The Department of Housing and Urban Development and Lender Processing Services are trying to find out whose data on FHA foreclosure starts were flawed, leading to a dispute over a controversial LPS report. The April Mortgage Monitor report released by LPS shows that, while overall foreclosure starts fell 2.6 percent in April, FHA foreclosure starts jumped 73 percent to 60,000 during the month. LPS explained that the high default rate of FHA’s 2008-2009 books of business and high origination volume in those years drove the increase. Although all FHA vintages saw increases in foreclosure starts in April, those from 2009 onward have ...

Three more FHA-approved lenders have found themselves under government scrutiny as the Department of Housing and Urban Development’s Office of the Inspector General broadened its investigation of potential abuses of the FHA single-family program. The OIG reportedly issued subpoenas to three large financial institutions last month to submit information on their FHA operations to determine whether the lenders followed HUD requirements when originating and underwriting FHA loans. The inspector general also would look to see whether quality control programs are ...

The Department of Housing and Urban Development is expanding an existing FHA note sales program as an alternative strategy for disposing of foreclosure property from the department’s bulging real estate-owned inventory. HUD Secretary Shaun Donovan announced enhancements to the accelerated claims disposition (ACD) program, which was designed primarily for delinquent FHA loans, at the 2012 Clinton Global Initiative America Meeting held this week in Chicago. The event brings together government and private sector leaders to discuss ways to ...

Making the Department of Veterans Affairs’ adjustable-rate mortgage programs permanent would cost $144 million in new direct taxpayer subsidies over the next 10 years, according to Congressional Budget Office estimates. Based on the number of ARM and hybrid ARM loans the VA has guaranteed in recent years, CBO estimates that the VA would guarantee approximately $1.3 billion worth of additional loans annually over the next 10 years. Consequently, additional subsidy costs for those loans would increase direct spending by $52 million over 2012-2017 and $144 million over 2012-2022, the CBO said. Subsidy costs of those additional loan guarantees would be paid from a ...

The Consumer Financial Protection Bureau is seeking comment and information on mortgages not financed by Fannie Mae or Freddie Mac, including those insured and guaranteed by the federal government, as it reopened the public discussion for the proposed “ability to repay” rule. New data the Federal Housing Finance Agency provided to the CFPB after the close of the rulemaking’s comment period spurred the bureau to reopen the comment period until July 9, 2012. The new FHFA data track the performance of loans purchased or guaranteed by Fannie Mae and Freddie Mac from 1997 to 2011. The CFPB also has obtained data on ...

The volume of new mortgages with FHA insurance jumped 25.1 percent in April from a year ago, continuing the heightened production pace in government lending seen during the first three months of 2012. Excluding Home Equity Conversion Mortgage originations, FHA lending in April improved not only on a year-over-year basis but also on a monthly basis. FHA lenders combined for $19.2 billion in new FHA endorsements for the month, up 8.2 percent from March and from $17.7 billion in April of last year, according to Inside FHA Lending’s analysis of FHA data. FHA’s April originations rode on a surge of government-insured lending in the first quarter of 2012, during which the ... [1 Chart]

A proposal to replace the FHA’s current Tier Ranking System with a Servicer Performance Scorecard as a basis for determining servicer incentive payment is expected to be published in the Federal Register by the end of this month. In the previous issue of Inside FHA Lending (Volume 5, Issue 11, May 25), it was reported that a coalition of industry groups asked the FHA to adopt a private transfer fee rule in harmony with the final rule recently adopted by the Federal Housing Finance Agency. In a recent seller/servicer bulletin, Freddie Mac announced that, effective July 16, it will not purchase mortgages that are ...

Mortgage Guaranty Insurance Corp.’s hopes for a “business as usual” relationship with Freddie Mac despite the mortgage insurer’s recent lawsuit against the GSE over a pool insurance dispute appears to be wishful thinking after Freddie has counter-punched with litigation of its own, claiming breach of contract and seeking punitive damages. Two weeks ago MGIC filed suit against Freddie and the GSE’s regulator, the Federal Housing Finance Agency, in the U.S. District Court Eastern District of Wisconsin, Milwaukee division, where the MI is based.

The Department of Housing and Urban Development has expressed concern over the “lack of alignment” between FHA’s credit underwriting standards and credit overlays – a probable explanation for the apparent increase in FHA lending to non-traditional FHA borrowers. Responding to an Inside FHA Lending inquiry, FHA Deputy Assistant Secretary Charles Coulter said HUD will look at lenders’ compare ratio as a potential driver for overlays and will work to improve clarity in FHA manual underwriting. In recent remarks at the Mortgage Bankers Association’s National Secondary Market Conference in New York, Coulter said ...