Four private mortgage insurance companies this week agreed to pay $15.4 million in penalties to resolve government charges that they improperly paid kickbacks to mortgage lenders for business referrals in violation of the Real Estate Settlement Procedures Act. The Consumer Financial Protection Bureau filed complaints and proposed consent orders against Genworth Mortgage Insurance Corp., Radian Guaranty, Inc., Mortgage Guaranty Insurance Corp. and United Guaranty Corp. for the alleged illegal business practices that contributed to the financial crisis. The CFPB said the MI companies engaged in illegal ...

The U.S. Department of Agriculture’s rural housing program finances only modest homes for low- to moderate-income borrowers, not properties for millionaires as alleged in a news account published by Reuters, according to the program’s top executive. “USDA continues to operate its housing programs under the law and in accordance with the will of Congress,” said Tammye Trevino, administrator of the USDA Rural Housing Programs. Trevino disputed the Reuters report, which claimed that the USDA had guaranteed loans to “dozens of millionaires” by backing at least 500 loans of $500,000 or more, including more than ...

Ginnie Mae issuance fell in the first quarter of 2013 but was easily offset by significant gains from a year ago, according to Inside FHA Lending’s analysis of FHA data. Mortgage-backed securities production at the government facility dropped 5.1 percent to $104.1 billion in the first quarter but increased 28.6 percent year-over-year , which was more than enough for an offset. The securities were backed mostly by FHA and VA loans with a combined total of $99.33 billion. Federally guaranteed rural housing loans totaling $4.84 billion were also in the mix. Wells Fargo and Chase Home Finance led the Ginnie Mae market with a combined ... [1 chart]

Consumer complaints about mortgage foreclosure relief and debt management services providers were fewer in 2012 than in 2011, according to the Federal Trade Commission. In the FTC’s annual report listing the top consumer complaints for the past year, mortgage foreclosure relief and debt management dropped to #15 (33,791 complaints) in 2012 from #13 (38,140 complaints) in 2011. For the 13th year in a row, identity theft complaints topped the list, representing 18 percent of all consumer complaints. Complaints about real-estate fraud remained at #25, although fewer consumers complained about it last year (8,468) compared to ...

The Securities and Exchange Commission last week cleared the way for Genworth Financial to separate its struggling mortgage insurance operations and create a new holding company structure that would shield the parent from any fallout from problems of its MI operations. The SEC granted Genworth’s request for a no-action letter, which ensures that no enforcement action would be taken based on Genworth’s interpretation of rules and regulations regarding mergers and succession, new registrant, obligations and indentures. Genworth announced...

Industry insiders, at least in some corners, may not be wild about the Federal Housing Finance Agency’s recent proposal to curb what it considers excessive force-placed insurance payments but the FHFA’s decision to seek public input on the measure is seen as a promising sign of future openness on agency policymaking. Under the FHFA proposal issued last week, seller/servicers would be prohibited from accepting sales commissions or fees related to the placement of force-placed insurance where a conflict of interest exists between them and the insurance providers and their affiliates. Formally published in the March 29 Federal Register for a 60-day comment period, the FHFA’s proposal responds...

Nearly two months after it shut down a plan by Fannie Mae to lower the costs of so-called “force-placed” insurance, the Federal Housing Finance Agency this week unveiled for public comment a plan that would ban the payment of lucrative commissions and reinsurance fees to banks in return for their purchase of lender-placed insurance policies. Under the FHFA proposal, seller/servicers would be prohibited from accepting sales commissions or fees related to the placement of force-placed insurance where a conflict of interest exists between them and the insurance providers and their affiliates. Fannie Mae and Freddie Mac may be affected by such costs where a servicer pays the higher premiums and is unable to recoup the cost from the homeowner or at a foreclosure sale. Consequently, explained the FHFA, the expense is passed along to the GSEs for reimbursement.

Two differing notions have emerged during a recent hearing in the House Financial Services Subcommittee on Housing and Insurance regarding the rapidly changing relationship between private mortgage insurance and the FHA single-family mortgage insurance program. One view is that FHA’s existing policies either ignore or violate basic regulatory principles and continue to crowd out private capital. Compared to state-regulated private MIs, the FHA has far less stringent standards and enforcement from a regulatory perspective has been disappointing. Proponents of this view say that ...

The FHA’s subsidy rate for its single-family mortgage insurance program is expected to remain negative and adjust significantly in the coming years along with other guarantees of new residential mortgages, according to the Congressional Budget Office. The CBO’s baseline estimates show the subsidy rate for the FHA Mutual Mortgage Insurance Fund at negative 6.0 percent in 2013 and eventually dropping to negative 1.2 percent in 2023, in line with a parallel decline in FHA’s share of loans with guarantees that will drop from 13.0 percent to 7.5 percent over the 10-year period. According to the Department of Housing and Urban Development’s FY 2012 third-quarter report to Congress, the FHA subsidy rate changed ...

The Internal Revenue Service is preparing to launch an industry-wide review of housing counseling agencies, including those approved by the Department of Housing and Urban Development, as well as other tax-exempt entities that provide mortgage foreclosure assistance, compliance experts warned. In fact, the IRS has started looking at providers that have applied for tax-exempt status in recent months and has denied three organizations in February 2013 alone, according to attorneys with the Washington, DC, law firm Venable. Housing counseling agencies can use the issues raised in the “private letter” rulings as a ...