The FHA has issued new, more permissive loss-mitigation guidelines for Home Equity Conversion Mortgages, including an optional extension for mortgagees when submitting due-and-payable requests. Additionally, the guidelines allow mortgagees to cure a HECM borrower’s taxes and/or insurance defaults as long as the FHA incurs no cost and the mortgagee agrees to refrain from seeking loan assignment for at least three years. The guidelines further remove a previous restriction prohibiting the use of the permissive loss-mitigation options announced in Mortgagee Letter 2015-11 for borrowers in foreclosure. Accordingly, for HECM loans that were in the process of foreclosure prior to the issuance of ML-2015-11, mortgagees may assess those borrowers for a repayment plan in accordance with the mortgagee letter. The repayment plan must have the ...

Freedom Mortgage is acquiring the correspondent origination assets of JPMorgan Chase’s rural housing business for an undisclosed amount. The Mount Laurel, NJ-based lender will operate the business under its own brand and retain the current executives and employees who have been originating rural housing loans through Chase’s 23-year old correspondent business. Loans backed by the U.S. Department of Agriculture comprise less than 5.0 percent of Chase’s 2015 mortgage banking business. USDA loans account for 1.04 percent of total mortgage originations in 2015, according to Inside Mortgage Finance. In its announcement, Chase said the move is part of a company effort to simplify its loan-origination business model and to focus its lending. Chase said it would continue to ...

United Guaranty last week filed papers for an initial public offering with the Securities and Exchange Commission as a first step to split from its parent company, American International Group, Inc. UG, the mortgage insurance subsidiary of AIG, has filed a proposed aggregate offering of $100 million of common stock but pricing has not been determined. The IPO will not launch until later this year, but if the weak IPO market picks up soon, “it would change things a great deal,” according to an analysis by investment research firm Seeking Alpha. In late January, AIG announced...

United Guaranty, the largest private mortgage insurer in the nation, filed to go public this week, touting its market position, longevity and the strong profits it posted over the past two years. Then again, it’s been a tough market for mortgage-related stocks this year. Overall, United Guaranty hopes to raise $100 million by selling 19.9 percent of the firm, with its parent company, American International Group, retaining the balance while setting the stage for eventual ...

United Guaranty, the market leader in private mortgage insurance – and a key partner of the GSEs – made it official this week, filing for an initial public offering of common stock in a transaction valued at $100 million. UG’s parent company American International Group will retain ownership of 80.1 percent of the firm, with the public getting the balance. As the company notes in its IPO documents, Fannie Mae and Freddie Mac must approve the spin-off. But when that will happen remains unclear. No specifics are addressed in the S-1 filing with the Securities and Exchange Commission and a spokesman for UG declined to comment on the matter.

Despite efforts by the Department of Housing and Urban Development to prevent or mitigate fraud, waste and abuse in FHA loan programs, concerns remain about HUD’s resolve to take the necessary actions going forward to protect the FHA insurance fund. Testifying recently during a House appropriations hearing, HUD Inspector General David Montoya said HUD is often hesitant to take strong enforcement actions against lenders. Montoya blames HUD’s tentativeness in carrying out competing mandates of continuing FHA’s role in restoring the housing market and ensuring availability of mortgage credit, and continuing lender participation in the FHA program. For example, he said FHA has been slow in starting claims reviews. “The OIG has repeatedly noted in past audits and other types of lender underwriting reviews HUD’s financial exposure when paying claims on ...

Although appraisals are mostly in line with contract prices, VA and FHA appraisals more often miss the contract price than appraisals for conventional home loans, according to real estate agents’ responses to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The difference gets no clearer than in California where many FHA and VA appraisals are coming in under the contract price. In contrast, appraisals for conventional mortgage loans are coming in as much as 10 percent higher, said a real estate agent in the Golden State. “FHA and VA appraisals are more conservative than conventional,” respondents observed. There are a number of reasons for FHA and VA appraisals coming in lower than conventionals, industry participants say. Although the appraisal process is the same for both government and conventional mortgage programs, FHA and VA appraisal rules require much closer scrutiny of the property to determine whether certain repairs must be made before it can be sold. In addition, no two appraisers are alike. Some appraisers will not give value to upgrades, such as granite countertops or hardwood floors, while others do.

The Mortgage Bankers Association called upon the FHA to update guidance regarding the assumption of FHA-insured loans and, separately, sought additional clarifications on many outstanding policies in the newly revised Single Family Policy Handbook. In a letter to FHA Commissioner Edward Golding, the MBA strongly urged the FHA to revisit and make changes to its loan-assumption policies and procedures, which have gone unchanged since the mid-1980s. With interest rates expected to rise over the next few years, the MBA anticipates the number of FHA loan-assumption requests to increase as well. Stale assumptions would make it virtually impossible for lenders to recover the actual costs incurred while processing them, warned Pete Mills, senior vice president for residential policy. Loan assumption enables a homebuyer to take on the obligations of the ...

The Mortgage Bankers Association urged lenders to review the Department of Housing and Urban Development’s new loan-level and lender-level certifications to assess the legal and reputation risks to FHA lending. In a statement, MBA President/CEO David Stevens further urged lenders to analyze whether the new certification language provides sufficient protection from unwarranted false claim enforcement action. The MBA statement came as the Department of Justice, commenting on the new certifications, warned that it will continue to pursue lenders that submit false statements and false claims with the intent to defraud taxpayers. The new loan-level certification language reinforces FHA’s position that lenders should not be penalized for minor mistakes on FHA loans. It requires lenders to certify “to what they know to be true to the best of their knowledge.” Lender-level certification, carved out of the initial loan-level certification, would require lenders to certify they have not ...

House Financial Services Committee Passes Flood Insurance Bill. The House Financial Services Committee recently voted to advance legislation that would provide a private flood insurance alternative to the federal National Flood Insurance Program for homeowners required to purchase flood insurance. H.R. 2901, the Flood Insurance Market Parity and Modernization Act, passed by a unanimous vote of 53-0 and was sent to the House floor for consideration. A Senate counterpart bill, S. 1679, which was reintroduced by Sen. Dean Heller, R-NV, last year, is awaiting action in the Committee of Banking, Housing and Urban Affairs. Both bills were introduced jointly in both the House and the Senate in 2015. Currently, due to uncertainty as to whether the coverage satisfies federal requirements, many lenders are reluctant to issue mortgages for homes with ...