The mortgage banking industry will support reasonable efforts to protect the FHA Mutual Mortgage Insurance Fund as long as the changes don’t expose FHA lenders to onerous liability risk and treble damage claims, which could force them to limit or curtail their FHA lending, said the Mortgage Bankers Association. MBA President and CEO Dave Stevens said appropriate protections for the FHA are clearly needed, but they should not go so far as to shut down or restrict access to affordable credit and sustainable homeownership, particularly for first-time homebuyers. He said the industry is most concerned with FHA proposals to seek authority from Congress to extend indemnification requirements to all direct endorsement (DE) lenders and for an amendment to eliminate the “knew or should have known” standard with regard to fraud or misrepresentation. Both proposals are...

Federal Reserve Chairman Ben Bernanke late last week reiterated his view that tight underwriting standards set by lenders are hindering a broader recovery of the housing market. Lenders, meanwhile, cite concerns with repurchases and regulatory uncertainty. Bernanke noted that low home prices and historically low interest rates have not prompted the “powerful housing recovery” that has typically occurred in the past after housing problems. “Unfortunately, while some tightening of the terms of mortgage credit was certainly an appropriate response to the earlier excesses, the pendulum appears to have swung too far, restraining the pace of recovery in the housing sector,” he said. More than half of the lenders that responded to the Fed’s senior loan officer opinion survey earlier this year said...

The first-time homebuyer share of home-purchase activity and the FHA share of home-purchase financing have each fallen significantly since peaking in 2010, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The trends appear to be tied to lender underwriting requirements and the cost of FHA loans. In May 2010, first-time homebuyers accounted for 45.8 percent of home purchases, based on the three-month moving average. In October 2012, the share fell to 34.7 percent. Similarly, the FHA share of home-purchase financing fell during that time from 36.7 percent to 26.3 percent. “Financing of first-time homebuyers with low downpayments threatens...

The recent actuarial report that showed the FHA’s insurance fund is underwater to the tune of $16.3 billion ought to sound an alarm for policymakers to refocus the agency on its original public mission, some leading policy experts say, and perhaps even motivate them to resolve Fannie Mae and Freddie Mac while they’re at it. “I think FHA’s financial condition is extremely precarious – much worse than FHA and HUD are making it out to be,” said long-time critic Edward Pinto, a resident fellow at the American Enterprise Institute, a conservative think tank in Washington, DC, and a former official at Fannie Mae. As he sees it, today’s very low interest rate environment means the economic value of FHA’s forward mortgage fund really is a far worse at a negative $31 billion. “And when you throw in the negative on the reverse [mortgage] program, you get close to $35 billion.” Compounding the problem is...

The Federal Housing Finance Agency is feeling some serious pushback from lawmakers, industry groups and even homeowners over its plan to impose a guaranty fee hike on several slow foreclosure states. The FHFA proposed to target five states – Connecticut, Florida, Illinois, New Jersey and New York – for an additional, one-shot g-fee of between 15 and 30 basis points in 2013. The fees, the FHFA contends, are intended to allow Fannie Mae and Freddie Mac to recover costs associated with foreclosures. The five states singled out are all judicial states where it is necessary to obtain court approval before foreclosure is completed. The National Association of Federal Credit Unions urged...

The CFPB and the Federal Trade Commission last week issued warning letters to approximately a dozen nonbank mortgage lenders and brokers about potentially misleading advertisements geared towards military veterans and older Americans that could be in violation of the 2011 Mortgage Acts and Practices Advertising Rule. The so-called MAP rule prohibits misleading claims concerning government affiliation, interest rates, fees, costs, payments associated with the loan, and the amount of cash or credit available to the...

In what may prove to be the first of many announcements dealing with the January 2013 mandate for changes under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has decided to give the mortgage lending industry extra time to implement certain new required consumer disclosures. Per the CFPB’s announcement in a new final rule, mortgage lenders will not be required to provide those disclosures until after the bureau’s other previously proposed mortgage disclosure rules are finalized...

Mortgage lenders say they support the CFPB’s overall effort to integrate and simplify the consumer disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act, but they’re also urging the bureau to proceed at a more deliberate pace when it comes to implementing such integration. In a public comment letter to the bureau, the Mortgage Bankers Association made three overarching points, the first of which is that the agency should continue to focus its energy on the enormous job of...

The CFPB has won a preliminary injunction in its first enforcement action, which was taken against a California attorney and some of his affiliated companies and partners that offered loan modification and foreclosure relief services to homeowners struggling to keep up with their mortgage payments. In Consumer Financial Protection Bureau v. Chance Gordon, et al., filed in July in U.S. District Court for the Central District of California, the judge enjoined the defendants from making various representations alleged by the...

In a move that caught most industry observers by surprise, CFPB Deputy Director Raj Date, widely seen as a possible successor to Director Richard Cordray, has decided he will leave the agency at the end of January, with no immediate plans other than to spend more time with his family. “The timing of his departure will enable Date to help finalize several new mortgage rules this January,” according to one industry trade group source. That would include the qualified mortgage rule, according to attorney Jeffrey Jamison, an...