Some observers say the reduction in the annual mortgage insurance premium earlier this year has put the FHA Single Family Mutual Mortgage Insurance Fund on an accelerated path to recovery. Whether that is enough to get the fund back to its statutory 2 percent capital reserve ratio remains to be seen. The FHA is getting stronger faster, said Brian Chappelle, a mortgage industry consultant, in an analysis foreshadowing the FHA’s November actuarial report on the state of the MMIF. Last year’s independent actuary projected FHA’s total loan production in 2015 at $124 billion, but the MIP cut has led to a 60 percent increase in the volume forecast, said Chappelle. In all likelihood, the FHA could be looking at more than $200 billion in total originations this year, he predicted. “When a business lowers its prices, it’s going to make it up in volume,” the consultant noted. “Thus, FHA revenue is going to be ...

The number of VA loans with a deficiency fell in April from March but was up 71.7 percent from the same period a year ago, according to the VA Lender Report Card. The report card includes VA loan reviews and deficiencies by month from April 2014 through April 2015. VA loan originations over the one-year period totaled 563,967, the report showed. Of those loans, 303,149 were purchase loans, 162,447 were streamlined refinances, and 98,371 were cash-out refis. A total of 39,037 loans were reviewed by VA, which comprised about 7.0 percent of total volume. Altogether, 14,793 loans (37.9 percent) had deficiencies. The average deficiency response time was 28.1 days. Of the 1,726 loans the VA examined in April, 613 (35.5 percent) contained deficiencies, down from 1,234 loans (33.7 percent of 3,662 loans reviewed) that were found with flaws in March. The number of deficient loans found in ...

A VA mortgage servicer must immediately schedule an inspection and protect a property securing a VA loan if the property has been left vacant or abandoned by its owners. According to new guidelines issued by the VA, loan servicers must conduct an inspection immediately after becoming aware that the property’s physical condition may be in jeopardy. If local codes require more extensive protection than what VA requires, servicers should adhere to local requirements, the agency said. Failure to protect and preserve the collateral may result in a reduced guaranty claim if the servicer’s failure increased the VA’s liability on the loan. Unless the loan is undergoing loss mitigation, a property inspection is also required before the 60th day of delinquency or before starting foreclosure, whichever is earlier, the VA said. In addition, a property inspection will be required at least once a month after ...

Fifth Third Bancorp became the latest mortgagee to fall victim to the federal False Claims Act after it agreed recently to an $85 million settlement with the government over alleged failures to self-report defective mortgages to the FHA. The settlement between the Department of Justice and FTB and its banking subsidiary resolves civil fraud claims arising from the bank’s origination of FHA-insured residential mortgages. According to the DOJ, the Ohio-based direct endorsement lender admitted to originating approximately 1,400 home loans it previously certified as FHA-eligible but which later turned out to be materially defective. FTB, however, did not report its discovery to the Department of Housing and Urban Development as required, resulting in millions of dollars in losses to the FHA Mutual Mortgage Insurance Fund. Under the settlement terms approved by ...

The Department of Housing and Urban Development has proposed a rule that would conform its property disposition practices and regulations to industry standards and make the program more effective and efficient. The proposed changes would allow HUD to obtain the best value for its real estate-owned properties, minimize losses to the Mutual Mortgage Insurance Fund, and expand homeownership opportunities. In addition, the proposed rule would prepare the agency for future changes to the FHA single-family property disposition program for REO properties. The proposed rule would clarify HUD’s authority to receive REO properties as well as possess, hold and maintain them throughout the disposition process. A provision in the proposed rule would clarify that various evaluation tools may be used to establish the list price for REO properties but only an approved appraiser in good standing may ...

The FHA has issued guidance on acceptable timetables in every state for completing the foreclosure process as well as for other procedural changes for forward and reverse mortgages. FHA regulations require that, when foreclosure of a defaulted loan becomes necessary, mortgage servicers “must exercise due diligence” in carrying out the foreclosure and in acquiring title to and possession of the property. The updated reasonable-diligence time frames will take effect for all cases in which foreclosure is initiated on or after Jan. 1, 2016. The reasonable diligence period begins with the first legal action required by the jurisdiction to start foreclosure and ends upon the acquisition of a good marketable title and possession of the property. The FHA expects servicers to comply with all federal, state and local laws when prosecuting foreclosures and possessing properties backing ...

The VA loan is a great option for veterans and servicemembers looking to purchase a new home. However, did you know it could also be paired with other home-financing programs to give the borrower a bigger bang for the buck? For instance, many real estate brokers and mortgage lenders are unaware that the VA loan can be used with certain products offered through state housing finance agencies to provide greater benefits to veterans and members of the military. The Colorado Housing and Finance Authority (CHFA) offers a tax credit program that allows VA borrowers to claim a percentage of the annual mortgage interest paid each year as a federal tax credit on their federal income tax returns. “It is not a tax deduction,” said Chad Patterson, a real estate agent with RE/MAX Traditions in Longmont, CO. “This can be a huge asset to the ...

Michaelson, Connor & Boul has reached the end of its term as mortgage compliance manager (MCM) of the Department of Housing and Urban Development. Sept. 30, 2015, was MCB’s last day as mortgage compliance manager, in charge of processing millions of pre- and post-conveyance transactions for HUD. MCB won the contract as HUD’s first national MCM in 2010, when the department reorganized its management and marketing(M&M) programs under a new M&M III. However, even before that, since 1999, MCB had been performing real estate acquisition and disposition services for HUD under the previous M&M programs. As mortgage compliance manager, MCB had a bird’s eye view of every lender’s (and their service provider’s) business practices when performing pre- and post-conveyance activities. As of Aug. 31, 2015, MCB had processed 4,162,550 pre- and post-conveyances. As MCB makes ...

Government Files False Claims Act Suit Against FHA Lenders, “Counseling Fund.” Three federal agencies filed a civil lawsuit against a purported charitable “counseling fund” and five FHA-approved mortgage lenders and their principals for running a mortgage scam that resulted in a huge loss for the FHA. The suit alleges that Rainy Day Foundation, a tax-exempt charitable institution in the District of Columbia, and five New York-based banks defrauded several federally insured banks resulting in millions of dollars of mortgage losses and costing the FHA $5.6 million in paid false claims. According to the complaint, the lenders originated FHA loans, which they later sold to the victimized banks. The loans went into early-payment default (EPD) at twice the average default rate of other lenders. The lenders allegedly conspired with the Rainy Day foundation to conceal their ...

Riding a wave of heavy purchase-mortgage activity, Ginnie Mae issuers produced a record $128.23 billion of single-family mortgage-backed securities during the third quarter of 2015, according to a new Inside FHA/VA Lending ranking and analysis. The third-quarter figure, which includes FHA home-equity conversion mortgage MBS, was up 6.5 percent from the second quarter of this year. The previous record was $125.68 billion, set back in the third quarter of 2009. Loan-level MBS data, which do not include HECMs and have truncated loan amounts, show hefty gains in purchase-mortgage activity that more than offset sharp declines in refinance business. The flow of FHA purchase mortgages jumped 37.7 percent from the second to the third quarter, and VA purchase mortgages were up 37.9 percent over the same period. Meanwhile, refinance volume fell ... [ 2 charts ]