Quicken Loans, the nation’s largest nonbank lender, recently offered a lender-paid mortgage insurance “sale” through loan brokers, committing $100 million to the effort and wrapping up the promotion in roughly 60 hours. According to Tod Highfield, vice president of loan production at Quicken, the sale wasn’t designed to hit any volume targets per se, but was meant to heighten the firm’s profile among certain segments of the origination market, namely brokers, credit unions and community banks. The offer was pitched...

The FHA’s accounting of receivables from settled legal claims and partial claim notes is so sloppy that the exact amount collected might be difficult to gauge, according to an internal audit of the agency’s FY 2014 and 2013 financial statements. Conducted by the Department of Housing and Urban Development’s Inspector General, the audit concluded that the FHA had booked receivables from seven cash settlements totaling $1.2 billion in FY 2014 but collected only $466.4 million of those settlements. In addition, during fiscal 2014, as part of its loss mitigation efforts to bring delinquent loans current, the FHA paid $4.4 billion to lenders for partial claims but never received the required promissory notes from the lenders for $1.5 billion of the claim payments. FHA rules require lenders to provide the agency with promissory notes for the payments made or ...

Reports that the Senate Appropriations Committee might include a proposed FHA administrative fee in the Senate’s spending bill for financial and housing agencies is causing a furor within the mortgage financing industry. Industry groups have come out in force, urging the leaders of the Senate committee to remove the provision from a continuing resolution to fund the government beyond Dec. 11. There is speculation that the House might go along with the fee. The provision, expected to raise $30 million for FHA quality assurance efforts, would allow the Department of Housing and Urban Development to charge a fee of no more than 4 basis points of the original principal balance of all FHA-insured mortgages a lender made in the previous fiscal year. HUD originally made the request in President Obama’s proposed FY 2015 budget. Over industry objections, the Senate later incorporated the ...

The FHA and Ginnie Mae will share in the record-setting $16.7 billion settlement between Bank of America, the Department of Justice and certain other federal agencies and six states to resolve claims related to mortgage fraud and toxic mortgage-backed securities. The FHA will receive approximately $800 million and an undisclosed amount for consumer relief from BofA. The bank was accused of falsely certifying poorly underwritten loans for FHA insurance, resulting in huge losses for the agency. It is unclear how much Ginnie Mae’s share would be from the settlement. “As a direct endorser of FHA-insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta Lynch for the Eastern District of New York during the announcement of the global settlement in August. “In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not ...

A provision on lender-placed insurance in the servicing segment of the FHA’s draft Single Family Housing Policy Handbook appears to contradict the agency’s previously stated position on LPI, according to the American Bankers Association. The ABA urged the FHA to retain the current policy regarding a lender’s discretion in requiring hazard and flood insurance for loans the agency insures. In a comment letter, the ABA expressed concern about the FHA’s new proposed standard for LPI, which could limit the amount of LPI coverage a lender or servicer could impose on a borrower to the outstanding balance of the loan. It would apply broadly to hazard insurance, including flood insurance. There are several problems with this approach, the ABA said. The group noted that Congress had established a standard which requires any home construction in a special flood hazard area (SFHA) to obtain “at least” ...

Unless contravened by another federal or state statute or jurisdiction, FHA lenders must use the agency’s adjusted fair market value (AFMV) for all foreclosure sales and post-foreclosure sales associated with defaulted FHA loans, according to the FHA. The FHA said it issued guidance because more lenders are using FHA procedures regarding claims without conveyance of title. Before applying the AFMV, lenders must ensure that th loan’s FHA insurance is still active and that the loan is not subject to indemnification. Both items may be verified by checking Neighborhood Watch. Working with the borrower, the lender must make sure that all possible applicable home-retention and loss-mitigation options have been considered and explored before moving to an AFMV alternative. In addition, the lender must determine that the borrower’s case does not meet the criteria for a pre-foreclosure sale or deed-in-lieu of foreclosure. Mortgagees may not proceed with any foreclosure sale until ...

The FHA has extended a temporary waiver of insurance requirements to allow certain condominium projects or developments that otherwise would not qualify for mortgage insurance to remain eligible. Temporarily waiving provisions pertaining to master/blanket hazard, flood, liability and other insurance requirements will help ensure the availability of affordable housing units, including condos, to people who cannot afford to purchase a home or could not qualify for a mortgage loan, the agency said.The temporary waiver was issued on Nov. 27, 2013, and now has been extended to Aug. 31, 2016. It allows individual-unit owners to obtain and maintain their own insurance coverage on their condo unit.The waiver also requires condo projects to maintain a master/blanket insurance policy for hazard, flood and liability risks and any other insurance that may be ...

Final PMIERS Rule Expected in 1Q15. The Federal Housing Finance Agency has revised its timeline for publishing a final version of the Private Mortgage Insurance Eligibility Requirements, which Fannie Mae and Freddie Mac proposed in July at the direction of the FHFA. The PMIERS will establish capital and other requirements for private mortgage insurers. In a statement, industry trade group U.S. Mortgage Insurers said it has received word from the agency that the final PMIERS would not be published until at least late in the first quarter of 2015. The FHFA initially indicated that a final rule would be issued by yearend 2014. The USMI reiterated its support for an updated PMIERS. Mortgage Executives Concerned About G-Fee Increase. A survey of mortgage executives at this year’s Mortgage Bankers Association annual conference found 53 percent saying that ...

Private mortgage insurers would support a front-end, risk-transfer program that makes greater use of MI, such as the one proposed by the Mortgage Bankers Association, to reduce taxpayer risk, according to MI executives. The MIs are interested in moving forward with a year-old MBA proposal for a risk-sharing program that would allow deeper MI coverage on loans with high loan-to-value ratios, and coverage on loans with LTVs below 80 percent, accompanied by a reduction in guaranty fees. Importantly, this would require lowering the floor on loss factors to account for these lower-risk loans, the MBA said. However, two important things must be...

The majority of mortgage industry executives believe a proposal to raise Fannie Mae and Freddie Mac guaranty fees will hurt lenders, raise origination costs and lead to fewer loans being made, according to a survey by Genworth U.S. Mortgage Insurance. “The survey findings were in line with expectations and highlight the need for continued dialog on regulatory reform and credit access,” said Rohit Gupta, president/CEO of the company. An estimated 53 percent of executives believe raising the g-fees would result in fewer loans being closed. And 23 percent of executives said higher fees for the government-sponsored enterprises would increase demand for FHA loans. While 13 percent said an increase would limit industry competition, 11 percent said it would stoke competition. ...