The House Financial Services Committee this week reported out a legislative package of housing finance system reforms, including measures designed to reduce FHA’s role in the mortgage marketplace, strengthen lender oversight and avoid a potential taxpayer bailout. The bill, Protecting American Taxpayers and Homeowners Act (H.R. 2767), passed by a vote of 30 to 27 despite mixed responses from industry experts, academics, financial trade associations and consumer advocates. Critics called for changes. Offered by Rep. Jeb Hensarling, R-TX, chairman of the Financial Services Committee, the bill proposes ...

FHA officials, industry groups and consumer advocates appear to be leaning more towards a Senate FHA reform bill that is moderate and far less ambitious than legislation approved by the House Financial Services Committee this week. Introduced by Senate Banking Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Mike Crapo, R-ID, the FHA Solvency Act of 2013 “focuses on the right issues, not like the House bill, which tries to dramatically alter the program and affect borrower eligibility,” said an industry observer. Testifying as the sole witness at a Senate Banking Committee hearing on FHA solvency this week, FHA Commissioner Carol Galante said ...

A former FHA commissioner said he supports a proposal in the Protecting American Taxpayers and Homeowners Act (PATH Act) to spin off the FHA from the Department of Housing and Urban Development as an independent government-owned corporation. Brian Montgomery, who was assistant secretary for housing and head of the FHA during the Bush administration, said the separation, if enacted, would transfer authority, resources and personnel from HUD to the FHA to manage the insurance fund. “This is something I have advocated both during and after my more than four-year tenure as FHA commissioner,” said Montgomery, who ...

The FHA is trailing Fannie Mae, Freddie Mac and the Department of Veterans Affairs in the disposition of real estate-owned properties, according to a new study from the Government Accountability Office. The study found that FHA’s net proceeds from REO sales from January 2007 through June 2012 were about 4 to 6 percentage points lower than Fannie’s and Freddie’s returns. The differences in combined returns between FHA and the government-sponsored enterprises persisted at an estimated 2 to 5 percent even after controlling for differences in value, location, market conditions and other relevant factors. In addition, the FHA took about ...

The Department of Housing and Urban Development has updated its lender requirements for preforeclosure sale (short sale) and deed-in-lieu of foreclosure for implementation on Oct. 1 this year. The short sale or deed-in-lieu of foreclosure are the last options available to a distressed borrower if home-retention options, such as special forbearance, loan modification, partial claim, and FHA’s Home Affordable Modification Program are not successful. A short sale allows the borrower to avoid foreclosure by selling the home for less than the loan balance. The lender recovers the remainder from ...

Ginnie Mae servicers continued to experience modest increases in servicing outstanding while FHA servicers reported a slight increase in 30-to-60 day delinquencies, according to Inside FHA Lending’s analysis of the agencies’ servicing portfolios as of midyear 2013. As of June 30, Ginnie Mae’s total servicing outstanding was $1.4 trillion, an increase of 6.6 percent from last year and up 1.8 percent from the first quarter, reflecting improvements in government-backed loan originations due to a slowly recovering economy. Ginnie Mae servicing volume has been ... [2 charts]

HUD Hires Expert to Improve FHA Operations, Risk Management. The Department of Housing and Urban Development has announced Biniam Gebre as the new general deputy assistant secretary for the Office of Housing. He will be joining the FHA leadership team. Before joining HUD, Gebre served as a principal at global management consulting firm McKinsey & Co., where he led a company-wide, public-sector initiative to develop insights, tools and approaches for building capabilities in ...

Mortgage production volume remained fairly steady in the second quarter as a growing purchase-mortgage market helped offset a weakening in refinance lending, according to a new ranking and analysis by Inside Mortgage Finance. Mortgage lenders originated an estimated $495.0 billion of home loans during the second quarter of 2013, down just 1.0 percent from the first three months of the year. That pushed year-to-date production volume to just shy of $1 trillion, and put the market 14.4 percent ahead of the pace set during the first six months of 2012. It figures...[Includes two data charts]

FHA Commissioner Carol Galante this week expressed support for bipartisan reform legislation in the Senate that would provide the agency with tools it had requested to strengthen its finances and operation. Further discussion and clarification, however, may be needed with regard to certain provisions as well as issues that were not addressed in the draft bill, she said. Galante appeared as the sole witness at a hearing called by the Senate Committee on Banking, Housing and Urban Affairs to consider a draft of the FHA Solvency Act of 2013. The Senate bill is significantly narrower in scope than the FHA provisions included in a broader mortgage finance reform bill approved by the House Financial Services Committee this week. The Senate bill would help...

The Federal Housing Finance Agency should coordinate with the FHA to establish a formal working group to permit both agencies to raise guaranty fees and insurance premiums as a way to reduce the federal government’s role in the mortgage-guaranty business, the FHFA’s official watchdog has recommended. The FHFA firmly disagrees. A new report by the FHFA’s Office of Inspector General this week noted “potential benefits” that the FHFA may achieve by establishing a “more formalized working arrangement” with the FHA and “jointly assessing the key issues around their pricing initiatives.” The Treasury Department made...