A regional inspector general report found “material underwriting deficiencies” in a clump of FHA loans originated by Countrywide Financial, and though Bank of America may end up paying about $1 million to settle the charges, the case could be a harbinger of bigger losses to come. The Department of Housing and Urban Development inspector general for five upper midwest states singled out Countrywide for an audit because the company’s average default-to-claim rate was high for the region. The IG audited just 14 FHA loans, but half of them contained material underwriting deficiencies, mostly failing to...
Total capital backing the FHA single-family program rose modestly during the second quarter, according to a new report from the Department of Housing and Urban Development, while the demographics of borrowers served by FHA tilted slightly toward those with lower credit scores. For the first time since 2008, the share of new FHA loans for borrowers with scores below 680 edged higher. HUD attributed the change to a drop in lending to high-score borrowers and an increase in purchase-money lending for borrowers with scores below 680. Average FICO scores in new FHA business began to climb in the third quarter of 2008 (662) and...
The strongest mortgage insurers benefit the most if the Federal Housing Finance Agency follows through on recent comments that it is considering expanding use of MI as one of a number of potential risk sharing strategies for the government-sponsored enterprises, according to a recent report by Moody’s Investors Service. Moody’s noted that uncertainty about the role of private MI in a post-GSE environment “remains a key credit concern” for the industry. “If the FHFA opted for an increase in mortgage insurance as a way to share risk, even as the GSE mortgage universe shrinks, the action would likely to be a...
Two strongly pro-consumer mortgage lending initiatives underway at the Consumer Financial Protection Bureau are nearing completion, top agency officials told industry representatives recently. One project nearing the finish line is the ability-to-repay rulemaking the bureau inherited earlier this year from the Federal Reserve Board. The final rule will be unveiled “early next year in order to provide clarity to the market as quickly as we can, without sacrificing the quality of our analysis,” said Raj Date, special advisor to the Secretary of the Treasury for the CFPB, in comments before attendees at a conference sponsored by SourceMedia. “I’m a real believer in...
Debt-for-equity, a strategy commonly used in buyout deals among companies in Europe, is being floated as an idea to help underwater U.S. homeowners and the lenders avoid taking bigger losses if the mortgage ends up going to foreclosure. In a debt-for-equity arrangement, the borrower would refinance an underwater mortgage for a new loan that reflects the house’s current market value as an alternative to going to foreclosure. In return for reducing the loan amount, the lender takes an equity position that allows it to share in any future house price appreciation.Proponents say...
The Federal Housing Finance Agency is looking for public input on two separate proposals that could change the way Fannie Mae and Freddie Mac servicers are compensated.This week, the FHFA issued a discussion paper detailing proposed alternatives for a GSE servicing compensation model that will benefit servicers, consumers and investors.
Between 2006 and early 2011, Fannie Mae’s regulator repeatedly tolerated delays by the GSE in establishing an acceptable and effective operational risk-management program despite repeated calls to do so, according to a report by the Federal Housing Finance Agency Office of Inspector General.
A report issued this week by the Federal Housing Finance Agency Office of Inspector General found preventable flaws in the FHFA’s oversight and approval of a $1.35 billion settlement between Bank of America and Freddie Mac in December 2010 which resolved most past, present and future repurchase demands on 787,000 loans.Fannie Mae made its own similar repurchase settlement with BofA for $1.52 billion that same month.The FHFA-OIG evaluation found the agreement was based on Freddie’s flawed review process and that a “lack of independent action by FHFA senior management may have led and could lead to significant losses” by the GSE.
The average fee charged by Fannie Mae and Freddie Mac to lenders rose last year, while payments collected on the Home Affordable Refinance Program contributed to the GSEs’ bottom line, according to the Federal Housing Finance Agency.The third-annual FHFA study found that the average total guarantee fee charged by Fannie and Freddie on single-family mortgages was 26 basis points in 2010, compared to 22 bps in 2009. When HARP loans were excluded, the FHFA said the total average g-fee increased to 25 bps in 2010 from 21 bps in 2009.
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