The Department of Housing and Urban Development and the reverse mortgage lending industry lauded the U.S. House of Representatives this week for passing bipartisan legislation that would allow the agency to make immediate, necessary changes to the Home Equity Conversion Mortgage Program while working simultaneously on implementing regulations. H.R. 2167, the Reverse Mortgage Stabilization Act of 2012, passed by voice vote after it was added to the House “suspension” calendar, which limits debate on noncontroversial bills for quick passage. Co-sponsored by Reps. Denny Heck, D-WA, and Mike Fitzpatrick, R-PA, the bill responds ...

The likelihood of new loans exceeding the statutory “high-priced mortgage loan” (HPML) threshold due to a recent policy change relating to FHA mortgage insurance premium payments is causing uneasiness among some lenders, said an industry trade group. This week, the Consumer Mortgage Coalition warned that lenders might not originate FHA-insured loans if they thought the new MIP policy would cause the mortgages to turn into HPMLs and subject them to increased liability. Specifically, the new MIP policy might prevent ...

The Department of Housing and Urban Development has issued guidance on several FHA issues, including partial-claim documentation and delivery requirements, clarification regarding title approval at conveyance, interest rates for loss mitigation home-retention options, and subordination of partial-claim liens associated with FHA streamlined refinances. Partial Claim Documentation and Delivery Requirements (ML 2013-19. The guidance addresses the problem of many missing FHA partial-claim documents due to lenders’ failure to comply with HUD procedures for ...

HUD Takes Second Furlough. The Department of Housing and Urban Development this week announced the second of seven furlough days employees are scheduled to take due to mandatory, government-wide budget cuts: June 14. Sequestration went into effect March 1 because Congress failed to pass legislation on balanced deficit reduction. HUD employees took their first forced leave on May 24. Approximately $85 billion will be slashed from the federal budget for the remainder of the fiscal year. The next furlough date is July 5. HUD, however, may not need to ...

The Department of Housing and Urban Development will face intense scrutiny from lawmakers after revelations this week that the department may have suppressed information indicating much higher projected losses for the FHA Mutual Mortgage Insurance Fund than it reported to Congress. Rep. Darrell Issa, R-CA, chairman of the House Committee on Oversight and Government Reform, raised the issue in a May 29 letter to FHA Commissioner Carol Galante, citing suspicious email exchanges between certain top FHA officials and Tyler Yang, chairman and chief executive officer of Integrated Financial Engineering, which performed the FY 2012 actuarial audit of the fund. The letter is...

The FHA’s net-worth requirement, now fully phased in nearly three years since it was revised, will help ensure that only responsible, well-capitalized lenders and mortgagees are involved in the origination of FHA-insured loans. However, small FHA lenders may get squeezed out in the process. On May 20, the second and final phase of FHA’s new net-worth rule became effective. The final rule provides that, regardless of size, all applicants for FHA approval and those with current approval must have a ...

Lenders are at odds with housing finance agencies over the benefits of a new FHA guidance, which calls for documentation of downpayment assistance (DA) that HFAs provide to borrowers. The new guidance requires mortgagees to show written proof that funds provided by a federal, state or local government entity to help borrowers meet the FHA’s 3.5 percent minimum cash investment requirement actually came from the entity and not from some impermissible source. The guidance follows up on a rule issued by HUD last year clarifying an interpretation of the National Housing Act. The rule expressed HUD’s view that ...

A recent Federal Reserve survey of bank lending practices further confirmed a continuing trend among FHA lenders of refusing to lend to borrowers with FICO scores below 620 even though they qualify for the loan and could afford the required minimum 3.5 percent cash investment. About a third of senior loan officers who responded to the April 2013 survey indicated they were less likely to approve FHA home-purchase loan applications within the 580-620 FICO range this year compared to last year. They prefer lending to borrowers with a 720 FICO and who are making a 10 to 20 percent downpayment, the survey showed. An estimated 75 percent of banks cited the ...

The Texas House of Representatives has approved legislation that will let voters decide on Nov. 5 whether to allow home-equity purchase lending in the Lone Star State. The bill would amend the Texas constitution to authorize Home Equity Conversion Mortgage for Purchase loans, which would make the program available to Texans for the first time. The state legislature voted 139 to 1 in favor of Senate Joint Resolution 18, which the Texas Senate approved unanimously in March. Specifically, the bill would amend the state constitution to ... [One chart]

The prospect of legislation being offered that would grant the Department of Housing and Urban Development greater authority to manage the Home Equity Conversion Mortgage program has improved significantly after two House lawmakers declared their intention to introduce a bipartisan bill. Reps. Michael Fitzpatrick, R-PA, and Denny Heck, D-WA, announced during a recent hearing by the House Financial Services Subcommittee on Housing and Insurance that they will co-sponsor legislation to give the FHA the authority it needs to swiftly implement HECM reforms by mortgagee letter. Fitzpatrick expressed his support for ...