First Tennessee Bank’s agreement with federal agencies to pay $212.5 million to resolve allegations of violation of the False Claims Act is the latest proof of the government’s unrelenting pursuit of FHA lenders over underwriting and quality control issues. The settlement once again demonstrates the federal government’s commitment to combat FHA fraud using the FCA to recover taxpayer losses, according to an analysis by Boston law firm Greene LLP. “[The Department of Housing and Urban Development] made a point of saying that this behavior is exactly what led to the financial crisis and housing market downturn,” Greene’s compliance attorneys said. HUD and the Department of Justice have vowed to continue to pursue and hold accountable lenders who put profits ahead of their customers and legal obligations, the attorneys added. According to the DOJ, First Tennessee, a regional bank, admitted ...

Consumer education is the key to VA’s growing origination volume, according to a top executive of a VA-certified lender. “It has to do more with increased awareness of VA loans and their benefit to veterans,” said Jonathan Schrum, vice president at Commerce Home Mortgage, a VA lender in Huntington Beach, CA. Awareness comes with education, and one can go to any network or cable channel or print publication and see advertisements for loans with a VA guaranty, said Schrum. “There are many veterans and service members out there who don’t know what loan programs are available to them and what they can do,” he observed. “So I think it’s word of mouth, talking about it ourselves and getting the word out there about VA loans as much as we can.” The VA loan is such a specific product that a borrower needs to know what it is – the funding, fees, percentages for disabled vets – they need to ...

The FHA is planning to propose a number of rules for the single-family mortgage insurance program through the second half of 2015 and is expecting to act soon on a long-anticipated rule on seller concessions. In its semiannual regulatory agenda, the FHA appears poised to take final action this month on a five-year-old proposed rule seeking to lower FHA seller concessions or contributions toward a buyer’s closing cost. The proposed rule is one of three FHA initiatives to help restore the FHA’s Mutual Mortgage Insurance Fund, which was severely depleted during the housing crisis. Similar to what was proposed in the President’s FY 2012 budget, the proposed rule would limit concessions to 3 percent or $6,000, whichever is greater. The proposal would limit acceptable use of concessions to borrower closing costs, prepaid items, discount points, FHA upfront insurance premium and ...

Total originations of reverse mortgages with FHA insurance increased in the first three months of 2015, according to an Inside FHA/VA Lending analysis of agency data. Home Equity Conversion Mortgage production, overall, rose 3.0 percent to $3.9 billion from the fourth quarter of 2014 and was down 2.0 percent on a year-over-year basis. HECM purchase loans far outpaced refinances, which accounted for only 14.5 percent of total HECM volume in the first quarter. Lenders reported a total of $2.3 billion in initial HECM principal amount at loan origination. Meanwhile, there is continued investor interest in HECM mortgage-backed securities (HMBS), according to Ginnie Mae. The unpaid principal balance of HMBS climbed to $48.9 billion in FY 2014 and the number of participations (the funded portions of HECM loans that have been securitized) has increased to 6,585, 856. HMBS issuance was ... [1 chart]

The FHA plans to issue a proposed rule in the fall that would allow it to insure single-family condominium units in multifamily projects, according to the agency’s regulatory agenda for the second half of 2015. The proposed rule would cover condo units that are attached, detached, semi-detached or manufactured. It would apply as well to undivided interests in the common areas and facilities that serve the project. The proposed change would clarify and ensure lender compliance with the Housing and Economic Recovery Act of 2008. HERA moved FHA’s authority to insure single-family condominiums from Section 234 to Section 203 of the National Housing Act. However, because Section 203 does not provide the same authority for FHA, rulemaking became necessary. HERA also granted FHA the authority to issue administrative notices to convey condominium policy guidance until a ...

Deadline Extended for Submission of Due-and-Payable Request. On April 23, the FHA issued guidance to reverse-mortgage servicers on the types of loss mitigation options they may provide when a Home Equity Conversion Mortgage loan goes into default. If the default occurred before April 23, 2015, the guidance’s publication date, servicers have 180 days to submit a due-and-payable request if the borrower is unable to pay property charges and goes into default. Under the revised guidance, FHA is allowing a one-time extension through Oct. 20, 2015, for lender-servicers to submit the due-and-payable request. The FHA said the extension would ensure that the April 23 guidance is successfully implemented. Lenders Get First Look at FHAC Improvements. The FHA is providing an overview of the FHA Connection (FHAC) system enhancements to help lenders get ready before the ...

The Consumer Financial Protection Bureau threw the book at PHH Corp. over its captive reinsurance activities, refuting a handful of court rulings, an administrative letter from the Department of Housing and Urban Development and several points made by an administrative law judge. CFPB Director Richard Cordray overrode a $6.4 million penalty set by an ALJ in the matter and ordered PHH to pay $109.2 million – all the mortgage insurance premiums it received from its captive reinsurer, Atrium, after July 2008, regardless of when the loan was originated. July 2008 was...

The Office of the Wisconsin Insurance Commissioner has launched a preliminary investigation into lender-paid mortgage insurance, a revelation that is causing additional unease at private MIs. Sources confirmed to Inside Mortgage Finance this week that insurance regulators in the state are looking at what one official called discounting “practices” for the product. He added: “Wisconsin is asking them to name names: ‘Who are you giving discounts to, on what basis, etc.” This official, who did not want to go on the record regarding the matter, said...

Gross new issuance of Fannie Mae, Freddie Mac and Ginnie Mae single-family MBS declined by 6.3 percent from April to May, according to a new Inside MBS & ABS ranking and analysis. The agencies produced $113.46 billion of new single-family MBS last month. Though down from April, it was still significantly higher than at any time in 2014, when production averaged just $77.46 billion per month. The key to the drop-off in May was...[Includes two data tables]

With just six months lefts to meet the new private mortgage insurer eligibility requirements, Genworth U.S. Mortgage Insurance is making moves to ensure it will be in compliance by the end of the year. “We did disclose a gap of $500 to $700 million, but at the same time we said we will fulfill that gap with a combination of reinsurance and cash. We are working at a very aggressive pace to make sure that we meet that standard sooner than later,” said Rohit Gupta, Genworth’s president and CEO. In addition to reinsurance and working on payment plans, Rohit said last month the company sold 14 percent of its Australian mortgage insurance business on the Australian...