The Department of Housing and Urban Development has released a final rule defining a “qualified mortgage” that is insured by the FHA. The final rule will be effective on Jan. 10, 2014. The HUD rule builds off the QM/Ability-to-Repay rule, which the Consumer Financial Protection Bureau finalized earlier this year. The Dodd-Frank Act requires HUD to propose a QM definition that is aligned with the ability-to-repay criteria set out in the Truth in Lending Act and with the agency’s mission to ...

Lenders will need to order a new appraisal for an FHA-insured real estate-owned property if the current REO appraisal is defective or an adverse condition exists that requires a new assessment of the property, according to the Department of Housing and Urban Development. The requirement is one of several that HUD spelled out recently in Mortgagee Letter 2013-44. The mortgagee letter includes changes to HUD’s policies on the use of an FHA-insured mortgage in the purchase of HUD REO properties and the use of distressed properties in ...

With Rep. Mel Watt, D-NC, expected to be officially installed as the permanent director of the Federal Housing Finance Agency as soon as next week, the change could slow the use of risk-sharing deals at the government-sponsored enterprises and progress on the common securitization platform. Of particular concern to investors in the risk-sharing deals is the role mortgage insurance companies play in the transactions. According to industry observers, current FHFA Acting Director Edward DeMarco would like...

The Federal Housing Finance Agency is still weighing final risk-to-capital rules for mortgage insurance firms that conduct business with Fannie Mae and Freddie Mac, with a target release date of mid-December, MI executives told Inside The GSEs. MI sources with knowledge of the situation said the FHFA will likely issue a risk-to-capital minimum of 18:1 compared to the current standard of 25:1. Also, there is talk of a phase-in period and “bi-furcation” for legacy versus new companies.

Lender-paid mortgage insurance has garnered renewed interest lately from mortgage lenders as an alternative to FHA-insured loans, whose increased costs have shut out many cash-strapped borrowers. David Williams, vice president of RightStart Mortgage in Pasadena, CA, said his firm has been getting a lot of requests from wholesale brokers for conventional conforming loans with LPMI because the FHA product has lost its competitive edge. With borrower-paid private MI, the homeowner pays a monthly ...

The mortgage insurance industry is anxiously awaiting new risk-to-capital rules from the Federal Housing Finance Agency, hoping that the regulator will go easy on an industry that is beginning to recover from a years-long debacle and reclaim market share from the FHA. Private MI executives close to the matter told Inside Mortgage Finance that the FHFA will likely issue a minimum risk-to-capital ratio of 18:1, a tougher standard than the current 25:1, but there is also talk of a phase-in period and “bifurcation” for legacy versus new companies. According to its securities filings, National MI, a new MI, has agreed...

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 ...

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 ...