Earlier this month, the CFPB put out an updated small entity compliance guide for the ability-to-repay/qualified mortgage rule, incorporating clarifications and amendments to the rules issued on May 29, 2013, and July 10, 2013. The updated guide includes a handful of new sections, one of which goes into some detail about the exemptions that were added by the June 2013 concurrent final rule for certain creditors and loan programs, such as designated community development organizations, certain nonprofit organizations, and...
The CFPB’s ability-to-repay rule and its qualified mortgage standard are getting closer every day, and best practices may provide the surest path to compliance. First off, if you haven’t started, start now. “There’s a lot to do, there’s a lot to know, and there’s a lot to sort out. So, go ahead and get started. It’s already August, and January will be here before we know it,” Ginger Moore, the compliance officer at PrimeLending, a top-25 mortgage originator based in Dallas, TX, told participants during a recent Inside Mortgage...
Tammy Butler, the director of fair lending and compliance for Optimal Blue, a leading pricing engine, said she’s been hearing from one attorney and industry consultant after another that the time of mortgage lenders naming their fees just to re‐name profit is not going to go over well with the CFPB. “In fact, those who have been through the exams or been fined have learned the hard way that complete transparency to the consumer is a must,” Butler said.For instance, Butler has heard some lenders plan on lumping a...
FHA lenders have gradually stretched to originate loans for borrowers with more modest credit scores in recent quarters, although these borrowers typically are better positioned to keep up with their payments, according to an Inside FHA Lending analysis of data released by the agency. The average credit score for single-family loans endorsed in the second quarter of 2013 was 693 – the lowest such average in nearly four years. This is partly the result of a shift toward more purchase-money mortgages, which generally have ... [1 chart]
Sen. Elizabeth Warren, D-MA, is asking the Department of Justice to explain why it failed to get “adequate” compensation from major mortgage servicers for fraud committed against the FHA. In an Aug. 21 letter to U.S. Attorney General Eric Holder, Warren raised concerns about the $225 million paid by five servicers last year to obtain releases from False Claims Act liability stemming from fraudulent mortgage insurance claims the servicers submitted to FHA and other agencies from 2008 to 2010. The FHA’s woeful financial condition led to legislative reform efforts, including the ...
The FHA is easing the waiting period and eligibility criteria for certain borrowers with previous bankruptcies, foreclosures, deeds-in-lieu of foreclosure and short sales who would like to purchase a home again. According to Mortgagee Letter 2013-26, borrowers who may be otherwise ineligible for an FHA-insured mortgage due to the agency’s required waiting period may now be able to apply for a new purchase mortgage loan because of the shortened waiting period and if they meet the criteria. This latest initiative to help borrowers whose credit had been impaired by the financial crisis is called ...
The reverse mortgage lending industry is working with the Department of Housing and Urban Development to implement two policy changes that would strengthen the FHA’s Home Equity Conversion Mortgage program. One policy change involves the development of a new HECM option that combines features of the fixed-rate, full-draw HECM Standard and the HECM Saver, according to Peter Bell, president and chief executive officer of the National Reverse Mortgage Lenders Association. HUD eliminated the standard 30-year, fixed-rate HECM in April because ...
Lenders must correct erroneous disclosures concerning mortgage insurance premiums (MIP) before submitting loans for FHA insurance, according to new FHA guidance. In an update to Mortgagee Letter 2013-04, FHA Commissioner Carol Galante said some mortgages originated since the termination of the MIP cancellation policy earlier this year still contain incorrect MIP-related disclosures. Under the revised policy, MIPs are no longer cancellable when the current loan-to-value ratio reaches 78 percent. Rather, MIP payments must be made over the entire life of the FHA-insured loan. The change is aimed at increasing ...
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