Lawmakers on Capitol Hill this week mulled over how to strengthen the shaky financial condition of the FHA single-family insurance fund and reduce the risk to taxpayers of another government bailout, while shrinking the agency’s market footprint without disrupting the market’s fragile recovery. Partisan differences were immediately on display, predictably, as Republicans slammed the agency while Democrats defended it. “If the FHA was...

The Department of Housing and Urban Development this week announced the latest changes designed to bolster the solvency of the FHA and ease Congress’ fear of a potential taxpayer bailout. The announcement is in connection with additional reforms, which FHA Commissioner Carol Galante committed to in an agreement with Sen. Bob Corker, R-TN. In a deal that cleared the way to her confirmation as FHA chief, Galante promised to have the measures in place by the end of the month to better manage risk and strengthen the FHA Mutual Mortgage Insurance Fund. As expected, HUD is...

Mortgage bankers funded $232.69 billion worth of FHA loans in 2012, a 22 percent jump from the year prior, but the improvement pales in comparison to business gains experienced by Fannie Mae and Freddie Mac, according to exclusive loan-level data compiled by Inside FHA Lending. By comparison, Fannie grew its business by almost 46 percent last year with Freddie improving loan purchases from seller/servicers by 49 percent. Still, it was FHA’s best quarterly showing ($64.03 billion) since the fourth quarter of 2010 when mortgage lenders originated $72.12 billion of product. And not surprisingly, consumers taking out FHA loans ... [2 charts]

Can a lender rely on an approval from the FHA’s automated underwriting system in determining whether a mortgage loan is a “qualified mortgage?” Lawyers at BuckleySandler, a Washington, DC, law firm, indicated some uncertainty after poring over the Consumer Financial Protection Bureau’s final “ability-to-repay” rule governing residential mortgage lending under new Truth in Lending Act regulations. Effective on Jan. 10, 2014, the final rule requires lenders to verify a borrower’s financial information and determine the borrower’s capacity to repay the loan over the long term. It also creates a ...

Poor oversight and monitoring have allowed certain borrowers with Home Equity Conversion Mortgage loans to illegally rent their properties to participants in the federal government’s Section 8 housing choice voucher program, according to the Department of Housing and Urban Development’s Office of the Inspector General (OIG). The second of two OIG audit reports on HUD’s oversight of the HECM program has concluded that department policies did not always ensure that borrowers complied with the program’s residency requirements. The audit found that 37 out of 174 HECM borrowers reviewed were ...

The Department of Housing and Urban Development is investigating reports that a loan officer of an approved FHA lender had participated in a reverse mortgage borrower’s counseling session, a practice HUD frowns upon but does not directly prohibit. A HUD representative declined to provide details but acknowledged that the report was part of informal discussions between department officials and stakeholders. “That information … has not been officially released in any form,” he said. “Once the details are finalized, we will be advising stakeholders.” The National Reverse Mortgage Lenders Association posted the ...

Some FHA lenders are seeing new opportunities in the distressed property market as they offer new or expand on existing 203(k) rehabilitation mortgage insurance products. Houston-based Envoy Mortgage, a full-service mortgage banker with retail branches across the country, has broadened its FHA 203(k) product line to include a full 203(k) option. The option allows borrowers to devote more funds for repair and renovation, which are rolled into the mortgage amount. The full 203(k) option is a step up from what Envoy is already offering – a “streamline” 203(k) program designed for borrowers that have ...

Rule for Selling Government Mortgages to Fannie Mae Updated. Eligibility for delivery of mortgage loans backed by FHA, VA and the Department of Agriculture is now available on a negotiated basis only, Fannie Mae announced in a recent update to its Selling Guide (Announcement SEL-2013-01). The change is effective for all government loans, including whole loans sold to Fannie on or after May 1, 2013, and government loans in mortgage-backed securities with issue dates on or after May 1. Genworth to Delink Struggling Mortgage Insurance Operations from Holding Company. Genworth Financial plans to ...

The private mortgage insurance landscape is shifting in 2013 with the entry of a new MI provider, Genworth Financial’s announced plan to revamp its mortgage insurance business, and reports of a plan by Essent Guaranty to go public later this year. Fannie Mae and Freddie Mac last week approved National Mortgage Insurance Corp. as an eligible insurer, clearing the company’s entry into the U.S. mortgage insurance market with a scheduled launch in the first quarter of 2013. NMIC’s entry brings to seven the number of companies that are currently active in the MI market while three other companies are in a runoff mode. Earlier last year, NMIC parent NMI Holdings, Inc., raised...

The Federal Housing Finance Agency should review the concerns of industry trade groups about Fannie Mae’s plans to reduce the cost of lender “force-placed insurance” and then facilitate a “collaborative resolution” that’s open and transparent, industry groups contend. In a letter to the FHFA earlier this month, the American Bankers Association warned that Fannie’s March 2012 request for proposal inviting insurance companies to compete for the GSEs lender-placed insurance business directly as a way to ensure a significant reduction in insurance costs is rife with unintended consequences to the industry. “The proposal, if adopted, effectively would allow Fannie Mae to pick winners and losers among insurers, would be potentially inconsistent with state insurance requirements and would dramatically alter existing servicing operations, contracts and costs,” noted the ABA. “Such a proposed major reform of the mortgage servicing market should be considered in the sunshine.”