The Department of Housing and Urban Development is taking aggressive actions to mitigate the negative impact of future Home Equity Conversion Mortgage books of business on the FHA Mutual Mortgage Insurance Fund. HUD said changes in borrower use of the HECM program, particularly among younger users, and the modeling changes in the FY2012 actuarial review of the MMI Fund show substantial stress in the HECM program. Besides softening the impact of HECM losses on the fund, the department wants to ensure that consumers are better protected and able to sustain their reverse mortgages. While the MMI Fund’s economic value fell to ... [1 chart]

Some real estate agents are refusing to accept offers from buyers using FHA financing prompting minority rights advocates to question whether racial discrimination is causing the problem or some other factors. While illegal flipping and steering that targeted minority communities appear to have abated, bias against borrowers using FHA financing continues in the real estate market, according to Janis Bowdler, director of the Wealth-Building Policy project of the National Council of La Raza. Bowdler expressed her concern during a recent panel discussion of an FHA Working Paper on the FHA’s role in the housing finance market hosted by the Urban Institute. She said there have been reports of ...

The Department of Housing and Urban Development has announced changes to existing loss mitigation options to reduce the number of claims against the FHA Mutual Mortgage Insurance Fund.The changes will benefit qualified, distressed FHA borrowers, who will be able to qualify for FHA loss mitigation interventions and get more help than what was allowed under previous guidelines. HUD has issued a mortgagee letter to amend existing FHA Home Affordable Modification Program guidelines, the definition of “special forbearance,” and loss mitigation-priority guidelines. Specifically, HUD eliminated the ...

Private mortgage insurers have been making a slow comeback and reclaiming market share, thanks in part to policy changes adopted by the FHA, according to MI industry executives. Executives say MI penetration of the market has grown from 2.8 percent in the first quarter of 2012 to anywhere between 8-10 percent in the third quarter, an increase they attributed in part to gaining market share from FHA. Currently, private MI companies account for approximately one-third of loans with loan-to-value ratios of 80 percent or more, which are also ...

FHA Loan Delinquencies Drop in 3Q. The number of delinquent loans with FHA insurance has dropped 75 basis points to 11.14 percent in the third quarter of 2012 from the previous quarter, according to the Mortgage Bankers Association’s latest delinquency and foreclosure rates survey. Foreclosure starts and the percentage of loans in foreclosure fell after a spike in the second quarter when some larger servicers restarted the foreclosure process after being stalled for more than a year by the “robo-signing” investigations and subsequent negotiations. Both rates, however, remain ...

MGIC Investment Corp. announced last week it will pay Freddie Mac $267.5 million to settle their prolonged dispute over pool mortgage insurance coverage. The settlement was a condition set by the GSE to allow a new unit of MGIC to underwrite mortgages in seven states, though the MI said it won’t sign the deal until Freddie approves MGIC’s newly capitalized unit to write insurance.

Private mortgage insurers posted an impressive 26.5 percent increase in new insurance written during the third quarter of 2012, but four of the industry’s six active firms are gradually taking market share away from their rivals. Private MIs insured $51.76 billion in new mortgage originations during the third quarter, according to a new Inside Mortgage Finance ranking and analysis, making it the strongest quarter for the beleaguered industry since the second quarter of 2008. FHA and VA lending grew at a much slower pace, climbing just 2.1 percent and 4.0 percent, respectively, during the third quarter. The result was...[Includes two data charts]

The private mortgage insurance industry is expressing optimism with the positive changes seen lately in the housing market while hoping that Congress or the Obama administration do nothing to impede or spoil the market’s recovery. Industry executives say stabilizing home values, low interest rates, better quality mortgages and a shrinking FHA share of the mortgage market are helping MIs win back market share and write new business. “Everybody is trying to write as much business as they can to regain share,” said Michael Zimmerman, senior vice president for investor relations at Mortgage Guarany Insurance Corp. New insurance written is...

Reportedly dire findings of the annual independent audit of the FHA insurance fund due for release late this week may set off alarms in Congress and calls for reform but not a taxpayer rescue as some FHA critics have suggested, according to the Mortgage Bankers Association. Recent news reports indicated that the fiscal 2012 actuarial review of the FHA’s Mutual Mortgage Insurance Fund will show a negative economic value or capital reserve position, which some say could require the Treasury to bail out the FHA to boost its claims-paying ability. There is speculation that the fund could go from a predicted economic value of positive $9.4 billion in last year’s study to as much as negative $10 billion this year. A deficit should not be...

The mortgage lending industry won a couple of key legal challenges recently, including an unusual claim brought under the Racketeer Influenced and Corrupt Organizations Act. In Cabrera v. Countrywide Financial, the U.S. District Court for the Northern District of California recently dismissed, without prejudice, most of the complaint brought by two borrowers who accused the mortgage lender of engaging in fraudulent loan practices in violation of the RICO Act. In July 2007, Manuel Cabrera received...