HUD

Browse articles from all of our Newsletters related to HUD.

February 17, 2017 - Inside FHA/VA Lending

Lender, Charity Hid Defaults from FHA to Manipulate Default Rate

Three federal agencies have announced a joint settlement agreement and consent order with a New York FHA lender and several of its top executives to resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act and the False Claims Act. The U.S. Attorney for the Eastern District of New York, the Office of the Inspector General for the Department of Housing and Urban Development, and the Inspector General of the Federal Deposit Insurance Corp. announced the $1.25 million settlement with Franklin First Financial, Ltd., its Chief Executive Officer Frederick Assini, Chief Operating Officer Christopher Berman, and Andrew Dauro, a manager of the company. The lawsuit alleged that the defendants made illegal payments on behalf of borrowers from February 2009 through March 2010 to keep default rates low so that Franklin First could keep its ...


February 17, 2017 - Inside FHA/VA Lending

FHA-Related FCA Enforcement, Recoveries Increase in 2016

Claims relating to housing and mortgage fraud represented a huge chunk of the amount recovered by the federal government under the False Claims Act last year. An analysis by the WilmerHale law firm found that the Department of Justice continued to give high priority to FCA investigations and prosecutions in 2016, resulting in more than $4.76 billion in settlements and judgments, nearly $1 billion more than in 2015. The increase also reflected a continued focus on financial institutions and the mortgage lending industry, with approximately $1.6 billion in recoveries last year, the law firm said. The DOJ, working on referrals from the Department of Housing and Urban Development’s inspector general, has used the FCA effectively as a tool in prosecuting FHA-related fraud cases against lenders. The DOJ ...


February 17, 2017 - Inside FHA/VA Lending

4Q16 Spike in FHA Delinquencies Justifies Trump’s Premium Action

The spike in FHA delinquencies in the fourth quarter of 2016 justifies the Trump administration’s decision last month to suspend and review the outgoing administration’s lowering of FHA mortgage insurance premiums, said House Financial Services Committee Chairman Jeb Hensarling, R-TX. Commenting on the Mortgage Bankers Association’s quarterly delinquency rate survey, Hensarling praised President Trump’s decision to set aside the 25-basis-point premium reduction, which Inside FHA/VA Lending reported first on Jan. 6, 2017. “Lowering premiums at this time was a big mistake,” said Hensarling. “The sudden increase in delinquencies makes it clear that President Trump was absolutely right to undo the previous administration’s irresponsible action.” Hensarling recalled that in 2013 “taxpayers had to spend $1.7 billion to bail out the FHA.” Going forward, the FHA must be fiscally sound, with a ...


February 17, 2017 - Inside FHA/VA Lending

Republicans Invoke Cloture in Upcoming Carson Confirmation

Ben Carson is a step closer to being confirmed as secretary of the Department of Housing and Urban Development after Republicans this week invoked cloture to block any attempt by Democrats to delay or prevent a Senate confirmation vote. Republicans filed their cloture motion and waived quorum call on Feb. 13, effectively ending further debate on Carson’s nomination. At least 16 senators must sign a cloture petition.]There has been no date set for Carson’s confirmation vote. The Trump administration has been slow to fill its Cabinet positions, partly due to Democrats’ stalling techniques. So far, only nine cabinet positions have been filled. There has been no Senate action scheduled since the Senate Banking Committee approved Carson confirmation by voice vote on Jan. 24, and nobody seems to have an explanation for the delay. While the committee vote was unanimous, Democrats continue to ...


