The Department of Housing and Urban Development has announced plans to consolidate multifamily hubs nationwide and close a number of its smaller field offices. The plan would result in an estimated $61.9 million in annual costs savings for HUD after completion and affect approximately 900 of the department’s 9,300 employees. No employee will be laid off as a result of the restructuring, according to HUD Secretary Shaun Donovan. Donovan said the changes are part of a broader, long-term effort that will allow HUD to continue to deliver high-quality services by adapting modern best practices. The decision to ...

The Department of Housing and Urban Development’s Office of the Inspector General has recommended that two lenders be reviewed for potential treble damages under the False Claims Act for allowing restrictive covenants to be recorded in regard to 864 FHA-insured loans in violation of FHA regulations. CTX Mortgage Co. of Dallas, TX, and Pulte Mortgage of Englewood, CO, could be on the hook for millions of dollars if HUD agrees to accept the OIG’s recommendations, which also include reimbursements and indemnification for paid and potential future claims. Both lenders maintained that ...

Congress Extends MI Tax Deductibility. Congress again extended legislation ensuring the tax deductibility of mortgage insurance on purchase and refinance loans through Dec. 31, 2013. Consequently, homeowners with adjusted household incomes of $109,000 or less can continue to claim the MI tax deduction on their federal tax return retroactive to Jan. 1, 2012. With a tax deduction, qualified borrowers may be able to ...

Genworth Financial reported improved first-quarter earnings, Mortgage Guaranty Insurance Co. made some progress on the litigation front while new entrant National Mortgage Insurance went through some highs and lows in the same week. It’s not every day a private MI gets to report a net profit, but Genworth’s U.S. mortgage operation posted $21 million in operating income during the first quarter, following a $32 million loss in the previous quarter. It was the first time in five years that the MI unit reported a profitable quarter. First-quarter results included a $4.5 million charge related to the settlement with the Consumer Financial Protection Bureau announced on April 4. Genworth’s MI losses were...

Look for Fannie Mae’s and Freddie Mac’s regulator to press forward with its policy proposal to develop a set of aligned standards for force-placed insurance, the head of the Federal Housing Finance Agency told lawmakers last week. Testifying before the Senate Banking, Housing and Urban Affairs Committee, FHFA Acting Director Edward DeMarco said the agency plans to pursue a “broader approach” to force-placed insurance. “Our goal is to establish a set of standards that could be adopted by a broader set of mortgage market participants, similar to what was done with the Servicing Alignment Initiative,” said DeMarco. “This broadened approach will also enable greater regulatory coordination in an effort to consider the various issues associated with lender-placed insurance.”

National MI, a new entrant in the private mortgage insurance market, began issuing its first commitments this month, although company officials acknowledge that a lot of the company’s operations are still being put together. In fact, building a new MI from scratch with state-of-the-art technology and no hangover from the housing collapse is one of National MI’s key advantages, officials said. “2013 is...

Private mortgage insurers provided coverage on some $8.2 billion of mortgages securitized by Fannie Mae and Freddie Mac during the first quarter of 2013 that had loan-to-value ratios exceeding 105 percent, according to a new Inside Mortgage Finance analysis of loan-level data. Private MIs had little choice in the matter since the Home Affordable Refinance Program allows underwater borrowers to refinance without getting additional MI, or any mortgage insurance if the original loan wasn’t insured. In fact, Fannie and Freddie securitized a total of $27.1 billion of mortgages with LTV ratios over 105 percent, most of which did not have insurance. But most private MI coverage was placed...[Includes one data chart]

The Department of Housing and Urban Development this week issued guidance that spells out procedures for demanding indemnification from lenders participating in the agency’s Lenders Insurance (LI) program for loans deemed ineligible for FHA insurance. The guidance (Mortgagee Letter 2013-10) implements regulation that HUD finalized in January 2012. Indemnification for defective LI loans became even more important for the FHA after an independent actuarial audit in November revealed a negative capital reserve ratio and that a taxpayer bailout seemed imminent. Compliance experts warned that, with the policy changes, the more than ...

Department of Housing and Urban Development Secretary Shaun Donovan this week reiterated his agency’s request for additional legislative authority to regulate the Home Equity Conversion Mortgage program by mortgagee letter so that much-needed changes can be implemented immediately. Rather than go through the tedious legislative process of amending HECM legislation to improve the program and reduce HECM losses, expanding HUD’s authority would enable the department to undertake immediate reforms, such as restricting lump sum payments, requiring financial assessments of HECM applicants and requiring borrowers to ...

The Department of Justice recently announced enforcement actions against a New York-based FHA lender and its owner/president for fraudulent certification of FHA-insured loans as well as two separate settlements with bank subsidiaries for alleged violations of the Servicemembers Civil Relief Act. In the first action, the U.S. Attorney for the Southern District of New York, the Department of Housing and Urban Development, and the HUD Office of the Inspector General jointly announced a civil mortgage fraud lawsuit against ...