Investors of all different stripes have been increasing their stakes in several publicly traded mortgage insurance firms of late, betting that this recovering corner of the residential finance industry has more gas in the fuel tank. Among those buying into MI stocks is Paulson & Co., the legendary hedge fund that made $15 billion by shorting publicly traded subprime firms via the ABX Index in the run-up to the housing bust. Paulson & Co. recently increased...

The mortgages that most frequently experience delays in closing are those with private mortgage insurance and FHA loans, according to new findings from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. According to responses from real estate agents involved in 1,401 transactions in January, some 45 percent of purchase mortgages with private MI experienced a delayed closing. And 42 percent of FHA purchase mortgages experienced a delay in closing. Tom Popik, research director of Campbell Surveys, said...

FHA-approved lenders should make sure they leave no stones unturned to ensure that loans submitted for endorsement meet FHA’s strict underwriting criteria. It is the responsibility of direct endorsement lenders to scrutinize every loan for compliance with FHA lending guidelines, including income verification, credit analysis and property appraisals. JPMorgan Chase admitted it failed to do all of the above. Last week, the bank acknowledged it violated the False Claims Act and agreed to pay $614 million in cash to settle government charges it improperly certified poorly underwritten loans for FHA and VA guarantees. The defective loans later ...

The whistleblower whose investigative efforts led to the landmark $25 billion national mortgage settlement between the federal government, 49 state attorneys general and five of the largest mortgage servicers is at it again. This time, Lynn Szymoniak is suing 22 companies for using fraud to obtain FHA insurance – in some instances, VA guaranties – for defective loans that later were securitized through Ginnie Mae and sold to investors. Szymoniak, who is suing under the False Claims Act, gained notoriety from a 2011 interview on “60 Minutes” in which she ...

The Department of Housing and Urban Development has declared a one-month freeze on all mailed-in applications for FHA lender approval beginning March 31 as the department shifts from the current paper-based system to a new online electronic processing system. HUD said the blackout period would be from March 31 to April 30, during which system enhancements would be implemented, including replacement of the current Lender Assessment Sub-System (LASS) with the Lender Electronic Assessment Portal (LEAP), formerly known as “HUD/FHA Lender Approval Files.” The changes are ...

Buoyed by improvement in FHA loan quality, some lenders have begun lowering the credit score requirements for FHA and other government-backed mortgages. Last month, Wells Fargo alerted FHA lenders of its decision to lower the minimum credit score for purchase home loans through its retail channel from 640 to 600. “We felt it was an appropriate time to do it given the improvement in FHA loan quality,” a spokesman explained. “The change applies to all FHA borrowers. Last year’s resolution of the FHA indemnification issue also prompted the change at Wells Fargo, according to a bank official. In addition, resolving the putback risk with ...

VA activity appeared to lose momentum in the fourth quarter of 2013 as approved lenders reported $129.9 billion in total originations for the year, according to Inside FHA Lending’s analysis of Department of Veterans Affairs data. Production has been gradually slipping since the end of the first quarter, when lenders posted an aggregate $37.5 billion in new VA loans. The fourth quarter ended with $22.4 billion in total originations, which was down a hefty 32.1 percent from the previous quarter. On a year-over-year basis, however, VA originations were up by 1.5 percent. Refinancing accounted for 9.9 percent of VA production in 2013, up slightly from ... [1 chart]

NRMLA Plans to Recruit Certain Borrowers to Offer HECM Testimonials. Seeing so much negative publicity against reverse mortgages, the National Reverse Mortgage Lenders Association is planning to recruit borrowers who are willing to share with reporters their positive experiences with the product. The aim is to build a “repository” of borrowers who are willing to be interviewed by reporters on the merits of having a Home Equity Conversion Mortgage loan. Media representatives typically contact the NRMLA for borrower interviews, and having a borrower contact list would ...

The CFPB last week initiated an administrative action against PHH Mortgage, accusing the firm of participating in a multi-million-dollar kickback scheme involving captive mortgage insurance reinsurance. The regulator said an investigation it conducted showed “that when PHH originated mortgages, it referred consumers to mortgage insurers with which it partnered. In exchange for this referral, these insurers purchased ‘reinsurance’ from PHH’s subsidiaries.” The bureau continued, “PHH took the reinsurance fees as kickbacks, in violation...

Total FHA delinquencies rose slightly while the percentage of seriously delinquent loans remained flat in the fourth quarter of 2013, according to an Inside FHA Lending analysis of FHA servicing data. Data showed delinquencies of 90 days or more remained unchanged at 8.1 percent from the previous quarter even as total FHA delinquencies increased a bit to 15.2 percent from 15.1 quarter over quarter. The share of loans that are 30-60 days behind on their payment also increased to 7.1 percent from 6.9 percent over the same period. As of Dec. 31, FHA servicers had a combined ... [1 chart]