The FHA was still able to endorse single-family mortgage loans during the first week of the partial government shutdown, although no FHA staff were available to underwrite and approve loans. A significant delay in the processing of new FHA insurance applications might have occurred this week because only 64 employees are still at work in HUD’s Office of Housing, which includes the FHA. HUD said it might need more essential employees per day, on an intermittent basis, to perform key activities. The department expects these calls for reinforcement to ...

The Inspector General of the Department of Housing and Urban Development urged HUD to strengthen its oversight of prohibited restrictive covenants (PRC) in FHA-insured mortgages and to stop the illegal practice. It is difficult to gauge just how serious is the problem nationwide because HUD did not specifically look for prohibited restrictive covenants during loan reviews and did not track such violations, said Tanya Schultze, HUD regional inspector general for audit for the Los Angeles region. However, audits by Schultze’s team did uncover six FHA lenders that allowed ...

Wells Fargo claimed partial victory after a Manhattan federal district court judge dismissed certain claims against it in a government lawsuit alleging the bank lied about the quality of defaulted mortgages insured by the FHA. District Court Judge Jesse Furman ruled that legal injury claims based on events that happened prior to June 2009 were time-barred and that the government had waited too long to file a lawsuit. He also threw out claims of negligence and unjust enrichment. On the other hand, Furman let stand claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which the ...

HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

Redwood Trust and Credit Suisse, the jumbo MBS sector’s two biggest players, slowed their securities issuance during the third quarter.

The Mortgage Bankers Association and other industry trade groups fear that the shutdown will have a growing impact on the housing market, including FHA endorsements.

However, if Fannie Mae determines through established delivery or quality-control review processes that any loan has ineligible term or amortization provisions, it will be subject to repurchase.

The general consensus is that despite their conservatorship status, the GSEs are still considered private companies, even though Treasury controls their senior preferred shares.

The Department of Housing and Urban Development has issued a proposed rule establishing standards that FHA loans would have to meet to be considered “qualified mortgages,” varying slightly from the QM rule approved earlier this year by the Consumer Financial Protection Bureau. According to HUD, the proposal is aligned with the ability-to-repay criteria set out in the Dodd-Frank Act and the CFPB’s QM rule. The key difference is in the pricing threshold that puts QM loans in the safe harbor, rather than the less desirable rebuttable assumption category that exposes lenders to more legal risk. Under the CFPB rule, safe harbor QM loans must have...

The home-equity market has been down so long it doesn’t take much to make it look like it’s looking up. Firming house prices in 2013 may be leading to a revival. The outstanding balance of home-equity loans, including home-equity lines of credit and closed-end second mortgages, continued to decline during the second quarter, dropping another 2.3 percent, according to the Federal Reserve. Since the end of 2007, the home-equity market has shrunk by 35.5 percent. Depository institutions hold...[Includes three data charts]