FHA-approved lenders should make sure they leave no stones unturned to ensure that loans submitted for endorsement meet FHA’s strict underwriting criteria. It is the responsibility of direct endorsement lenders to scrutinize every loan for compliance with FHA lending guidelines, including income verification, credit analysis and property appraisals. JPMorgan Chase admitted it failed to do all of the above. Last week, the bank acknowledged it violated the False Claims Act and agreed to pay $614 million in cash to settle government charges it improperly certified poorly underwritten loans for FHA and VA guarantees. The defective loans later ...

The whistleblower whose investigative efforts led to the landmark $25 billion national mortgage settlement between the federal government, 49 state attorneys general and five of the largest mortgage servicers is at it again. This time, Lynn Szymoniak is suing 22 companies for using fraud to obtain FHA insurance – in some instances, VA guaranties – for defective loans that later were securitized through Ginnie Mae and sold to investors. Szymoniak, who is suing under the False Claims Act, gained notoriety from a 2011 interview on “60 Minutes” in which she ...

The Department of Housing and Urban Development has declared a one-month freeze on all mailed-in applications for FHA lender approval beginning March 31 as the department shifts from the current paper-based system to a new online electronic processing system. HUD said the blackout period would be from March 31 to April 30, during which system enhancements would be implemented, including replacement of the current Lender Assessment Sub-System (LASS) with the Lender Electronic Assessment Portal (LEAP), formerly known as “HUD/FHA Lender Approval Files.” The changes are ...

Buoyed by improvement in FHA loan quality, some lenders have begun lowering the credit score requirements for FHA and other government-backed mortgages. Last month, Wells Fargo alerted FHA lenders of its decision to lower the minimum credit score for purchase home loans through its retail channel from 640 to 600. “We felt it was an appropriate time to do it given the improvement in FHA loan quality,” a spokesman explained. “The change applies to all FHA borrowers. Last year’s resolution of the FHA indemnification issue also prompted the change at Wells Fargo, according to a bank official. In addition, resolving the putback risk with ...

VA activity appeared to lose momentum in the fourth quarter of 2013 as approved lenders reported $129.9 billion in total originations for the year, according to Inside FHA Lending’s analysis of Department of Veterans Affairs data. Production has been gradually slipping since the end of the first quarter, when lenders posted an aggregate $37.5 billion in new VA loans. The fourth quarter ended with $22.4 billion in total originations, which was down a hefty 32.1 percent from the previous quarter. On a year-over-year basis, however, VA originations were up by 1.5 percent. Refinancing accounted for 9.9 percent of VA production in 2013, up slightly from ... [1 chart]

NRMLA Plans to Recruit Certain Borrowers to Offer HECM Testimonials. Seeing so much negative publicity against reverse mortgages, the National Reverse Mortgage Lenders Association is planning to recruit borrowers who are willing to share with reporters their positive experiences with the product. The aim is to build a “repository” of borrowers who are willing to be interviewed by reporters on the merits of having a Home Equity Conversion Mortgage loan. Media representatives typically contact the NRMLA for borrower interviews, and having a borrower contact list would ...

Purchase-mortgage lending exceeded refinance production for the first time in five years during the fourth quarter of 2013, according to a new Inside Mortgage Finance ranking and analysis. The shift has been in the works for some time as the potential refinance market began to shrink when interest rates rose late in the second quarter of last year. Mortgage lenders originated an estimated $168 billion of purchase mortgages during the fourth quarter of 2013, accounting for 55.1 percent of total originations. The last time purchase mortgages comprised more than half of new production was back in the fourth quarter of 2008. But purchase-mortgage originations fell...[Includes three data charts]

Green Tree Loan Servicing is the latest lender to turn away mortgage brokers, a move that in years past might create pangs of anxiety in the industry. But brokers have seen this movie before – many times – and they appear to be just fine with the latest news. “I know companies are still getting out, but we’re also seeing a number of companies stepping up to the plate,” said Don Frommeyer, senior vice president of Amtrust Mortgage Funding. Asked whether there are fewer options for brokers these days, he said...

Speculators, in the form of “short-sellers,” are zeroing in on the mortgage industry, including some of the fastest-growing servicers of the past two years: Nationstar Mortgage, Ocwen Financial, and Walter Investment Management Corp. But one mortgage stock being shorted more than any of these is PHH Corp., the parent company of PHH Mortgage, the nation’s seventh largest originator. According to figures compiled by Standard & Poor’s, as of early February, speculators had sold short 17.2 million shares of PHH common. As a ratio of shares outstanding in PHH, this comes...[Includes one data chart]

Future changes to Home Mortgage Disclosure Act regulations may shed more light on how lenders adapt to the new ability-to-repay rule, as well as assessing the role of credit history and payment burden in the lending process and mortgage pricing. The Consumer Financial Protection Bureau late last week took the opening steps in overhauling HMDA reporting requirements under provisions included in the Dodd-Frank Act. Among the changes on the table are disclosing the loan term, total points and fees, the length of any teaser or introductory rate, and the applicant or borrower’s age and credit score. Also, the CFPB is...