uncollected approximately 1,361 partial claims, worth about $21.5 million. The IG discovered the oversight during an audit of HUD’s partial claim collections. The IG reviewed a statistical sample of 135 of 10,561 partial claims associated with FHA loans that terminated in FY 2015. “HUD had not collected 36 of the claims that should have been collected,” the report stated. “We used this result to project that a total of 1,361 partial claims were not collected.” The claims were never returned to the FHA mortgage insurance fund, as required by agency rules, to strengthen FHA solvency, the report said. A partial claim is a loss ...


August 26, 2016 - Inside FHA/VA Lending

Lenders Need to Seek Legal Advice Before Using FHA’s DPA Programs

The Mortgage Bankers Association strongly urged the Department of Housing and Urban Development and the FHA to issue authoritative guidelines for lenders participating in state and local housing finance programs that rely on premium pricing to fund downpayment assistance. In a recent letter to members, the MBA recommended that FHA lenders “tread carefully” and seek legal advice until HUD provides more definitive guidance on downpayment assistance and premium pricing. Lenders should consider carefully whether and when to participate in DPA programs from housing finance agencies that rely on premium-pricing mechanisms, the letter said. The MBA said it would continue to press HUD for clarification on this contentious issue. The FHA and HUD’s inspector general are currently at odds over permissible sources of single-family downpayment assistance offered through housing finance agencies. Although the ...


August 26, 2016 - Inside FHA/VA Lending

Purchase Lending Fires Up FHA in First Half, Refis Push VA Volume

FHA saw a modest rise in originations midway through 2016 compared to the same period last year, but VA did a lot better with a double-digit increase in loan production, according to an analysis of Ginnie Mae data. Lenders delivered $123.0 billion of FHA-insured loans to Ginnie pools during the first half of 2016, up 8.4 percent from the previous year. FHA’s midyear production was driven by a surge in purchase-mortgage lending in the second quarter, which also pushed volume higher for VA as well as conventional-conforming mortgages. Government-backed lending rose 32.3 percent from the first quarter to approximately $131.0 billion in second-quarter originations, according to Inside Mortgage Finance, an affiliate publication of Inside FHA/VA Lending. It was the highest three-month total for government-insured lending on record, although private mortgage insurance did more business in the ... [2 charts]


August 25, 2016 - Inside Mortgage Finance

FCC Declines to Exclude Servicer Calls to Delinquent Borrowers from TCPA’s ‘Prior Consent’ Requirement

The Federal Communications Commission has refused an industry request to exempt mortgage servicing calls from prohibitions against the use of “robocalls,” or automated dialing and calling systems, to contact delinquent borrowers on their cell phones. In a long-awaited final rule limiting the way servicers can collect on student loans, mortgages and other debts owed to the federal government, the FCC said it would not make a decision on whether the statutory exemption from the Telephone Consumer Protection Act’s “prior express consent” requirements applies to Fannie Mae and Freddie Mac loans or their servicers. The TCPA and FCC regulations require...


August 18, 2016 - Inside Mortgage Finance

With Falling Market Share, Analysts Doubt if FHA Would Do Another MIP Cut; Factors Other than Share Influence Agency

Despite the FHA loss of market share to the private mortgage insurance business in the second quarter of 2016, stakeholders continue to believe that an FHA premium reduction is not likely to occur any time soon. Analysts with Keefe Bruyette & Woods said that, while investor concern about an FHA price cut remains elevated, the likelihood of a cut “is not very high” and the impact would be limited since the FHA is likely to cut rates only by about 30 basis points before hitting the ...


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