An increasing number of credit unions and other lenders have recently started offering a mortgage that allows borrowers to adjust their interest rates as frequently as every 120 days. While many lenders have avoided alternative mortgages since the collapse of the non-agency market, credit unions have not shied away from offering innovative products. This week, for the first time, a HarmonyLoan borrower executed an interest rate reset without the expense and requirements of the traditional refinancing process. The borrower took out ...

Performance concerns prompted Moody’s Investors Service to downgrade the servicer quality ratings of two non-agency servicers recently and place a third servicer’s ratings on watch for possible downgrade. Last week, Moody’s downgraded the servicer quality ratings of JPMorgan Chase Bank and Chase Home Finance to SQ2 from SQ1 for subprime and prime loans. The rating scale ranges from SQ1 (strong) to SQ5 (weak). The downgrades were mainly due to the deterioration of the company’s collection metrics relative to some of its peers, a deterioration in ...

Peter Wallison, a commissioner on the Financial Crisis Inquiry Commission, violated the FCIC’s ethics guidelines and was extremely difficult to work with, according to an investigation by Democratic staff on the House Committee on Oversight and Government Reform. A report released this week by Rep. Elijah Cummings, D-MD, the ranking member on the committee, also revealed that FCIC staff thoroughly debunked mortgage-related claims made by Edward Pinto, a resident fellow at the American Enterprise Institute. Pinto claimed that the economic crisis of 2007 was caused by ...

The Federal Reserve Bank of New York has not committed to a defined auction schedule for non-agency mortgage-backed securities in the Maiden Lane II portfolio, which analysts warn could serve as a ceiling for prices on subprime MBS.“Not only was June’s auction the largest on record but it was also the least successful with just under 50 percent of the bid list being sold,” said David Austerweil, a director at Fitch Solutions. “Maiden Lane’s subpar auction results have ...

The Department of Housing and Urban Development is mulling over changes for the FHA TOTAL Scorecard to increase scrutiny of loans with higher debt-to-income ratios, according to HUD officials. Responding to inquiries by Inside FHA Lending, department officials said the FHA automated underwriting system, FHA TOTAL Scorecard, is under review for possible changes that could have mixed results for lenders and consumers. HUD said it is still considering the effects of various potential changes to TOTAL. But making those changes would result in higher risk loans, including those with higher DTI ratios, being subjected to manual reviews rather than...

Raising the annual mortgage premium by 25 basis points has resulted in some reduction in FHA lending but not so dramatic as to send lenders reeling from its impact. Industry reaction to premium adjustment has been mixed as the effects were felt in both the 15- and 30-year fixed-rate loan products. “Application levels have gone down as FHA products become more and more costly,” said one FHA lender. The quarter-of-a-percentage point increase became effective for all new 15- and 30-year mortgage loans insured by FHA on or after April 18, 2011. The upfront mortgage insurance premium (MIP) of 1.0 percent remains unchanged. The premium increase does not affect...

Some FHA lenders have been easing off on FICO credit scores to qualify more borrowers but they are also adding other requirements to ensure borrower eligibility and ability to repay. Frost Mortgage Banking Group, a subsidiary of Primary Residential Mortgage Inc., began relaxing its credit score overlays in January and results have been encouraging, said Greg Frost, company president and chief executive officer. The action has so far resulted in a 95 percent approval rate on mortgages sent for a second review to the parent company, PRMI. The approach has had a positive effect on 20 percent to 25 percent of FHA loans that were initially...

The Department of Justice has charged three mortgage loan officers and a title agent with defrauding elderly borrowers, financial institutions and the Department of Housing and Urban Development out of $2.5 million in a large-scale reverse mortgage and loan modification scam. The accused loan officers – Louis Gendason, John Incandela and Marcos Echevarria, all Florida residents – and Kimberly Mackey, a title agent in Pittsburgh, allegedly conspired to commit wire fraud by using HUD’s Home-Equity Conversion Mortgage program to target seniors with promises to refinance their existing mortgages. The three loan officers allegedly inflated the...

The Department of Housing and Urban Development recently stripped three mortgage lenders of their FHA Direct Endorsement (DE) approval for having default and claim rates in excess of what the department normally allows on nationwide and local levels. Prior to the termination of their DE approval, the lenders were placed on FHA Credit Watch for evaluation following an audit that uncovered their unusually high default and claim rates within the areas they serve. HUD regulations call for the termination of an FHA lender’s DE approval and origination agreement if the default and claim rate for loans endorsed within the preceding 24 months exceeds...

President Obama has named Carol Galante as acting FHA commissioner and assistant secretary for housing at the Department of Housing and Urban Development. Galante was most recently HUD deputy assistant secretary for multifamily housing. She will replace Robert Ryan, who most recently also served as Acting FHA Commissioner and Assistant Housing Secretary. Ryan will become senior advisor to HUD Secretary Shaun Donovan on housing finance matters. In his new expanded role, Ryan will serve as HUD’s leaderon the interagency housing deputies’ team. He will develop, among other things, the department’s view regarding a long-term plan for...