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...

The outlook for the private mortgage insurers remains grim as MI companies continued reporting significant operating losses in 2011 and, unless positive factors come into play by mid-2012, time may soon run out for the sector, according to a Standard & Poor’s analysis. As the U.S. economy struggles in recovery, little hope remains for mortgage insurers to begin reporting operating profits by the end of this year, said S&P senior credit analyst Ron Joas. Sluggish employment growth and the depressed housing market have resulted in more delinquencies that pose further...(Includes one data chart)

Failure by a sponsored third-party originator or by an FHA-approved mortgagee acting as a sponsored TPO to comply with FHA requirements will result in drastic administrative action that may include loss of FHA approval and civil penalties, the Department of Housing and Urban Development warned. The warning came as HUD clarified the requirements for the origination, closing and submission of mortgage loans for FHA insurance endorsement through sponsored third-party originators. The agency is clamping down on bad business practices that lead to high delinquency and claims rates, which ultimately weaken ...

The Department of Housing and Urban Development has updated the FHA TOTAL Mortgage Scorecard User Guide to reflect current FHA guidance on derogatory or delinquent credit and on borrower employment history. A lender is required to downgrade a mortgage loan application to “refer” and manually underwrite the loan for cash-out refinance transactions if any mortgage trade line, including mortgage line-of-credit payments, show any mortgage delinquencies within the most recent 12 months or if it shows less than six months of payments on the existing mortgage. The same guidance applies if the loan is ...

The federal rulemaking process can be confusing at times. Currently, the Department of Housing and Urban Development sets the area-based mortgage loan limits annually and allows local interested parties and housing industry groups to appeal for increases in the FHA’s maximum mortgage limits for specific counties or metropolitan statistical areas. Any interested party may submit a request for an increase in the mortgage limits of a particular area if the party believes that the present limit does not accurately reflect the higher home sales prices in that area. Requests must be adequately supported by ...

The volume of Home Equity Conversion Mortgage loans continued to drop both on quarterly and yearly bases while the overall FHA market ended January 2012 on a weaker note compared to the same month last year. HECM production fell 11.0 percent in 2011 from the previous year to $16.9 billion and off 20.6 percent from the third to the fourth quarter. Sponsors as a share of lender originations accounted for 40.7 percent of new HECM loans originated over the 12-month period. Initial principal amount at origination totaled $10.9 billion. Wells Fargo Bank ended the year as ... (with 2 charts)

Despite watching two long-time competitors shoved to the sidelines by eroding reserves, private mortgage insurers continued a slow rebound from near-irrelevance just two years ago, while crowning a new market leader for the first time since 1994. Exactly who the new industry leader isn’t clear. Most private mortgage insurers include Home Affordable Refinance Program loan originations in the new insurance written figures that they report to Inside Mortgage Finance. However, United Guaranty has declined to participate in our survey, and the numbers released by AIG, the MI’s...(Includes three data charts)

The National Association of Realtors recently asked the Department of Housing and Urban Development to allow investors to participate in the FHA’s property rehabilitation program. The FHA’s 203(k) Rehabilitation Mortgage Insurance Program allows homebuyers to take out a mortgage to purchase a house, including the cost of its rehabilitation. The program also allows the current owners to finance the rehabilitation of their own homes. Currently, investors and cooperative units are barred from using the 203(k) programs. Individual condominium units may be insured if ...

Mortgage Guaranty Insurance Corp. announced a new two-year waiver from regulatory capital requirements from the Office of the Insurance Commissioner for the State of Wisconsin, which would allow it to write new business through Dec. 31, 2013. Approved on Jan. 23, the waiver came after the previous waiver expired at the end of last year. As did the prior order, the new waiver allows MGIC to write new business as long as it maintains a level of capital sufficient to keep the company afloat. The new waiver required MGIC to contribute $200 million to MGIC Indemnity Corp. (MIC), a direct subsidiary of MGIC, by Jan. 31 as part of a ...