In a mortgage market thoroughly dominated by agency-eligible home loans, a handful of boutique products such as no-downpayment loans, “energy-efficient” mortgages and peer-to-peer mortgages are trying to gain a foothold. Navy Federal Credit Union has been offering a no-downpayment mortgage since 2010, and officials said demand for the “HomeBuyers Choice” product has grown this year. The credit union holds originations of the no-downpayment loan in portfolio. The product is available for balances ...

Major banks significantly increased their use of principal reduction loan modifications in 2012, according to new data from the Office of the Comptroller of the Currency. The eight banks and one thrift tracked by the OCC completed 126,283 principal reduction mods in 2012, up from 43,396 the previous year. Principal reduction was used on 20.0 percent of all loss mitigation actions taken by the firms in the fourth quarter, up from an 8.5 percent share in the fourth quarter of 2011. Mortgages in non-agency MBS ...

Bank of America agreed to a $165.0 million settlement with the National Credit Union Administration this week regarding non-agency mortgage-backed securities purchased by credit unions that subsequently failed. BofA did not admit fault as part of the settlement. The NCUA has received more than $335.0 million in non-agency MBS settlements with five firms and has similar lawsuits pending against nine other firms. The Conference of State Bank Supervisors ... [Includes three briefs]

Reaction to a report about Obama administration efforts to get banks to increase their purchase mortgage lending, particularly through the FHA, has ranged from supportive to dire warnings of déjà vu. Apparently, administration officials are trying to push banks to make more loans to qualified lower-income borrowers as well as minority and first-time homebuyers who have been shut out of the mortgage market because of stringent credit overlays. The report, which ran in the April 2 Washington Post, described the targeted borrowers as “people with weaker credit,” which, for some, conjures up the ...

The FHA is seeking comment on a proposal to change the period for reviewing loans for direct endorsement from pre- to post-closing in order to increase the number of acceptable loans and, therefore, reduce any potential risk to the Mutual Mortgage Insurance Fund. Under the proposal, a lender applying for unconditional direct endorsement authority would be required to submit the necessary loan files only after closing. After determining that the mortgage is acceptable and meets all FHA requirements, the agency would notify the lender that the loan has been endorsed. Current regulations provide for ...

Borrowers rushing to get their purchase-mortgage applications submitted before FHA’s higher annual mortgage insurance premiums took hold April 1 helped boost total purchase applications last week, according to the latest data from the Mortgage Bankers Association. The MBA’s weekly mortgage applications survey for the week ending March 29 showed a surge in purchase applications for government loans. The surge, fueled mostly by FHA applicants, helped boost the total number of purchase applications received by lenders during the period. “Total purchase applications increased last week, due to an almost ...

With the deadline for filing individual income tax returns just around the corner, the FHA has reminded lenders of its rules regarding the eligibility of a borrower who has a delinquent federal tax debt or lien. According to the FHA, an individual with an overdue federal tax debt or tax lien is not eligible for an FHA-insured mortgage loan until the delinquent account is either brought current, fully paid or is resolved by a satisfactory repayment plan agreed to by the borrower and the federal agency owed. Tax liens may remain unpaid as long as the lien holders subordinate the tax lien to the ...

The FHA may allow a borrower’s 401(k) retirement fund to be included in the calculation of debt-to-income (DTI) ratio, according to the agency. Normally, up to 60 percent of the fund’s value may be included in the DTI ratio, the agency said. Fund assets, such as Individual Retirement Accounts, thrift savings plans, 401(k) retirement plan and Keogh Accounts, may be counted in the underwriting, it added. The rule remains applicable unless the borrower presents proof that a higher percentage may be withdrawn after subtracting any federal income tax and withdrawal penalties. In such cases, the lender would ...

The Internal Revenue Service has guidelines for lender cancellation or forgiveness of debt – and the FHA has none. This, however, may be somewhat more complex than it may first appear, cautioned an FHA spokesman. On the one hand, the FHA has no guidelines on the forgiveness or cancellation of mortgage debt that it insures. If the lender wants to cancel some of the borrower’s outstanding indebtedness, it does not need to ask FHA’s permission under normal circumstances, the spokesman made clear. However, the lender may not then try to recover the ...

The Department of Housing and Urban Development is planning to make housing counseling an integral part of FHA lending and will soon begin testing the process. HUD’s newly created Office of Housing Counseling (OHC) is working with the FHA to develop a pilot program to embed housing counseling in FHA lending to ensure that borrowers are better prepared for homeownership, said HUD Secretary Shaun Donovan. “Whether it’s buying or renting, improving financial literacy, protecting families’ rights against discrimination or even preventing homelessness, housing counselors play a critical role in helping families make ...