The Department of Housing and Urban Development has updated the timelines and methods servicers must follow for communicating with borrowers in default. Mortgagee Letter 2013-39 also addresses policies for engaging borrowers early in their delinquencies, specialized collection techniques for early-payment defaults or re-default, and FHA’s expectation for servicers to have written processes and procedures to follow for every stage of delinquency up to collection. Communicating early with borrowers who are late in their mortgage payments is essential in ensuring that delinquency is properly addressed, the agency said. HUD’s latest guidance provides a “collection-communication timeline,” which is a series of sequential steps a servicer can follow in dealing with a delinquent borrower. These steps would help the servicer assess a borrower’s circumstances, intentions and financial condition as well as determine an appropriate response.

Ginnie Mae issuers reported a 14.0 percent drop in mortgage-backed securities issuances in the third quarter from the previous quarter as refinance activity declined further and home-purchase lending slowed during the period, according to an Inside FHA Lending analysis of Ginnie Mae data. Despite the quarter-over-quarter drop, Ginnie production rose 11.2 percent in the first nine months of 2013. Volume over this period totaled $313.8 million, of which 60.3 percent were FHA loans, 33.9 percent were VA, and 5.2 percent were rural housing loans. Ginnie MBS issuance dropped gradually ... [2 charts]

Recapitalization of RMIC Will Pave the Way for a Return to MI Market. Old Republic International (ORI) is planning to recapitalize its mortgage guaranty subsidiary, RMIC Companies, Inc., which could resume underwriting in early 2014. Old Republic plans to contribute up to $50 million of new capital and raise additional funds, which would allow RMIC and its subsidiaries to fully support existing policies, pay off deferred claim obligations, exit state supervision, and resume underwriting new business early next year. The cash infusion would require ...

During the third quarter of 2013, for the first time since the middle of 2008, private mortgage insurers edged past the government-insurance programs to become the biggest source of primary MI coverage in the market, according to a new ranking and analysis by Inside Mortgage Finance. Private MIs provided primary coverage on $59.03 billion of newly originated mortgages during the third quarter. That was down 3.2 percent from the second quarter, but the FHA and VA programs posted even bigger declines of 17.5 percent and 10.6 percent, respectively. That gave the private MI sector a 39.4 percent share of new primary coverage, its highest level since the second quarter of 2008. The last time private MIs did...[Includes three data charts]

Old Republic International is planning to recapitalize its mortgage guaranty subsidiary, RMIC Companies, Inc., allowing the company to resume underwriting in early 2014, adding to the flow of new capital coming into the private mortgage insurance business. It is unclear how much money is needed to recapitalize RMIC, which is currently in a run-off mode, but Old Republic plans to contribute up to $50 million and raise additional funds in the capital markets to resurrect its MI subsidiaries. The company did not reply to requests for comment. Material increases in mortgage insurance claims and loss payments that began in 2007 gradually depleted...

Servicers working for Fannie Mae and Freddie Mac are now prohibited from being reimbursed altogether for expenses associated with lender-placed insurance practices, the Federal Housing Finance Agency announced this week. The FHFA’s action follows a notice the agency published in March calling for seller/servicers to be prohibited from accepting sales commissions or fees related to lender-placed or force-placed insurance where a conflict exists between them and the insurance providers and their affiliates.

A little-known case about disparate impact in housing and lending discrimination now before the U.S. District Court for the District of Columbia will likely be the stage for the next legal debate on the question whether disparate-impact claims are permissible under the Fair Housing Act. It could also decide whether the Consumer Financial Protection Bureau can apply disparate impact in its examinations and investigations. With the Mount Holly, NJ, town council reportedly poised to vote on a proposed settlement, the U.S. Supreme Court, for the second time in two years, would be deprived of the opportunity to decide the fate of disparate impact. Reports indicate the town council may have a decision by Nov. 7 and a settlement could end the case, Mount Holly v. Mount Holly Garden Citizens in Action, Inc., before scheduled oral arguments on Dec. 4. The Supreme Court was poised...

While the Department of Housing and Urban Development’s proposed definition of a “qualified mortgage” is superior to the treatment FHA-insured mortgage loans would receive under the Consumer Financial Protection Bureau’s QM rule, it would add significant regulatory burden and costs and increase litigation risks, warned mortgage lenders. HUD’s proposed distinction between safe harbor and rebuttable presumption loans is unnecessary for FHA loans because they already meet QM requirements, according to industry trade groups. Rebuttable presumption would only impose more costs and reduce credit availability for borrowers who need FHA credit the most and likely create more confusion, lenders said. The inclusion of the FHA annual mortgage insurance premium (MIP) in the annual percentage calculation under the CFPB rule would cause...

Financial industry trade groups want all Title II forward mortgage loans that meet FHA requirements to be treated as “safe harbor” qualified mortgage loans instead of being lumped in either of two QM buckets as proposed by the Department of Housing and Urban Development. Commenting on HUD’s proposed definition of a “qualified mortgage,” the industry groups – Mortgage Bankers Association, Consumer Bankers Association, Consumer Mortgage Coalition, American Bankers Association, and the Independent Community Bankers of America – urged HUD to ...

Proposed options for adjusting FHA products, market presence and powers could have a direct effect on the availability of credit for borrowers and on the FHA’s ability to respond to changing market conditions, according to a new study by the Government Accountability Office. In certain instances, the recommended changes would entail tradeoffs – a downside for every upside. Industry participants, researchers and the FHA have suggested these options to improve FHA’s long-term viability or for shrinking the agency’s footprint in the mortgage market. The GAO undertook the study to determine ...