February 17, 2017 - Inside FHA/VA Lending

Debt Burdens Crept Slightly Higher In 2016 for FHA and VA Borrowers

FHA and VA borrowers took on slightly greater payment obligations in 2016 than they have in previous years, according to a new analysis and servicer ranking by Inside FHA/VA Lending. The average debt-to-income ratio for FHA loans securitized in Ginnie Mae mortgage-backed securities last year was 40.4 percent, up about half a percentage point from 2015. The average VA DTI ratio nudged up slightly to 38.3 percent. Average credit scores in the FHA program drifted slightly lower, while climbing 1.9 points for VA loans. The differences in credit quality between the two programs remained substantial: the VA attracts borrowers with higher credit scores and lower DTI ratios who take on larger loans. Some 36.3 percent of VA loans backing Ginnie MBS issued last year had credit scores of 740 and up, while just 13.2 percent of FHA loans fell in that category. Meanwhile, 67.1 percent of FHA loans had ...


February 16, 2017 - Inside Mortgage Finance

The Time is Right for a Boom in Servicing Sales. Another Month or Two of Slow Prepayments Could Spur Market

The secondary market for bulk agency mortgage servicing rights is beginning to pick up a decent head of steam, but one factor is holding it back from a full-throttle: worries about prepayment speeds. “We’ve had one month of low prepayment numbers,” said Mark Garland, president of MountainView Servicing Group, Denver. “A couple of more months would be better.” According to investment bankers who work the market, although rates have been on a steady climb since the November election – the yield on the benchmark 10-year Treasury is...


February 9, 2017 - Inside Mortgage Finance

Carson Seeks ‘Strong Housing Finance Practitioner’ For FHA Post, Promises More Clarity for Lenders

Ben Carson, who is expected to be confirmed soon as the next secretary of the Department of Housing and Urban Development, said he’s looking for an experienced mortgage professional to guide the FHA program during his tenure. In recent years, the top FHA job has been held by people with more experience in government than in the mortgage business. The last industry veteran in the post was Dave Stevens, who brought years of mortgage finance experience when he took the job in the first Obama administration. He left in 2011 to become president and CEO of the Mortgage Bankers Association. In response to written questions from Senate Democrats, Carson said...


February 9, 2017 - Inside Mortgage Finance

HUD IG Says FHA Improperly Cleared New Defect Taxonomy and Pushes for Recall, HUD Holds Ground

The Department of Housing and Urban Development is facing criticism for its handling of FHA’s loan quality assessment methodology. A draft of the so-called defect taxonomy was published without proper departmental clearance, according to a recent report by HUD’s Office of Inspector General. The defect taxonomy is one of 13 FHA-related documents the OIG claims were not properly cleared. The OIG called on HUD to pursue departmental clearance for the documents and policies and to recall any documents that can’t be appropriately cleared. A recall of the defect taxonomy would be...


February 3, 2017 - Inside FHA/VA Lending

Around the Industry

Final Civil Action: Primary Residential Mortgage. The Department of Housing and Urban Development’s Office of the Inspector General has recommended that the department’s Office of Legal Counsel acknowledged $3.13 million of a $5 million settlement agreed to by Primary Residential Mortgage is due HUD. Primary agreed last September to a $5 million settlement with the Department of Justice to resolve allegations of failing to comply with FHA requirements in connection with its origination, underwriting and endorsement of 100 FHA-insured loans. Primary’s settlement is neither an admission of guilt nor assumption of any liability that may arise from the flawed transactions, the IG said. As of Oct. 4, 2016, the settlement amount due HUD had been paid in full. Moody’s Downgrades $243 Million of FHA/VA Residential MBS. Moody’s Investors Service has downgraded the ...


February 3, 2017 - Inside FHA/VA Lending

Vet Agency Clarifies Student Loan Policy in Underwriting VA Loans

The Department of Veterans Administration has issued guidance to clarify its new policy regarding student loans in underwriting VA guaranteed home loans. Specifically, the guidance shows lenders how to calculate a student-loan monthly payment when figuring out a VA borrower’s ability to repay. The clarification in the guidance applies to deferred student loans and the new policy will provide guidance for student loans currently in repayment or about to begin repayment within 12 months of a VA loan closing. How should a lender calculate a student loan monthly payment for loan underwriting purposes? A monthly payment need not be considered if the borrower provides written proof that the student loan will be deferred at least 12 months beyond the closing date, the guidance said. If a student loan is under a repayment plan or is about to begin repayment, the lender must consider the anticipated monthly payment in the ...


