Tax forgiveness enacted by Congress in 2007 for mortgage-debt relief is scheduled to expire at the end of this year. In a similar scenario last year, Congress agreed to a one-year extension of the tax break, but analysts are less certain that Congress will pass another extension in the weeks ahead. The Mortgage Forgiveness Debt Relief Act of 2007 exempts borrowers from federal tax obligations for debt forgiven via principal-reduction loan modifications and short sales. Congress has twice extended the deadline for the expiration of the tax break. “Policymakers have expressed...

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...

The Department of Housing and Urban Development has issued guidance clarifying FHA lenders’ obligation to report voluntarily instances of fraud, misrepresentation and any other material findings in connection with the origination, underwriting and servicing of FHA-insured loans. Compliance experts say the guidance in Mortgagee Letter 2013-41 is a shot across the industry’s bow – a reminder to lenders about existing FHA policy requiring them to self-report fraud and misrepresentation to the FHA. Upon notification, the FHA works with the lender on any potential mitigation actions. In the inaugural issue of Lender Insight in June, the FHA reported ...

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 ...

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 ...

The Department of Housing and Urban Development has scheduled its next note sale on Dec. 17, following last month’s withdrawal of $450 million of nonperforming notes from the table after bids came up short of the reserve price. The Dec. 17 whole-loan sale will include Neighborhood Stabilization Outcome (NSOs) single-family loan pools, which will be offered, as in several previous HUD note sales, through a competitive bidding process. The offering consists of 5,000 defaulted purchase single-family mortgage loans totaling $1 billion in unpaid principal balances with representations and warranties. Currently, the FHA is selling loans in ...

The Department of Veterans Affairs has provided VA lenders a table for determining the appropriate and maximum cost of legal services for each preferred method for foreclosing in judicial and non-judicial states. Specifically, the table concerns the maximum attorney fees the VA will allow in calculating the payment of loan guaranty claims upon termination of the VA loan. It reflects the amounts the VA has determined to be reasonable and customary for all states, following an annual review of amounts allowed by other government-related home loan programs. Every year, the VA ...

Ginnie Mae home mortgage debt outstanding fell by a whisper in the third quarter of 2013 while FHA servicers reported a slight drop in overall delinquencies and an uptick in the foreclosure rate, according to Inside FHA Lending’s analysis of government-backed servicing data. As of Sept. 30, Ginnie Mae’s single-family servicing was down 0.2 percent from the previous quarter but was up 4.1 percent from the same period last year. Ginnie servicers ended the third quarter with $1.35 trillion in servicing outstanding. Although banks continued to dominate Ginnie servicing, the agency has been concerned with the ... [2 charts]