Lenders are cautiously expanding their guidelines on FHA lending by reducing its minimum credit score to below 580 to qualify borrowers. Carrington Mortgage Servicers this week joined a cadre of some 80 FHA lenders that have lowered their minimum FICO scores and eased their overlays to better focus on borrowers, particularly those below the 640 FICO range. The Santa Ana, CA-based lender is doing it not only for its FHA business but also for its VA and USDA loan programs. Carrington lowered its minimum FICO score to 550 for FHA loans, showing more aggressiveness than Wells Fargo, which moved its own FHA FICO floor to 600 from 640 at the beginning of February for purchase mortgages originated through its retail channel. The FHA currently requires a minimum credit score of 580 for most borrowers for 3.5 percent downpayment loans. Borrowers below 580 undergo more stringent manual underwriting and ...

Approved lenders should review thoroughly all information before submitting their mortgage insurance certificates (MIC) to FHA because there have been too many mistakes over the past year, the agency warned. In the latest issue of Lender Insight, the FHA said lender requests to correct information on MICs have been more frequent than expected. Of the MIC corrections the FHA has reviewed, 81.5 percent stemmed from the agency’s Lender Insurance program. An MIC is a document issued by the Department of Housing and Urban Development as proof that FHA has insured a mortgage loan, and that a contract of mortgage insurance exists between the lender and HUD/FHA that incorporates agency regulations. A loan is considered as having no FHA insurance if it does not receive an MIC, regardless of how it is closed. The FHA made clear that it is the lender’s responsibility to ensure that information ...

A mortgagee that no longer wishes to participate in FHA programs must submit a letter requesting voluntary withdrawal of its FHA approval, signed by a senior executive of the company, according to guidance published in the March 2014 issue of FHA’s Lender Insight. Lenders may not simply let their FHA approval expire by failing to complete FHA’s required annual recertification process, the guidance warned. “Failing to recertify will result in a referral to the Mortgagee Review Board for administrative action,” it said. The board’s withdrawal of a lender’s FHA approval could have an adverse impact on the lender should it reapply for FHA approval in the future. A lender requesting voluntary withdrawal of FHA approval is subject to a review before the agency signs off on the request. The request would be denied if the lender has an MRB administrative action pending against it or if it is behind on its mortgage insurance premium payments. A lender whose FHA approval has been withdrawn may ...

Old Republic Cancels Recapitalization Plan for its Mortgage Guaranty Subsidiaries. Old Republic International Corp. has withdrawn plans to secure capital market funding for its beleaguered consumer credit indemnity and mortgage guaranty subsidiaries for lack of investor interest. Both business segments are housed within the Republic Financial Indemnity Group and have been in a run-off mode since 2008 and 2011, respectively. ORI Chairman/CEO Al Zucaro said holding company funds would be used to shore up the regulatory capital of the mortgage guaranty subsidiaries. The completion of the recapitalization plan hinged on regulatory approvals in North Carolina, Florida and Vermont, as well as from the government-sponsored enterprises and the Federal Housing Finance Agency. ORI said that with all the complications, it could not be certain of getting the necessary approvals. A primary investor concern is that new capital would be used to pay for RMIC’s legacy problems, and investors want their money to ...

The top three HEL lenders in the market – Wells Fargo, Bank of America and Chase – originated a combined $17.8 billion in home-equity loans last year, but they still saw a $32.1 billion decline in their total holdings of HELOCs and closed-end seconds.

Home-equity lending increased sharply last year, hitting its highest level in new originations since 2009, according to a new Inside Mortgage Finance analysis and ranking. Lenders originated an estimated $60.0 billion in home-equity lines of credit and closed-end second mortgages in 2013, up 36.4 percent from the previous year. That still represented only 3.2 percent of total residential mortgage production, but it was the only sector other than jumbo to show a gain from 2012 levels. Despite the improved home-equity originations, the supply of home-equity debt in the market continued...[Includes three data charts]

Speculation continues to grow concerning which nonbanks have looked at buying PHH Mortgage. Our sources caution that “looking” doesn’t mean a deal is close. PHH is based in Cherry Hill, NJ, not too far from Philadelphia. One advisor suggested we look at who has been flying in from points south.

The extended time on market for short sales does not appear to be due to a lack of demand, as short sales completed in February averaged 3.1 offers, based on a three-month moving average.

In a recent interview with IMFnews, Carrington Executive Vice President Ray Brousseau stressed that the privately held nonbank will carefully and manually underwrite the loans, which will be sourced through loan brokers.

Addressing CFPB officials at the American Bankers Association’s government relations conference in Washington, one community banker from Oklahoma reported survey findings that one-third of respondents in the state are no longer offering residential mortgages.