February 3, 2017 - Inside FHA/VA Lending

Suspending Premium Reduction Appears to be Better for HUD

Setting aside the 25-basis-point FHA premium reduction is a good idea because it would not have done much to expand access to credit anyway, according to researchers at the Urban Institute. In a recent analysis, Laurie Goodman, co-director of UI’s Housing Finance Policy Center, and research associate Bing Bai took a closer look at the FHA pricing adjustment and found that the impact on the market would have been small.The researchers concluded that retaining the current pricing for FHA-insured mortgages would help strengthen the FHA’s financial situation and allow the Mutual Mortgage Insurance Fund to build its buffer. As one of his final official acts as secretary of the Department of Housing and Urban Development, Julian Castro announced a 25-basis-point MIP reduction for most FHA single-family mortgages. The fee change was to take effect on Jan. 27, 2017. Just hours after ...


February 3, 2017 - Inside FHA/VA Lending

HUD Issues Guidance on Servicing Loans on Homes with PACE Liens

The Department of Housing and Urban Development has issued guidance for servicing FHA-insured mortgages on properties encumbered with a Property Assessed Clean Energy (PACE) obligation. The PACE guidance establishes servicing policies and procedures that went into effect on Jan. 19, 2017. It applies to all FHA Title II forward mortgages. A PACE loan is a way to finance clean-energy improvements in residential and commercial properties to reduce energy bills and facilitate water and energy conservation. The terms and conditions of a PACE loan may vary among state, local government and programs. Generally, a PACE loan is secured and collected in the same manner as a special tax assessment on the owner’s property. Payments are not made directly to the ...


February 3, 2017 - Inside FHA/VA Lending

MBA Concerned About Lack of Consumer Protections in PACE

The Mortgage Bankers Association has asked the Trump administration to help close a loophole in the Property Assessed Clean Energy (PACE) program that could put consumers at risk. In a recent public service video, Pete Mills, MBA senior vice president for residential policy and member engagement, said the MBA has been in contact with the president’s transition team to see if there is a way to incorporate consumer protections into the program. Mills noted a “significant void in consumer protection” due to the structure of PACE programs. The PACE program allows local or state governments, when authorized by state law, to finance the upfront cost of energy upgrades on commercial, residential or industrial properties. A PACE loan is repaid over a set period – typically 10 to 20 years – through a special assessment on the property on top of the owner’s annual property tax bills. It has seniority over all ...


February 3, 2017 - Inside FHA/VA Lending

Carson Wants a ‘Housing Finance Specialist’ as FHA Commissioner

Housing and Urban Secretary-Designate Ben Carson said he would want an expert in housing finance to lead the FHA and help draw disillusioned lenders back into the FHA single-family mortgage program. In a written response to questions from Sen. Sherrod Brown, D-OH, ranking minority member of the Senate Committee on Banking, Housing and Urban Affairs, Carson provided no detail on how he would entice previous lenders to return to the FHA. Carson made clear, however, that if confirmed he would seek a “strong housing finance practitioner who believes in the mission of the FHA” for the job of FHA commissioner. “We will work hard to balance mission and risk to preserve and sustain FHA now and into the future,” he wrote. “We will also use existing authorities to increase the certainty of loan eligibility in an effort to attract back many of the lenders who are no longer ...


