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...

Ginnie Mae has revised guidance for determining whether a loan is eligible for its mortgage-backed securities program. According to APM 11-12, effective for all securities with an issue date of June 1, and forward, all loans pooled in Ginnie Mae single-family securities must meet certain criteria. Only loans backing bond consolidation pools are exempt from the revised guidance. Beginning June 1, all loans underlying Ginnie Mae issuances must not be more than one month overdue and unpaid on the pooled mortgages. For example, if a Ginnie Mae MBS issued on Jan. 1 had a pooling date of Dec. 28, the loan must be paid through November in order to be...

The Obama administration is requiring FHA to participate in special program that extends forbearance periods for unemployed homeowners from four to 12 months to help them avoid foreclosure while seeking re-employment. The current unemployment forbearance programs have mandatory periods that are inadequate for most unemployed borrowers, said Department of Housing and Urban Development Secretary Shaun Donovan. Servicers participating in the Making Home Affordable Program may also be directed to extend the minimum forbearance period to 12 months wherever possible under regulatory or investor guidelines, Donovan added. Specifically...

Ginnie Mae issuance fell both on a quarterly and year-to-year basis as new data reflect the continuing slowdown in FHA loan production, according to the Inside Mortgage Finance MBS Database. Ginnie Mae issuers combined for $149.8 billion in MBS issuance at midpoint of 2011, down 16.4 percent from the same period last year, and down 10.5 percent on a quarterly basis as MBS production dropped to $70.7 billion in the second quarter from $79.1 billion in the previous quarter. The top issuers accounted for 94.3 percent of Ginnie Mae’s total MBS output for the first six months. Of that share, 77.4 percent belonged to...

Overlooking investor overlays in mortgage loan underwriting can be quite costly and could expose lenders to regulatory risk and liability. iServe Residential Lending, a retail mortgage banker in San Diego, believes it has found the ultimate solution to its underwriting problems, especially with regards to investor overlays, including FHA, VA, Fannie Mae, Freddie Mac and Ginnie Mae. iServe, which originates conventional, government and jumbo loans, recently implemented PriceMyLoan, an automated underwriting and loan pricing tool from Insight Lending Solutions, the same folks who created TOTAL Scorecard for FHA. “PriceMyLoan is the only system that...

A new Inside Mortgage Finance analysis reveals that the proposed qualified residential mortgage standard drafted earlier this year by federal regulators would affect individual mortgage originators in dramatically different ways. As the regulators acknowledged in their proposed rule, a significant share of Fannie Mae and Freddie Mac loans originated through 2009 would not meet new standards for loan-to-value ratios, borrower credit history, debt-to-income ratio and other factors. Most loans being sold to the government-sponsored enterprises under today’s pristine underwriting and pricing policies also would fail to meet the... [Includes one data chart]

The Department of Housing and Urban Development is working on a proposed regulation that seeks to harmonize existing standards for determining when a housing practice with a discriminatory impact violates the Fair Housing Act. The proposed rule would cover the liability standards in instances in which a racially neutral housing practice has a discriminatory effect. The disparate impact theory has been used in fair housing cases to allege discriminatory activity when the terms of a business policy are neutral toward protected classes but the policy is shown to have greater impact on minorities or other protected groups. There has been debate over...

High-risk mortgages securitized by Fannie Mae and Freddie Mac continued to drag down earnings for the government-sponsored enterprises in the first quarter of 2011, forcing the two GSEs to go deeper into debt to the federal government. Fannie and Freddie lost a combined $13.0 billion on their mortgage-backed security guarantee programs during the first quarter, a significant deterioration from the $6.6 billion the GSEs lost during the previous quarter, according to the Federal Housing Finance Agency’s latest conservatorship report. Since the beginning of 2008 through the first quarter of 2011, Fannie and Freddie have burned through...

The nation’s top mortgage servicers had to submit remedial plans for their foreclosure practices this week as part of their consent agreements with federal banking regulators, after having been granted an extension from the original submission timeline. Some servicers told Inside Mortgage Finance their plans are confidential and couldn’t be released to the public. An official at the Office of the Comptroller of the Currency said there are no plans for the agency to release those plans or to summarize their contents. The affected servicers are...