After years of servicing loans for distressed subprime borrowers but avoiding mortgage originations, Ocwen Financial is planning to offer nonprime mortgages. “Nonprime lending is sort of like crabgrass,” William Erbey, Ocwen’s executive chairman, said last week at an investor conference hosted by the firm. “I’ve been around long enough to see it get hit by Roundup and come back through the cracks.” Ocwen jumped into the agency origination market last year with its acquisition of Homeward Residential ...

Fraud among jumbo borrowers is increasing, particularly regarding employment and income, according to industry analysts who say lenders should pay particular attention to fraud on loan characteristics that factor into qualified mortgage requirements and new ability-to-repay standards. “In high-cost markets, people tend to be willing to fudge a little bit on their income,” said Ann Fulmer, a vice president of industry affairs at Interthinx, during a webinar hosted this week by the provider of fraud-mitigation services ...

The end-of-draw period for home-equity lines-of-credit originated 10 years ago isn’t the only concern for banks, according to federal regulators. Fair-lending violations are also a risk in cases where lenders reduced credit limits on HELOCs or suspended the loans due to declines in home prices. Many lenders suspended borrowers’ HELOCs in recent years or reduced credit limits due to significant declines in home prices, according to the Federal Reserve. “The manner in which HELOC accounts ... [Includes one data chart]

Servicers are complying with most of the requirements under the $25 billion national servicing settlement and the Home Affordable Modification Program. Regulators have warned that penalties will be severe if problems persist. The monitor of the national servicing settlement said in a report last week that CitiMortgage failed one of more than 24 metrics tested in the second quarter of 2013. Joseph Smith, the settlement monitor, said the failure regarding whether loans were delinquent ...

Severe decreases in the FHA loan limits in numerous counties across the country have spurred industry demand for the Department of Housing and Urban Development to disclose the methodology and process it used to determine the new loan limits. Although HUD’s announcement of lower FHA loan limits for 2014 had been long expected, mortgage industry participants were caught off guard by the substantial reductions in FHA loan limits caused by the statutory change in how the limits are calculated and by revised median house prices. For 2014, HUD announced that the national ceiling limit for single-family mortgages in high-cost areas would decline to ... [1 chart]

Policy changes implemented since 2009 appear to be having a positive impact on the FHA Mutual Mortgage Insurance Fund, which is still $1.3 billion in the red, but its net worth grew $15 billion over last year’s estimate, according to the latest independent actuarial audit of the FHA fund. The MMI Fund’s economic value improved from negative $16.3 billion last year to negative $1.3 billion. Its capital reserve ratio, which has been a cause of disagreement among lawmakers and industry players, also rose from negative ...

With one week left on Congress’ calendar year, Senate approval of S. 1376, the FHA Solvency Act of 2013, before the end of 2013 is becoming more unlikely, according to lobbyists. The bill is stalled and is unlikely to be brought to the floor any time soon. If the housing sector continues to improve, the government-sponsored enterprises continue to generate profit and the FHA’s newer books of business continue to perform well, passing GSE or FHA reform legislation next year would be an uphill battle, lobbyists said. The Congressional Budget Office estimates that implementing S. 1376 would result in ...

The Department of Housing and Urban Development has released a final rule defining a “qualified mortgage” that is insured by the FHA. The final rule will be effective on Jan. 10, 2014. The HUD rule builds off the QM/Ability-to-Repay rule, which the Consumer Financial Protection Bureau finalized earlier this year. The Dodd-Frank Act requires HUD to propose a QM definition that is aligned with the ability-to-repay criteria set out in the Truth in Lending Act and with the agency’s mission to ...

Lenders will need to order a new appraisal for an FHA-insured real estate-owned property if the current REO appraisal is defective or an adverse condition exists that requires a new assessment of the property, according to the Department of Housing and Urban Development. The requirement is one of several that HUD spelled out recently in Mortgagee Letter 2013-44. The mortgagee letter includes changes to HUD’s policies on the use of an FHA-insured mortgage in the purchase of HUD REO properties and the use of distressed properties in ...

More lenders will be able to make mortgage loans to rural homebuyers due to sweeping changes made by the U.S. Department of Agriculture to its single-family home loan guaranty program. Published in the Dec. 9 Federal Register, the changes are part of a broad program overhaul to strengthen rural housing markets, increase the availability of rural home loans and spur the construction of new homes in rural areas. The changes in the interim final rule will take effect on Sept. 1, 2014, and are likely to draw more prospective homebuyers to the program, the agency said. Commenters have until Jan. 8 to ...