The Inspector General of the Department of Housing and Urban Development urged HUD to strengthen its oversight of prohibited restrictive covenants (PRC) in FHA-insured mortgages and to stop the illegal practice. It is difficult to gauge just how serious is the problem nationwide because HUD did not specifically look for prohibited restrictive covenants during loan reviews and did not track such violations, said Tanya Schultze, HUD regional inspector general for audit for the Los Angeles region. However, audits by Schultze’s team did uncover six FHA lenders that allowed ...

The Department of Housing and Urban Development’s Mortgagee Review Board has collected $1.9 million from Oct. 1, 2012, through June 30, 2013, from actions taken against FHA lenders. The MRB actions involved 30 lenders, of whom 15 agreed to settle and seven agreed to indemnify HUD for its losses, according to the board’s latest data. The indemnification agreement covered 166 FHA-insured loans, and 11 lenders lost their authority to participate in the FHA single-family mortgage program. Cases heard by the MRB involved infractions, such as failure to implement and maintain a quality control plan and to review early payment default loans, which resulted in ...

The FHA has clarified the meaning of “continuous income” and announced other updates to its loss mitigation home-retention options to help distressed borrowers retain their homes and, thus, reduce the number of claims against the Mutual Mortgage Insurance Fund. FHA lenders are required to implement the updated policies in Mortgagee Letter 2013-32 by Dec. 1, 2013. “Continuous income” is one of the criteria a defaulting borrower must meet in order to qualify for a loan modification. While it generally refers to employment income (e.g., wages, salary or self-employed earnings), it may also include ...

Wells Fargo claimed partial victory after a Manhattan federal district court judge dismissed certain claims against it in a government lawsuit alleging the bank lied about the quality of defaulted mortgages insured by the FHA. District Court Judge Jesse Furman ruled that legal injury claims based on events that happened prior to June 2009 were time-barred and that the government had waited too long to file a lawsuit. He also threw out claims of negligence and unjust enrichment. On the other hand, Furman let stand claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which the ...

HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

Redwood Trust and Credit Suisse, the jumbo MBS sector’s two biggest players, slowed their securities issuance during the third quarter.

The Mortgage Bankers Association and other industry trade groups fear that the shutdown will have a growing impact on the housing market, including FHA endorsements.

Moody's, in a new report, notes that Bank of America outsources roughly 25 percent of its “early stage” collection efforts to vendors.

However, if Fannie Mae determines through established delivery or quality-control review processes that any loan has ineligible term or amortization provisions, it will be subject to repurchase.

The FHA and the Department of Housing and Urban Development have already slipped into somewhat of a “power save” mode since substantial parts of the federal government were shut down early this week. The FHA will continue to endorse new loans under what it calls a “multi-year appropriation authority.” FHA Commissioner Carol Galante said the agency will continue to guarantee single-family loans during the shutdown, refuting earlier news accounts that were based on erroneous materials included in HUD’s shutdown contingency plan. “I do want to clear up any confusion about what this means for FHA single-family home borrowers. FHA will be able to endorse single-family loans during the shutdown,” Galante said. “A very limited number of staff will be available to endorse new loans.” Galante warned...