February 3, 2017 - Inside FHA/VA Lending

FHA Endorsements Decline in 4Q16 VA Refinances Increase Slightly

FHA single-family endorsements declined 5.5 percent from the third to the fourth quarter of 2016, losing some market share, while VA saw a modest uptick in guaranteed loans, thanks to robust refinancing activity. The FHA endorsed a total of $68.3 billion of forward mortgages during the fourth quarter, according to an Inside FHA/VA Lending analysis and ranking. That brought total production over a 12-month period to $255.6 billion (excluding Home Equity Conversion Mortgage loans), a 7.3 percent increase over 2015. FHA activity in the purchase market fell 13.6 percent in the fourth quarter though annual volume was up 14.3 percent from 2015. While FHA historically has been stronger in the purchase market, 2016 proved to be a more competitive year for FHA streamlined refinancing. FHA-to-FHA refinance endorsements rose 15.6 percent in the fourth quarter from the prior quarter, but ... [ 5 charts ]


February 2, 2017 - Inside Mortgage Finance

GOP Executes a Work-Around to Push Through Favorable Votes on Nominee for Treasury, AG

A day after Democrats on the Senate Finance Committee delayed a vote on some of President Trump’s nominations by refusing to attend a confirmation hearing, Republicans used a parliamentary maneuver to push through a unanimous favorable vote on two of them. Mortgage industry observers were expecting positive votes this week from the committee on the nominations of Steve Mnuchin as the new head of the U.S. Treasury and Sen. Jeff Sessions, R-AL, as the next U.S. Attorney General. However, Democrat members of the committee refused...


January 27, 2017 - Inside Mortgage Trends

Will Carson Restore FHA MIP Cut?

Late last week, when the Department of Housing and Urban Development pulled the plug on reducing FHA premiums by 25 basis points, it was originally thought that perhaps, in time, the new White House might change its mind. As one Washington insider noted, “There was a feeling that with a little education and time and with the right decision-makers in place, that maybe they would let the cut go through. Now I’m not so sure.” An industry lobbyist – with a deep resume on Capitol Hill ...


January 26, 2017 - Inside Mortgage Finance

Stakeholders Warn Suspension of FHA Price Cut May Disrupt the Market; MBA Issues ‘Coping’ Guidance

Industry groups are calling for better ways to minimize the market disruption that may come in the wake of the Trump administration’s decision to suspend the recent 25-basis-point reduction of the FHA mortgage insurance premium. The suspension of the fee cut was announced Jan. 20 by Genger Charles, general deputy assistant secretary for housing at the Department of Housing and Urban Development, pending a review by the incoming administration. The pricing change was scheduled to take effect for loans with a closing or disbursement date of Jan. 27 or later. The moratorium has...


January 26, 2017 - Inside Mortgage Finance

Trump Imposes a Freeze on New Regulations, Immediate Effect on Mortgage Rules Unclear

The new administration of President Trump wasted no time in trying to fulfill his campaign promise to roll back the tide of regulation, issuing on the day of his inauguration a freeze on new and pending regulations from executive agencies of the U.S. government. What effect this will have on mortgage lending regulation is unclear, at this point, but it’s likely to be temporary, industry insiders agree. According to a memo issued by White House Chief of Staff Reince Priebus, unspecified “executive departments and agencies” were...


January 20, 2017 - Inside FHA/VA Lending

Ex-FHA Chief Suggests Common Standards for FHA, VA, USDA, GSEs

A former FHA commissioner is calling for a common national housing policy and regulations, as well as aligned capital standards for FHA and the government-sponsored enterprises in lieu of the current regulatory regime – an idea first put forth by the Mortgage Bankers Association. Brian Montgomery, former assistant secretary for housing and FHA commissioner in the second Bush administration, said the nation’s homebuyers are at a disadvantage due to the lack of a unified, detailed plan for the housing finance system. Montgomery, a current contender for a top executive position at the Department of Housing and Urban Development, urged President Trump to create a new Office of National Housing Policy to develop a “unified and collaborative approach to our nation’s housing policy, including homeownership and subsidized rental housing.” “The prevailing view within the ...


