The Consumer Financial Protection Bureau has provided some potentially significant insight into some of the positions it may end up taking on the rules that will govern the final integrated mortgage disclosure it’s developing. The disclosures were released as part of the CFPB’s announcement that it is putting together a Small Business Review Panel under the provisions of the Small Business Regulatory Enforcement Fairness Act. The panel is part of the broader initiative to integrate the mortgage disclosure forms that borrowers receive when applying for and closing on a loan...

Bank of America may be prepared to pony up $8.5 billion to settle litigation with residential mortgage-backed securities investors, but it’s not conceding a point in the face of government accusations that it discriminated against mortgage borrowers with disabilities. Last week, the Department of Housing and Urban Development accused the bank of imposing unnecessary and burdensome requirements on borrowers who depended on disability income to qualify for their mortgages in violation of the Fair Lending Act. The bank also allegedly required some disabled borrowers to provide physician...

Citigroup, Inc. was recently stung with a $158.3 million settlement and compelled to admit culpability to settle with the Justice Department and the Department of Housing and Urban Development after a former CitiMortgage employee raised concerns about the lender’s allegedly reckless mortgage lending practices. The former employee, Sherry Hunt, filed a private whistleblower lawsuit last August under the False Claims Act, alleging that Citi subverted FHA to push through poorly underwritten mortgages for a higher profit margin. Two weeks ago, the U.S. government joined the suit, seeking...

The Supreme Court of the United States heard oral arguments last month in Freeman v. Quicken Loans (Case 10-1042), an important fee-splitting case under the Real Estate Settlement Procedures Act, and the initial consensus of leading industry attorneys following the case is that the high court appears to be favorably inclined towards Quicken’s side. “If questions raised by the justices are any indication of where the court is headed, I’d say the scales are tipped in the direction of a favorable decision for Quicken Loans,” said attorney Phillip Schulman, in the Washington, DC, office...

Originations of non-agency jumbo mortgages increased 32.1 percent in the fourth quarter, aided by a modest reduction in Fannie Mae and Freddie Mac loan limits in high-cost markets and a surge in refinance lending. An estimated $37.0 billion in jumbos were originated in the fourth quarter, lifting annual production to $118.0 billion in 2011, a 13.5 percent increase from the previous year. It was the jumbo market’s best year since 2007 for origination volume, and jumbos accounted for 8.7 percent of total mortgage lending ... [Includes one data chart]

Increased mortgage insurance premiums combined with hefty penalties assessed on lenders will generate additional revenue that may keep the FHA mortgage insurance program afloat. Nevertheless, the price for keeping the fund solvent will make fewer borrowers qualified for an FHA loan, according to lenders. Lenders say the upfront mortgage insurance premium increase will have little effect on borrowers because the charge can be rolled into the loan amount. Changes to the annual MIP, however, will decrease FHA business in general because the cost of the annual MIP will have to be included in the ...

The Department of Housing and Urban Development is seeking comment on a revised proposal to reduce the amount of closing costs a seller may pay on behalf of a borrower purchasing a home with an FHA-insured mortgage loan. The seller-concession reduction proposal is part of a series of steps that HUD has undertaken to restore the FHA Mutual Mortgage Insurance Fund’s capital reserve account while preserving the FHA as a source of affordable mortgage credit for low and moderate income and first-time homebuyers. Current HUD policy allows up to 6-percent seller concessions. Payments under the cap are considered ...

Failure by a sponsored third-party originator or by an FHA-approved mortgagee acting as a sponsored TPO to comply with FHA requirements will result in drastic administrative action that may include loss of FHA approval and civil penalties, the Department of Housing and Urban Development warned. The warning came as HUD clarified the requirements for the origination, closing and submission of mortgage loans for FHA insurance endorsement through sponsored third-party originators. The agency is clamping down on bad business practices that lead to high delinquency and claims rates, which ultimately weaken ...

The Department of Housing and Urban Development announced it will waive for another year the requirement for small lenders to submit annual audited financial statements to the Department of Housing and Urban Development when seeking FHA approval or renewal. The waiver relates to requirements spelled out in a mortgagee letter 2010 to strengthen risk management in the FHA single-family mortgage insurance program. Issued in June 2010, Mortgagee Letter 2010-20 implemented reforms that increased the net-worth requirements for FHA-approved mortgagees, eliminated FHA approval of loan correspondents and changed ...

The Department of Housing and Urban Development has updated the FHA TOTAL Mortgage Scorecard User Guide to reflect current FHA guidance on derogatory or delinquent credit and on borrower employment history. A lender is required to downgrade a mortgage loan application to “refer” and manually underwrite the loan for cash-out refinance transactions if any mortgage trade line, including mortgage line-of-credit payments, show any mortgage delinquencies within the most recent 12 months or if it shows less than six months of payments on the existing mortgage. The same guidance applies if the loan is ...