The USDA’s Rural Housing Service is proposing to amend regulations implementing its guaranteed single-family home loan program to allow the use of “income banding” in determining the very low- and low-income limits in the guaranteed loan program. The planned rule change is part of a larger package of proposed changes to RHS’s single-family direct and guaranteed loan and grant programs. The proposed revisions were published in the Aug. 31 Federal Register. Among other things, RHS has proposed to revise the definition of low-income to allow for the two-tier income limit structure or “income banding” within the Section 502 single-family guaranteed home loan program. The program provides USDA guarantees to lenders that make mortgage loans to low- and moderate-income borrowers in rural areas who could not qualify for a conventional home loan with private mortgage insurance. It already uses ...

A federal district court in San Francisco preliminarily approved a $30 million class-action settlement resolving allegations that Wells Fargo Bank improperly collected post-payment interest on FHA-insured mortgages without notice to the borrowers. The U.S. District Court for the Northern District of California granted preliminary approval of the settlement on Aug. 22. Class members include plaintiff Vana Fowler and other borrowers who had an FHA loan originated between June 1, 1996, and Jan. 20, 2015. Plaintiffs allege that Wells Fargo continued to collect interest on FHA loans they had already fully repaid without sending them proper notice. HUD allows lenders to collect interest if the borrower repays the full principal on his or her FHA loan after the first of the month. This means that banks can still collect interest through the end of the month even though the ...

Big Four accounting firm Deloitte has paid $149.5 million to the federal government to settle allegations of misconduct in connection with its role as the independent outside auditor of defunct FHA lender Taylor, Bean & Whitaker. The settlement amount includes $115 million in restitution paid to the Department of Housing and Urban Development on Aug. 13, 2018, according to the HUD inspector general. The rest of the payment went to the Department of Justice, which brought the charges on behalf of the government. Deloitte admitted neither to any liability nor to wrongdoing. TBW was an FHA direct endorsement lender and a Ginnie Mae-approved mortgage-backed securities issuer and servicer. It originated, underwrote, acquired and sold mortgages to Freddie Mac and other investors, which used the loans to support MBS issuance or held them as investments. In its heyday, TBW was one of the ...

The profitability of mortgage servicing is under pressure these days due to factors that keep costs high, but there is a better way to reduce costs and conveyance time, especially for FHA foreclosed loans, according to a white paper from Dimont. Integrated processing of insurance claims and conveyance-related activities can dramatically reduce servicers’ operating costs and penalty risks on FHA and other investor-backed loans, said the Dallas-based technology solution provider. The white paper, “The Power of Integrated Claims & Conveyance Services,” lists factors that could significantly affect a servicer’s profitability, such as low origination volume, declining delinquency rates and other factors, like severe weather patterns. Servicing costs for performing loans peaked in 2015 when the average cost for servicing a single-family loan reached $181 per loan – the highest cost since the ...

VA Announces Special Relief Following Hurricane Lane. The Department of Veterans Affairs has issued guidance reminding servicers of measures they may use to provide relief to VA borrowers affected by Hurricane Lane. VA Announces Modification Comparison Chart; Development Updates. To provide additional clarification, VA has created a chart summarizing its different modification options. The chart will be available to servicers at https://www.benefits.va.gov/ HOMELOANS/servicers_valeri_guides.asp on Monday, Sept. 10, 2018. Also, VALERI Manifest 18.3 will be released on Sept. 8. VALERI will be unavailable from 7 p.m. EST to 11 p.m. EST. The following system enhancements will be included: CQ 13433 – Updates the redemption expiration date business rule logic in the Transfer of Custody event to pass if loan is terminated via deed in lieu; and CQ 13535 – Updates the ...

Fannie Mae, Freddie Mac and Ginnie Mae securitized a total of $82.55 billion of single-family home-purchase loans in August, their highest monthly volume of such business in the post-crisis era, according to a new Inside MBS & ABS analysis of agency MBS disclosures. [Includes two data charts.]

Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, late this week finally unveiled his long-awaited housing-finance reform proposal, calling for a repeal of the federal charters of Fannie Mae and Freddie Mac.

Problems with rating models that prompted corrections on more than 650 residential MBS in recent years helped lead to a settlement between Moody’s Investors Service and the Securities and Exchange Commission.

Non-agency MBS participants are developing a representation-and-warranty framework by learning from ongoing issues in pre-crisis non-agency MBS. The latest framework developed by the law firm of Alston & Bird features a number of new provisions to help address conflicts regarding breaches of reps and warrants.

Longer auto loan terms and softer collection practices by some lenders are slowing amortization schedules and backloading losses in certain subprime auto loan ABS, said S&P Global Ratings.