January 20, 2017 - Inside FHA/VA Lending

HFAs to Benefit from FHA Premium Cut, Wage Growth Says Moody’s

The 25-basis-point decrease in the FHA’s annual insurance premiums translates not only to annual savings for homeowners but also boosts the competitiveness of housing finance agency loan products, according to a new report from Moody’s Investors Service. The report regards the latest FHA pricing adjustment as credit positive for housing finance agencies (HFAs) because it would make FHA loans more affordable to borrowers and increase HFA loan originations. The announcement to reduce the annual mortgage insurance premium to its lowest allowable level took stakeholders by surprise. In November, FHA had no plans to lower premiums despite an uplifting actuarial report on the condition of the Mutual Mortgage Insurance Fund. This week, however, there is uncertainty as to whether the Trump administration will allow the reduced premiums to take effect for new loans closing on or after ...


January 20, 2017 - Inside FHA/VA Lending

FHA Codifies Key Changes to HECM Rules, Issues New Program Policies

The Department of Housing and Urban Development has codified significant changes to the Home Equity Conversion Mortgage program that have reduced risks to both FHA and reverse mortgage borrowers. Specifically, the rule codifies existing HECM policies implemented by mortgagee letters, implements statutory changes, issues new origination and servicing policies, and clarifies existing regulatory language. HUD said it has established an eight-month lead time between the publication of the final rule and the effective date, Sept. 19, 2017, to provide lenders enough time to understand the rule and plan for necessary changes. The grace period also allows time for FHA to issue guidance and make system changes. The National Reverse Mortgage Lenders Association expressed support for the final rule. “Personally, I am glad to see this final rule get out the door,” said NRMLA President and ...


January 20, 2017 - Inside FHA/VA Lending

Lenders Expect VA Refis to Drop in 2017, Rising Demand for Purchase

VA originations have been trending upward over several quarters, thanks to an unusually heavy share of refinance business, but all good things, at some point, must slow down, lenders say. The refinance business overall has fallen to 45 percent from 55 percent in the fourth quarter of 2016, and that will have an effect on VA originations in the first quarter of 2017, said Andy May, chief operating officer of the American Armed Forces Mutual Aid Association Mortgage Division. Going forward, May expects VA originations to fall by 10 percent in the first quarter due to rising interest rates. But even though rates have been trending up, May saw an uptick in VA loan applications in January as fence-sitters jumped into the market to take out a loan before rates went any higher. “The MBA estimates rates will rise above 5 percent in the next 24 months and then down to 4.8 percent by the end of 2018, and up to 5.3 percent at the ...


January 20, 2017 - Inside FHA/VA Lending

Trump Administration Scuttles 25 bps Annual Premium Reduction

The Trump administration has officially set aside the 25 basis point cut in FHA annual premiums in a new mortgagee letter issued by the Department of Housing and Urban Development hours after Donald Trump was sworn in as the 45th president of the United States. Mortgagee Letter 2017-07 said that the annual-premium reduction HUD announced on Jan. 9 “has been suspended indefinitely.” Stakeholders will be notified in the event of a policy change, the letter added. The letter confirms reports earlier in the week that the FHA pricing adjustment was about to be spiked. Ben Carson, who had his confirmation hearing before the Senate Banking Committee last week, told lawmakers that he planned to work with the FHA director and financial experts to review the cut. However, the HUD secretary-designate gave no indication as to whether he favored a premium reduction that would benefit thousands of ...


