The Association of American Retired Persons hit the Department of Housing and Urban Development again with another class-action lawsuit for allegedly failing to protect four surviving spouses of Home Equity Conversion Mortgage borrowers against foreclosure and eviction.The complaint was filed in the U.S. District Court for the District of Columbia, where last September a federal judge found HUD in violation of federal law in a similar case. The court remanded the case to HUD to determine the appropriate remedy for the problem. The AARP Foundation Litigation and the law firm of Mehri & Skalet, the same entities that successfully litigated last year’s reverse mortgage case, represented the plaintiffs, none of them younger than 65 years of age. The suit challenges HUD’s promulgation of HECM regulations, which allegedly is ...

Thirty-three FHA lenders were sanctioned and 32 others lost their FHA approval between October and December 2013 because of actions taken by the Department of Housing and Urban Development’s Mortgagee Review Board. The board also imposed $516,500 in civil money penalties and entered into one settlement agreement to bring an unidentified lender into compliance. During the three-month period, one lender entered into an indemnification agreement with the MRB over one FHA-insured single-family loan. FHA lenders were subject to MRB disciplinary actions for various reasons, including failing to establish and implement a servicing quality control plan and failing to perform loss mitigation as required by the agency. Actions were also taken against lenders for failing to conduct monthly reviews of delinquent loans to determine the type of loss mitigation needed, as well as for failing to repay HUD losses in connection with indemnification agreements. Noncompliance with HUD’s annual recertification requirements also resulted in ...

A mortgagee that no longer wishes to participate in FHA programs must submit a letter requesting voluntary withdrawal of its FHA approval, signed by a senior executive of the company, according to guidance published in the March 2014 issue of FHA’s Lender Insight. Lenders may not simply let their FHA approval expire by failing to complete FHA’s required annual recertification process, the guidance warned. “Failing to recertify will result in a referral to the Mortgagee Review Board for administrative action,” it said. The board’s withdrawal of a lender’s FHA approval could have an adverse impact on the lender should it reapply for FHA approval in the future. A lender requesting voluntary withdrawal of FHA approval is subject to a review before the agency signs off on the request. The request would be denied if the lender has an MRB administrative action pending against it or if it is behind on its mortgage insurance premium payments. A lender whose FHA approval has been withdrawn may ...

Old Republic Cancels Recapitalization Plan for its Mortgage Guaranty Subsidiaries. Old Republic International Corp. has withdrawn plans to secure capital market funding for its beleaguered consumer credit indemnity and mortgage guaranty subsidiaries for lack of investor interest. Both business segments are housed within the Republic Financial Indemnity Group and have been in a run-off mode since 2008 and 2011, respectively. ORI Chairman/CEO Al Zucaro said holding company funds would be used to shore up the regulatory capital of the mortgage guaranty subsidiaries. The completion of the recapitalization plan hinged on regulatory approvals in North Carolina, Florida and Vermont, as well as from the government-sponsored enterprises and the Federal Housing Finance Agency. ORI said that with all the complications, it could not be certain of getting the necessary approvals. A primary investor concern is that new capital would be used to pay for RMIC’s legacy problems, and investors want their money to ...

In general, newly-created mortgage servicing rights are being valued at 4 to 4.5 times the servicing fee, which has become the industry norm of late, but there’s a school of thought that says lenders are being a bit too conservative in their “marks.” “Whether your company is public or private you have to be within [generally accepted accounting principles] on these valuations,” said Ken Richey, managing partner in Richey & Co., an accounting and advisory firm based in Englewood, CO. “GAAP dictates that you have to book it at fair value. But what’s fair value?” On a Fannie Mae or Freddie Mac loan, 4 times the servicing fees translates...

The top three HEL lenders in the market – Wells Fargo, Bank of America and Chase – originated a combined $17.8 billion in home-equity loans last year, but they still saw a $32.1 billion decline in their total holdings of HELOCs and closed-end seconds.

As former Fannie Mae executive William Maloni put it: “More money for Uncle Sam!” The Treasury Department ultimately will benefit since it gets to “sweep” almost of Fannie’s and Freddie’s earnings.

The scorecard was ushered in by former Acting Director Edward DeMarco who stepped down from his post in early January, to be replaced by former North Carolina Congressman Mel Watt.

Home-equity lending increased sharply last year, hitting its highest level in new originations since 2009, according to a new Inside Mortgage Finance analysis and ranking. Lenders originated an estimated $60.0 billion in home-equity lines of credit and closed-end second mortgages in 2013, up 36.4 percent from the previous year. That still represented only 3.2 percent of total residential mortgage production, but it was the only sector other than jumbo to show a gain from 2012 levels. Despite the improved home-equity originations, the supply of home-equity debt in the market continued...[Includes three data charts]

Among other things, the proposed Mortgage Securities Cooperative would be the only issuer of government-backed MBS. The MSC would be governed on a one-member, one-vote basis.