Lacking sufficient guidance, CitiMortgage improperly filed for 66 partial claims before completing loan modifications and reinstating the loans, according to the Department of Housing and Urban Development inspector general. The finding arose from an IG audit of CitiMortgage’s processing of partial claims under the FHA-Home Affordable Modification Program. The audit was based on the financial institution’s volume of partial claims among lenders in the St. Louis, MO, metropolitan area. FHA-HAMP is a loss mitigation option, which uses a partial insurance claim, combined or separate from a loan modification, to reinstate a mortgage. Under a partial claim, FHA reimburses a lender’s advance of funds on behalf of the borrower in order to reinstate a delinquent mortgage. The IG said CitiMortgage did not have adequate policies and procedures to ensure the FHA-HAMP partial claims, combined with ...
The Department of Veterans Affairs recently clarified policy regarding lender use of credits or interest rates to pay veterans’ costs in VA home loans. Under VA regulations, lenders may charge and a veteran may pay a flat fee not exceeding 1 percent of the loan amount. The VA allows the charge provided it is in lieu of all other charges related to the costs of origination not expressly specified and allowed in the regulations. However, the agency has learned that some lenders are charging veterans interest-rate premiums in exchange for temporarily subsidizing the borrower’s monthly payments. “More precisely, an interest-rate premium is imposed as a charge for a cash advance on a loan principal,” the VA explained. While the agency allows lenders to charge borrowers for allowable costs, which may be made through an interest-rate adjustment, it clearly prohibits charges for impermissible costs, like ...
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