A Department of Housing and Urban Development proposal to reduce the amount of seller contributions on FHA loans on behalf of homebuyers would lock out lower-income purchasers, limit home sales and stall economic recovery, warned FHA lenders. As the proposal’s comment period ended on March 24, emailed comments opposing the proposed rule continued to pour in at HUD. “We are finally seeing an increase in buyers in our market in the entry-level purchase price,” said one loan officer. “I shudder to think of what will happen if this proposal goes through.” The verdict appears to be ...

The focus on foreclosure documentation on forward mortgages has set the stage for similar scrutiny on reverse mortgages, and the extra documentation required in a reverse mortgage adds to this challenge, according to compliance experts. In a recent legal analysis, Christopher Willis and Mercedes Kelly Tunstall, litigation attorney and of counsel at the Washington law firm Ballard Spahr, respectively, said reverse mortgage lenders and servicers could avoid many of the problems encountered by forward mortgages by examining their foreclosure process carefully and learning from ...

American International Group, which at times has seemed reluctant to admit that it owned a private mortgage insurance business, is now considering using the MI subsidiary to expand its footprint in the mortgage business. In an interview with the Financial Times, AIG Chief Executive Robert Benmosche said that the company is considering purchasing the mortgages it insures, though it is still working on hammering out the program’s details. Citing the fact that AIG is still in the planning stages, a company spokesperson declined to comment further on the program, specifically on what kind of loans AIG will...

Private mortgage insurers are optimistic the industry will remain competitive and expect a boost in new business as a result of the FHA’s recent premium price adjustments, but things may change for better or for worse depending on how economic factors play out in 2012. Officials at Radian Guaranty and Mortgage Guaranty Insurance Corp. said 2012 may yet turn out be a good year despite pessimistic outlooks by rating agencies. MI executives point to the declining unemployment rate and loan defaults as positive signs. Radian sees the recent FHA pricing changes as an opportunity for the MI industry...

The FHA’s total capital resources dipped slightly by $400 million in the last three months of 2011, but things could have been much worse had it not been for lower claims activity, according to the FHA’s quarterly report to Congress on Mutual Mortgage Insurance Fund programs. On balance, the report shows little change and nothing unexpected during the quarter, said industry participants. The much-anticipated changes will come after two FHA premium adjustments become effective on April 1 – an annual mortgage insurance premium increase of 10 basis points and a 75 bps hike in upfront premiums, they said. The upfront premium increase is expected to ...

The FHA would have more flexibility to adjust its insurance premiums and greater latitude to require lender indemnification under legislation approved by the House Financial Services Committee this week. The committee passed H.R. 4264, the FHA Emergency Fiscal Solvency Act of 2012, by voice vote on March 27, sending the measure to the House floor for consideration later this year. The bill is slightly different from the initial draft the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity passed on Feb. 7, according to the bill’s author, Rep. Judy Biggert, R-IL. Under the bill, approved lenders may ...

Perceived inaccuracies in public discussions about the FHA’s health and the way the agency manages its business have prompted Acting FHA Commissioner Carol Galante to address the issues and answer critics. In a posting on the Department of Housing and Urban Development’s official blog this week, Galante said the FHA is “moving in the right direction” and that the Mutual Mortgage Insurance Fund is in a much better shape than it was in 2009. Critics have raised concerns about FHA’s solvency, citing the current level of capital reserves, which have fallen way below the ...

Despite the steps taken recently by the Department of Housing and Urban Development to shore up the FHA insurance fund, concerns remain as to whether such actions are enough to make up for FHA’s losses and restore the agency’s mandatory 2.0 percent capital reserve ratio in a timely manner, according to HUD’s top internal auditor. Testifying before the House Committee on Appropriations this week, HUD Inspector General David Montoya warned further actions might be necessary to ensure the stability of the FHA Mutual Mortgage Insurance Fund and reduce its risks. For example, FHA now uses credit scores to ...

The Department of Housing and Urban Development has issued new guidance allowing non-FHA mortgage loans to qualify for an FHA refinance loan if the lender or investor agrees to write off the unpaid principal balance of the original first-lien mortgage by at least 10 percent. The guidance expands last year’s enhancements to the FHA Short Refinance program, which allowed responsible homeowners with negative equity to refinance into a 30-year, fixed-rate FHA loan. It also extends the program until Dec. 31, 2014. Under the latest changes, underwater borrowers who may have been delinquent ...

A Fannie Mae proposal to reduce the cost of lender-placed homeowner insurance might be great news for borrowers but not for insurance companies that underwrite the product, warned Moody’s Investors Service. While Fannie has not disclosed the full details of its cost-reduction proposal, the government-sponsored enterprise plans to place policies directly with insurance companies, rather than accept policies put in place by the mortgage lender. Last week, the GSE issued a “request for proposals” inviting insurance companies to compete for the GSE’s lender-placed business. The request is...