A new mortgage reform proposal drafted by a blue-ribbon panel gives a fairly prominent role to private credit enhancement as a key feature in a new mortgage securitization system. While the plan released this week by the Bipartisan Policy Centers Housing Commission like all others that came before it calls for a smaller government role in the mortgage sector, it remains to be seen whether it will get the reform process off the ground in a stalled political environment. The commission, comprised of former lawmakers and cabinet officials, both Republican and Democrat, calls for phasing out the government-sponsored enterprises in favor of a new federal entity that explicitly acts as a backstop of last resort after the private sector. It would replace Fannie Mae and Freddie Mac over a five- to 10-year period with a new Public Guarantor, a wholly government entity that would provide an explicit, but limited guaranty on mortgage-backed securities. The government would cover...
A recent recommendation by the House Financial Services Committee to the FHA to consider charging additional user fees to strengthen and protect the Mutual Mortgage Insurance Fund has raised questions in the industry as to what lawmakers meant by user fees. The FHA, apparently, has no authority to do so. In its recently published views and estimates related to the FY 2014 budget, the committee noted that while the FHA has increased its mortgage insurance premiums, lawmakers remain concerned that the agency has failed to make full use of its existing authorities to protect the health of the fund. The committee urged...
Improving house prices and increased availability of private mortgage insurance should provide greater opportunity to FHA borrowers to refinance to conventional loans, according to a recent report from Barclays Research. FHA annual mortgage insurance premiums are set to go up another 10 basis points on April 1 for most loans, except mortgages originated before June 2009 that are being refinanced through FHAs streamline refi program. Those loans pay just 1 basis point in upfront premium and 55 bps in annual premiums. The most recent available data through November 2012 show...
House Republicans may be able to pass tough FHA reform and solvency legislation out of committee but they may not have enough votes on the House floor or in the Senate to sustain such a bill, according to industry sources. Even after two successive hearings in the House Financial Services Committee this month, there has been no clear indication from Chairman Jeb Hensarling, R-TX, as to which proposals might go into a legislative package of FHA reforms. Hensarling is said to be operating with a very strong hand, and if it were up to him entirely, he would draft legislation that would contain some ...
Wells Fargo suffered a big legal setback after a federal judge denied its request to enforce a consent judgment under last years landmark $25 billion servicing settlement to prevent a New York lawsuit from proceeding. Judge Rosemary Collyer of the U.S. District Court for the District of Columbia rejected Wells Fargos argument that the new government suit filed in Manhattan district court was improper because it violated the consent judgment against Wells Fargo and flies in the face of the judgments liability release provision. Wells Fargo argued that the allegations in a civil mortgage fraud suit filed by ...
A modest decline in FHA endorsements of jumbo loans in the fourth quarter of 2012 could presage further declines this year, following the Department of Housing and Urban Developments recent proposal to raise the downpayment requirement to 5 percent, from 3.5 percent, for loans above $625,500. The FHA already has raised its jumbo mortgage insurance premiums to 1.55 percent annually and increased the monthly premiums on new, non-jumbo FHA mortgages by 10 basis points. The agency retained the 3.5 percent downpayment for new forward mortgages below $625,500. The increased premiums are ... [2 charts]
Industry participants who track various FHA data, including Home Equity Conversion Mortgage loans and Neighborhood Watch compare ratios, may have noticed delays in their postings. For example, the latest available data for HECM originations was in September, the end of fiscal year 2012, and no updates have been posted since. David Stevens, president and chief executive officer of the Mortgage Bankers Association, also wondered why Neighborhood Watch was down. He suspected lack of funding. A Department of Housing and Urban Development spokesman explained that the FHAs reporting timelines and procedures are undergoing ...
The Senate Banking, Housing and Urban Affairs will continue focusing on FHA solvency as part of its legislative agenda for the 113th Congress and has called a hearing next week to try to reach some bipartisan agreement on FHA reform. In a memorandum, Committee Chairman Tim Johnson, D-SD, said ensuring the health of the FHA Mutual Mortgage Insurance Fund is one of committees top priorities in sustaining and strengthening the nations economic recovery. Johnson said the committee will continue to conduct oversight on the condition of the FHA insurance fund and the role the FHA plays in the housing market as part of ...
The Department of Housing and Urban Developments Office of the Inspector General has alerted the FHA of significant potential losses because a California-based direct endorsement lender allowed certain FHA-insured loans with prohibited restrictive covenants to be recorded. An OIG audit of 84 FHA-insured loans underwritten by Standard Pacific Mortgage of Irvine, CA, found 28 loans with unallowable restrictive covenants that were recorded in certain Florida and Arizona county registers. The loans were closed between Jan. 1, 2008, and Dec. 31, 2011, the OIG said. Of the 28 loans, 15 resulted in ...