Michaelson, Connor & Boul has reached the end of its term as mortgage compliance manager (MCM) of the Department of Housing and Urban Development. Sept. 30, 2015, was MCB’s last day as mortgage compliance manager, in charge of processing millions of pre- and post-conveyance transactions for HUD. MCB won the contract as HUD’s first national MCM in 2010, when the department reorganized its management and marketing(M&M) programs under a new M&M III. However, even before that, since 1999, MCB had been performing real estate acquisition and disposition services for HUD under the previous M&M programs. As mortgage compliance manager, MCB had a bird’s eye view of every lender’s (and their service provider’s) business practices when performing pre- and post-conveyance activities. As of Aug. 31, 2015, MCB had processed 4,162,550 pre- and post-conveyances. As MCB makes ...

Government Files False Claims Act Suit Against FHA Lenders, “Counseling Fund.” Three federal agencies filed a civil lawsuit against a purported charitable “counseling fund” and five FHA-approved mortgage lenders and their principals for running a mortgage scam that resulted in a huge loss for the FHA. The suit alleges that Rainy Day Foundation, a tax-exempt charitable institution in the District of Columbia, and five New York-based banks defrauded several federally insured banks resulting in millions of dollars of mortgage losses and costing the FHA $5.6 million in paid false claims. According to the complaint, the lenders originated FHA loans, which they later sold to the victimized banks. The loans went into early-payment default (EPD) at twice the average default rate of other lenders. The lenders allegedly conspired with the Rainy Day foundation to conceal their ...

Fannie Mae and Freddie Mac securitized $59.07 billion of single-family loans with private mortgage insurance coverage during the third quarter of 2015, reflecting the increase in purchase-mortgage production, according to a new analysis and ranking by Inside Mortgage Finance. The flow of PMI-insured loans to the government-sponsored enterprises’ mortgage-backed securities program was up 12.3 percent from the second quarter, and it was likely the biggest such volume since the housing market collapsed in 2008. The data come from loan-level MBS disclosures, which Fannie started providing in 2013. The increased volume of privately-insured mortgages came...[Includes two data tables]

In the wake of large losses and insurance claim discrepancies stemming from the financial crisis, the government-sponsored enterprises and mortgage lenders are set to reap the benefits of new private mortgage insurer standards that formally take effect Jan. 1, 2016. Much tighter MI underwriting, coupled with improved insurer due diligence and stringent capital requirements, will improve claim payouts on defaulted loans, according to a recent report by Moody’s Investors Service, adding that policies written under updated GSE requirements will result in lower losses on the GSEs’ risk-sharing transactions and master insurance policies. The updated requirements for master policies give...

Over the past few months, the chief executive officers at two publicly traded mortgage firms and a private cooperative have departed, creating uncertainty in the market while underscoring what might seem obvious to some: It’s not easy running a mortgage business these days. CEOs heading for the exits – either on their own accord or via a management edict – include Jim Cutillo of Stonegate, Jeff McGuiness at the Lenders One Cooperative, and most recently Mark O’Brien, who headed nonbank lender/servicer Walter Investment Management Corp. And rounding out the “departure club” is...

The nation’s seven active mortgage insurance firms expect to be fully compliant with the Federal Housing Finance Agency’s new capital eligibility rules by the yearend deadline – if they aren’t already – but now there’s a new worry: more regulations may be on the way. According to sources inside the MI sector, the FHFA is taking a close look at the use of reinsurance by private mortgage insurers with an eye toward capping it. “FHFA is worried that reinsurance firms may not pay,” said one MI official who spoke extensively on the topic under the condition he and his firm not be identified. “They want to reduce the credit you get for using reinsurance firms.” “The FHFA is trying...

Fannie Mae and Freddie Mac continued to tap investor interest in credit-risk transfer transactions over the last week or so, with each company announcing another deal involving more support from various elements in the insurance and reinsurance sectors. Last week, Fannie announced it has completed its latest Credit Insurance Risk Transfer transaction, which shifts credit risk on a pool of loans to a panel of reinsurers. In CIRT-2015-3 which became effective Aug. 1, 2015, Fannie retained...[Includes one data table]

Ginnie Mae President Ted Tozer is urging the FHA to find some flexibility in its loan-level certification proposal that would balance the need to protect the FHA from losses with lenders’ ability to lend without fear of consequences. Tozer said the controversial FHA proposal is trying to find a middle road between protecting the Mutual Mortgage Insurance Fund and making lenders feel confident that they are accountable only for the most egregious problems and not for small oversights or technical errors. “It is...

The FHA will consider stakeholders’ concern about its proposal to terminate a lender’s mortgage insurance contract for missing a yet-to-be-finalized deadline for filing claims, an agency official said. For now, however, the agency remains adamant about letting the provision stand despite stakeholder complaints about its severity, said Ivery Himes, director of the Office of Single Family Asset Management at FHA, during a panel discussion this week at the Ginnie Mae annual conference in Arlington, VA. She said missed deadlines are costly and are putting a strain on the agency’s resources. Himes blamed...

In an analysis of Fannie Mae and Freddie Mac loan-level loss data, Fitch Ratings concluded that while similar, there are differences between loss severities among loans with similar profiles. Fannie disclosed its loan-level loss data in late July to increase transparency to the market as it plans for an actual-loss credit offering in the fourth quarter. Fannie’s loan-level loss data was comparable to historical loss severities for its liquidated mortgages and the fixed loss-severity schedules used in its Connecticut Avenue Securities risk-transfer deals, said the Fitch report this week. All CAS risk-sharing transactions have passed...