January 20, 2017 - Inside FHA/VA Lending

FHA/VA Default Rates Spike Up In 4Q16, Nonbanks Still Growing

Mortgage default rates appeared to spike higher in the fourth quarter of 2016, according to a new analysis and servicer ranking by Inside FHA/VA Lending. Some 5.51 percent of FHA loans in Ginnie Mae mortgage-backed securities pools were reported as 30- to 60-days past due at the end of December. That was up 80 basis points from the previous quarter and was easily the highest default rate in the past three years. FHA default rates were also up in more serious delinquency categories: loans 60- to 90-days past due and those over 90-days late. The figures are based on loan count and are not seasonally adjusted. Similar trends occurred in the VA home loan guaranty program. The 30-60 category was up 41 bps, while 90+ delinquencies jumped 19 bps. The supply of Ginnie single-family MBS outstanding continued to set new records. The total, not including multifamily and FHA home-equity conversion ... [4 charts]


January 19, 2017 - Inside Mortgage Finance

PHH Corp. Convinces Appeals Court to Let It Respond to Government’s Brief in CFPB Dispute

The U.S. Court of Appeals for the District of Columbia Circuit last week gave PHH Corp. the green light to weigh in on the legal arguments the Justice Department made late last year in support of the Consumer Financial Protection Bureau’s petition for an en banc rehearing of its dispute with the lender. The appeals court did so over the objections of the CFPB, and with 11 of the 12 judges in agreement and one not participating. PHH had argued that it ought to be able to respond to the second of two government arguments in favor of the review. Privately, some industry insiders thought...


January 19, 2017 - Inside Mortgage Finance

Trump Administration Expected to Freeze Cut in FHA Mortgage Insurance Premiums

The Trump administration is expected to put a temporary freeze on the 25 basis point cut in FHA annual premiums that is scheduled to take effect Jan. 27. One industry source noted: “On Jan. 20, President Trump will be issuing an executive order that freezes all past actions over a certain period of time. The FHA premium reduction gets swept into this.” Sources told...


January 13, 2017 - Inside MBS & ABS

FHA’s New Pricing Adjustment Could Boost Ginnie Mae Issuance, Trigger Prepayments on Premium MBS

The 25 basis-point mortgage insurance premium cut announced this week by the Department of Housing and Urban Development’s departing leadership could switch $50 billion of issuance from Fannie Mae/Freddie Mac business to FHA as well as cause premium Ginnie Mae MBS to prepay faster, according to market analysts. Absent any adversarial pricing by private mortgage insurers, a guaranty fee adjustment by the Federal Housing Finance Agency or a reversal by the Trump administration, analysts with Bank of America Merrill Lynch see up to 12 percent of purchase and 2 percent of refis shifting to FHA. On June 9, HUD Secretary Julian Castro announced...


January 12, 2017 - Inside Mortgage Finance

With PHH Case Pending, Industry Officials Still Believe CFPB Should Give More RESPA Guidance

Mortgage compliance experts say there’s still a strong need for the Consumer Financial Protection Bureau to provide more guidance about acceptable business relations under Section 8 of the Real Estate Settlement Procedures Act. One of the issues that came to the fore in the bureau’s enforcement action against PHH Mortgage was lenders’ relationships under marketing services agreements. Even though banks these days may be using MSAs to a lesser extent than nonbanks, there is still a need for the CFPB to more clearly delineate do’s and don’ts. “On the lender side of the mortgage industry, there is...


January 12, 2017 - Inside Mortgage Finance

HUD Cuts FHA Mortgage Insurance Premium by 25 bps, Hensarling Slams ‘Parting Gift,’ but Reversal Is Uncertain

Any pushback against the FHA’s 25 basis-point cut in the annual mortgage insurance premium remains to be seen despite grumblings from Capitol Hill, said stakeholders and industry analysts. Earlier this week, the outgoing leadership of the Department of Housing and Urban Development surprised the industry by reducing the annual MIP for 30-year FHA mortgages by 25 bps, and eliminated the higher MIP for loans exceeding $625,500. There are...[Includes one data table]


Poll

With rates higher this year, there has been talk of lenders liberalizing their underwriting standards in an effort to increase volume and make up for lower refis.

Do you think your shop will loosen standards over the coming three months?

Yes, but not by much.
Yes, by a lot.
Yes and, heck, we may even do non-QM lending.
No, not at all.
No and we may even tighten credit.

vote to see results