Lender-paid mortgage insurance has garnered renewed interest lately from mortgage lenders as an alternative to FHA-insured loans, whose increased costs have shut out many cash-strapped borrowers. David Williams, vice president of RightStart Mortgage in Pasadena, CA, said his firm has been getting a lot of requests from wholesale brokers for conventional conforming loans with LPMI because the FHA product has lost its competitive edge. With borrower-paid private MI, the homeowner pays a monthly ...

The mortgage insurance industry is anxiously awaiting new risk-to-capital rules from the Federal Housing Finance Agency, hoping that the regulator will go easy on an industry that is beginning to recover from a years-long debacle and reclaim market share from the FHA. Private MI executives close to the matter told Inside Mortgage Finance that the FHFA will likely issue a minimum risk-to-capital ratio of 18:1, a tougher standard than the current 25:1, but there is also talk of a phase-in period and “bifurcation” for legacy versus new companies. According to its securities filings, National MI, a new MI, has agreed...

The Department of Housing and Urban Development has issued guidance clarifying FHA lenders’ obligation to report voluntarily instances of fraud, misrepresentation and any other material findings in connection with the origination, underwriting and servicing of FHA-insured loans. Compliance experts say the guidance in Mortgagee Letter 2013-41 is a shot across the industry’s bow – a reminder to lenders about existing FHA policy requiring them to self-report fraud and misrepresentation to the FHA. Upon notification, the FHA works with the lender on any potential mitigation actions. In the inaugural issue of Lender Insight in June, the FHA reported ...

For the first time in five years, private mortgage insurers surpassed all government-insurance programs in the third quarter of 2013 as the largest provider of primary MI coverage in the mortgage market, according to the latest analysis from Inside FHA Lending affiliate Inside Mortgage Finance. The private MI industry showed that it has rebounded from the post-financial crisis by reporting $59.03 billion in new insurance written during the third quarter, down 3.2 percent from the previous quarter but clearly better than the FHA and VA production numbers for the same period. Data showed the two government agencies posting ...

The Department of Housing and Urban Development is considering an industry request to delay the implementation of a proposal requiring FHA lenders to perform a financial assessment of all prospective borrowers of Home Equity Conversion Mortgage loans. In remarks during the National Reverse Mortgage Lenders Association’s recent annual meeting in New Orleans, FHA Commissioner Carol Galante said HUD is still studying the comments and will need more time to implement the rule. In September, the FHA published a notice in the Federal Register seeking comment on the financial assessment proposal. The proposal is currently in ...

With the FHA high-cost loan limit set to decline from its current statutory level of $729,750 to $625,500, the same level as Fannie Mae and Freddie Mac, nobody appears to be pushing for an extension. The temporary maximum loan limit for FHA is set to expire on Dec. 31, unless Congress votes for another extension, which appears unlikely, according to mortgage industry analysts. Neither lawmakers nor the White House have shown support for maintaining the current FHA high-cost loan ceiling. Although no one has conceded that the FHA lending ceiling will go down for certain areas, there has been no effort to ...

Many condominium properties continue to struggle to meet stringent FHA requirements while many condo projects are being denied approval despite the easing of FHA approval requirements in recent years. Panelists at a recent National Association of Realtors conference in New Orleans said condos are often the most affordable homeownership option for first-time homebuyers, single borrowers and senior citizens, especially when purchased with FHA financing. Condominium loans are among the strongest performing loans in the FHA portfolio, they added. However, FHA data show that ...

Imprecise rules, triple-damage claims and increasingly political enforcement of agency rules could make it more dangerous for lenders to do business with the FHA than to originate non-qualified mortgage loans, according to a top compliance expert. Larry Platt, a partner with K&L Gates, said that when lenders originate and underwrite FHA loans they are subjected to rules that are unevenly applied and politically enforced. It is a prescription for a financial bloodbath, especially if you add to it the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act, he added. Throwing the Department of Justice into the mix ...

FY 2013 Actuarial Review of Insurance Fund Out in Mid-December. The Department of Housing and Urban Development expects to issue the long-anticipated FHA FY 2013 independent review of the state of the FHA’s Mutual Mortgage Insurance Fund during or before the middle of December. The report’s release was delayed due to the three-week government shutdown in October. The report will show FHA taking a mandatory appropriation of $1.7 billion to close out FY 2013. HUD has clarified that the draw is an accounting transfer required to close out the FHA’s FY 2013 books and not a reflection of ...

The regulatory regime currently contemplated in government-sponsored enterprise reform legislation in the Senate doesn’t go far enough, according to officials at the Federal Housing Finance Agency and others. At a hearing this week by the Senate Committee on Banking, Housing and Urban Affairs, Alfred Pollard, general counsel at the FHFA, testified that the regulatory functions included in GSE reform legislation from Sens. Bob Corker, R-TN, and Mark Warner, D-VA, should be enhanced. “Making regulatory authority clear and explicit, including where appropriate the ability to establish prudential standards, set capital requirements and take enforcement actions, would enhance...