Two crucial legal events occurred in 2013 that might have signaled the extinction of the narrow window through which deficiency judgments were possible on residential property in California. Attorneys at Nossaman LLP said the recent passage of California Senate Bill 426 and the conforming decision by the California Court of Appeal, Fourth Appellate District, have made clear that the state’s anti-deficiency statutes not only protect home loan borrowers from judgments or collections but also trump any separate lender/borrower agreement regarding the payment of any deficiency following a foreclosure or a short sale. A deficiency judgment is...

Mortgage credit availability, loan quality and lenders’ ability to foreclose on distressed properties remain big issues as lenders try to adjust to a more difficult, more complex regulatory environment, according to industry participants in a symposium hosted last week by the Urban Institute. While private capital is available, potential investors are wary of investing in the new environment of qualified and non-qualified mortgages and on mortgage companies and ventures that have drawn much regulatory scrutiny, panelists said. The average credit scores on a conventional-conforming purchase loan has increased...

Originations of non-agency jumbo mortgages in the third quarter increased by 2.7 percent compared with the second quarter of 2013 while total originations fell by 18.6 percent, according to a new ranking by affiliated publication Inside Mortgage Finance. An estimated $77.0 billion in non-agency jumbos were originated in the third quarter, a level of originations not seen since the second quarter of 2007. The jumbo market accounted for 16.7 percent of total mortgage ... [Includes one data chart]

Non-agency lenders that plan to originate qualified mortgages suggest that one of their top concerns is meeting the debt-to-income ratio requirements. Only non-agency mortgages will have to have a back-end DTI ratio of 43 percent or below to be classified as qualified mortgages under the Consumer Financial Protection Bureau rule taking effect Jan 10. Average DTI ratios on mortgages in jumbo mortgage-backed securities are well below that limit – 34.0 percent on the latest deal from Redwood Trust ...

The Consumer Financial Protection Bureau released a final rule last week regarding long-running efforts to integrate mortgage-disclosure documents. The new “Know Before You Owe” forms will be required beginning Aug. 1, 2015. Lenders will be required to give potential borrowers a loan-estimate form within three business days after receiving a complete loan application. The form replaces the early Truth in Lending Act statement and the Good Faith Estimate required by the ... [Includes three briefs]

For the first time in five years, private mortgage insurers surpassed all government-insurance programs in the third quarter of 2013 as the largest provider of primary MI coverage in the mortgage market, according to the latest analysis from Inside FHA Lending affiliate Inside Mortgage Finance. The private MI industry showed that it has rebounded from the post-financial crisis by reporting $59.03 billion in new insurance written during the third quarter, down 3.2 percent from the previous quarter but clearly better than the FHA and VA production numbers for the same period. Data showed the two government agencies posting ...

The Department of Housing and Urban Development is considering an industry request to delay the implementation of a proposal requiring FHA lenders to perform a financial assessment of all prospective borrowers of Home Equity Conversion Mortgage loans. In remarks during the National Reverse Mortgage Lenders Association’s recent annual meeting in New Orleans, FHA Commissioner Carol Galante said HUD is still studying the comments and will need more time to implement the rule. In September, the FHA published a notice in the Federal Register seeking comment on the financial assessment proposal. The proposal is currently in ...

With the FHA high-cost loan limit set to decline from its current statutory level of $729,750 to $625,500, the same level as Fannie Mae and Freddie Mac, nobody appears to be pushing for an extension. The temporary maximum loan limit for FHA is set to expire on Dec. 31, unless Congress votes for another extension, which appears unlikely, according to mortgage industry analysts. Neither lawmakers nor the White House have shown support for maintaining the current FHA high-cost loan ceiling. Although no one has conceded that the FHA lending ceiling will go down for certain areas, there has been no effort to ...

Many condominium properties continue to struggle to meet stringent FHA requirements while many condo projects are being denied approval despite the easing of FHA approval requirements in recent years. Panelists at a recent National Association of Realtors conference in New Orleans said condos are often the most affordable homeownership option for first-time homebuyers, single borrowers and senior citizens, especially when purchased with FHA financing. Condominium loans are among the strongest performing loans in the FHA portfolio, they added. However, FHA data show that ...

Imprecise rules, triple-damage claims and increasingly political enforcement of agency rules could make it more dangerous for lenders to do business with the FHA than to originate non-qualified mortgage loans, according to a top compliance expert. Larry Platt, a partner with K&L Gates, said that when lenders originate and underwrite FHA loans they are subjected to rules that are unevenly applied and politically enforced. It is a prescription for a financial bloodbath, especially if you add to it the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act, he added. Throwing the Department of Justice into the mix ...