A nonsupervised Arizona FHA lender whose high default and claims rate triggered a supervisory audit earlier found itself in a deeper mess for improper underwriting on a number of FHA streamline refinanced loans that resulted in losses to the FHA insurance fund. The Department of Housing and Urban Development’s Inspector General found that Allen Mortgage of Centennial Park, AZ, violated HUD’s regulations , procedures, and instructions in the underwriting of FHA-insured loans. Specifically, of the 73 streamlined refinance mortgage loans reviewed by the IG, 23 were ...

VA Home Loan Program Celebrates 20-Millionth Loan Beneficiary. The Department of Veterans Affairs this week commemorated the 20-millionth recipient of a VA loan under the agency’s Home Loan Guaranty Program. Agency officials held a ceremony at the Woodbridge, VA, home of the loan’s recipient, Mrs. Elizabeth Carpenter, whose husband, Capt. Matthew Carpenter, passed away in 2010. Since 1944 as part of the original GI Bill of Rights, the VA has been providing guarantees to 30-year mortgage loans with low interest rates and has guaranteed ...

The Mortgage Insurance Companies of America urged U.S. banking regulators not to exclude private mortgage insurance as they consider the proposed Basel III risk-based capital framework for the nation’s banks. Commenting on the proposed rules this week, MICA urged regulators to acknowledge the crucial role private mortgage insurance plays in the single-family residential market and recognize it in the proposed capital rules “with a reduced capital charge.” “Exclusion of private mortgage insurance in the proposed rules is a departure from accepted banking practices and would have ‘unintended adverse consequences on housing finance and the broader U.S. economy,’” said Suzanne Hutchinson, MICA executive vice president. Under the proposed U.S. implementation of Basel III, conventional residential mortgages with loan-to-value ratios in excess of 80 percent, regardless of the presence of private mortgage insurance, could trigger...

The Federal Housing Finance Agency is looking for feedback on a proposed advisory bulletin which would set forth standards to guide FHFA staff in its supervision of secured lending to insurance company members of the 12 Federal Home Loan Banks.The Finance Agency’s advisory bulletin on insurance company collateral, published in the Oct. 5 Federal Register, noted that lending to insurance company members over the last several years has come to represent “an increasingly larger portion” of FHLBanks’ overall business, with several Banks actively targeting this member segment.

PNC Bank has sued Republic Mortgage Insurance Co. for refusing to pay claims and attempting to rescind coverage on thousands of legacy mortgage loans that came with the bank’s acquisition of National City Corp. in 2008. In a complaint filed in federal district court in Pittsburgh last week, PNC Bank alleged that the North Carolina mortgage insurer refused to honor coverage it sold to National City under a “flow” policy and “pooling” policy between 1989 and 2005 by increasing its rescissions and cancellations. The flow policy provided...

The number of major fair lending settlements brought by federal regulators over the last year highlights the increasing importance of mortgage lenders properly evaluating their risk of being out of compliance and responding appropriately and preemptively, according to top banking agency officials. Since November 2011, the Department of Justice has settled seven fair lending cases – against Bank of America, Countrywide Financial, GFI Mortgage Bankers, Luther Burbank Savings, Mortgage Guaranty Insurance Corp., SunTrust Mortgage, and Wells Fargo – mostly related to steering, pricing and underwriting. In the aggregate, these settlements have produced more than $550 million in monetary relief in compensation for more than 250,000 victims, according to Jon Seward, head of housing and civil enforcement for the Justice Department. “All seven cases resulted from referrals” as the regulators are...

A National Association of Insurance Commissioners proposal for more conservative ratings of insurer holdings of residential and commercial MBS could result in higher risk-based capital requirements on some of these securities, warned analysts. As the proposal currently stands, the changes involve increasing the probability weights assigned to more pessimistic economic scenarios. However, the method by which the economic scenarios are created will not change, according to Barclays Capital analysts monitoring the work of NAIC’s Valuations of Securities Task Force, which was assigned to develop the risk-based capital proposal for insurers’ CMBS and RMBS holdings. The proposed peak-to-trough economic scenarios for RMBS and CMBS consist...

While President Barack Obama and his Republican challenger, Gov. Mitt Romney, differ widely on key issues, both candidates appear to agree on the need to reduce the government’s role in housing and bring private capital back to the mortgage market, industry observers say. Nothing much has been said in public forums or in the first presidential debate (except for a brief mention of the “qualified mortgage” proposal) about the housing issue, but observers say their positions on FHA may not be far apart. Obama’s approach to the housing crisis is ...

Despite problems associated with the program, the FHA 203(k) Rehabilitation Mortgage Program has seen some modest production gains during the last few quarters, according to an Inside FHA Lending analysis of FHA data. Top FHA 203(k) lenders reported $1.8 billion in total originations during the first six months of 2012, with the top five lenders accounting for 46.9 percent of production. Production rose 8.1 percent from the first quarter to the second, from $851.2 million to $920.5 million. Purchase fixer-uppers comprised ... [Includes 1 chart]

The FHA is starting to lose business to private mortgage insurers and the conventional mortgage market because it is no longer the cheaper alternative, a recent industry survey indicated. Numbers released by the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey show consumer preference for conventional home loans rising as a growing number of homebuyers, particularly current homeowners, used mortgages backed by Fannie Mae and Freddie Mac to finance home purchases in August. The survey noted that current homeowners increased their use of mortgages in June this year while investor participation began ...