The Department of Housing and Urban Development could soon face a technology crisis with roughly 87 percent of its antiquated information-technology systems dying or on the verge of collapse. The warning came from the HUD inspector general in a semiannual report to Congress. The report raised concerns about the poor state of HUD’s IT systems, “of which 87 percent are at or near the end of their life cycle.” These systems include 400 IT products that no longer have technical support, the report noted. The problem is so bad that HUD is having trouble doing mathematical ...

House Financial Services Committee Approves Flood Insurance Reform Measures.The House Financial Services Committee this week reported out several bills to reform and reauthorize the National Flood Insurance Program, which is set to expire on Sept. 20, 2017. The bills that passed included H.R. 2875, the National Flood Insurance Program Administrative Reform Act of 2017, which would protect taxpayers from program fraud and abuse; H.R. 1588, the Repeatedly Flooded Communities Preparation Act, which would ensure community accountability for areas frequently damaged by floods; and H.R. 1422, the Flood Insurance Market parity and Modernization Act, which would increase the availability of private flood insurance. The committee also approved H.R. 2246, the Taxpayer Exposure Mitigation Act of 2017, which would shift flood insurance risk for commercial and multifamily properties in ...

First-time homebuyers have fueled a surge in home sales in the last two years, and the trend is continuing into 2017, according to a new report on the first-time homebuyer market from Genworth Mortgage Insurance. The report focused on mortgage origination data from more than 20 million first-time homebuyers over the past 24 years, with some interesting findings. Approximately 85 percent of the overall increase in home sales over the past two years was...

Federal banking regulators this week took action against two mortgage lenders for failing to enforce flood insurance requirements on properties in flood-prone areas. Separately, House lawmakers mulled over draft Republican legislation to reform and reauthorize the National Flood Insurance Program. The Office of the Comptroller of the Currency announced it slapped Colonial Savings Bank with an $87,500 penalty for violation of the Federal Disaster Protection Act of 1973. The FDPA requires...

A Manhattan appeals court raised the burden of proof for Ambac Assurance, which seeks to recover monetary damages from Bank of America in an insurance case involving $1.68 billion in securities backed by high-risk mortgages from now-defunct Countrywide Home Loans. Attorneys with Shepherd Smith Edwards & Kantas said a panel of the Appellate Division, First Judicial Department, ruled that Ambac may not use New York insurance law as the sole basis for arguing that it does not have to prove certain elements of fraud in its claims against BofA. The court also barred Ambac from using the statute to recover damages. The court held...

Insurance policies are the second-largest form of the government-sponsored enterprises’ credit-risk transfer but Fannie Mae’s Credit Insurance Risk Transfer (CIRT) program and Freddie Mac’s Agency Credit Insurance Structure (ACIS) have a few stark differences. One of the primary differences in the two is that Freddie has retained large portions of the tranches from its popular Structured Avenue Credit Risk deals (STACR), and used the ACIS program as a way to transfer some of the remaining risk, up to the 5 percent retention limit, note analysts at Wells Fargo Securities in a recent report. With ACIS coverage tied to companion STACR deals, it’s...

The Mortgage Bankers Association is pushing back against a controversial budget proposal to charge FHA lenders a fee to pay for technology upgrades to help protect the Mutual Mortgage Insurance Fund. Rather than charging lenders an “administrative fee,” the MBA prefers that funding improvements to FHA’s aging information systems be done through the appropriations process. “We need to be working with [the Department of Housing and Urban Development] and Congress to find ways to fund technology upgrades and risk-management improvements,” MBA Senior Vice President Pete Mills told Inside FHA/VA Lending. The White House’s budget plan for FY 2018 incorporates verbatim a proposal by the Obama administration to charge FHA lenders an administrative fee to support the upgrades needed to reduce MMI Fund losses. According to the previous administration’s estimate, the ...

Requesting a certificate of eligibility (COE) may be just a click away but the process is not without pitfalls, cautioned a panel of VA loan production officers during an industry conference. The panelists – Maxine Henry, program analyst with the VA Central Office; Ricardo Holloway, loan production officer with the Atlanta Regional Loan Center; and Paula Jesse, assistant loan production officer with the Denver RLC – urged veterans to order their COE early in the loan-application process to avoid any hiccups. A COE verifies to the lender that the veteran/borrower is eligible for a VA loan. Ordering early would help prevent last-minute delays, said Henry. “It is a problem if the veteran is at the closing table and still does not have a COE because it was ordered just a few days prior to closing,” Henry noted. Other potential hitches are incorrect documentation or receiving a VA determination that the ...

Loan processing for incompetent veterans presents significant challenges to VA lenders, requiring strict compliance with special guidance on top of the basic VA underwriting rules. One challenge is dealing with legal appointees who assist and represent veterans in legal transactions, such as applying for a mortgage loan. There are ways to determine whether a veteran is incompetent, said Mark Jamison, loan production officer (LPO) with the VA Cleveland Regional Center, during the VA Lender Conference in Kansas City, MO, last month. The Department of Veterans Affairs or a probate court can deem a veteran incompetent due to severe injury, medical conditions, mental disorders, and financial instability, he said. A mortgage lender could make a determination of incompetency if the initial purchase contract documents were signed by an attorney-in-fact, the veteran divulged the incompetency, or the ...

Poor agency oversight of voluntary lender terminations of FHA insurance on single-family home loans has resulted in increased risk for borrowers, premium overpayments and inaccurate records, according to the Department of Housing and Urban Development’s inspector general. The IG gave the department a poor grade for failing to ensure that lenders properly processed voluntary terminations of FHA coverage and disclosed to borrowers the implications of such termination. The audit report blamed HUD’s failure on its inability to detect and deter lender errors while processing voluntary terminations, causing borrowers to lose FHA-insurance protection and overpay FHA premiums. HUD’s records also were skewed because of the oversight, the report noted. IG auditors reviewed a statistical sample of 115 of the 3,690 loans that were terminated voluntarily by lenders during fiscal years 2015 and ...