The U.S. Court of Appeals for the First Circuit has affirmed a district court’s dismissal of a putative class action alleging that a lender improperly required FHA borrowers to buy and maintain higher flood insurance coverage than that indicated in their mortgage contracts. According to an analysis by the Washington law firm BuckleySandler, the ruling from an equally divided en banc court allows mortgage lenders to require borrowers to maintain flood insurance equal to the replacement value of their homes. In Kolbe v. BAC Home Loans Servicing, LP, No. 11-2030, 2013 WL 5394192 (1st Cir. Sept. 27, 2013), plaintiff Stanley Kolbe contends ...

Two surviving spouses of deceased reverse mortgage borrowers won their case against the Department of Housing and Urban Development after a U.S. court found HUD in violation of federal law for failing to protect the spouses from foreclosure. The court’s decision marks a turning point for surviving spouses, such as Robert Bennett of Annapolis, MD, and Leila Joseph of Brooklyn, NY, and ensures that they will be protected against eviction and foreclosure, despite the loss of their husband or wife, said Jean Constantine-Davis, a senior attorney with the AARP Foundation Litigation. In March 2011, the AARP and the law firm of Mehri & Skalet of Washington, DC, filed ...

FHA loan originations declined by 10.5 percent in August from July, following a downward trend that seems to suggest that private mortgage insurance companies are gaining the upper hand against their biggest government-backed competitor. Volume dropped to $16.8 billion in August from $18.8 billion in July, and from $22.1 billion a year ago, according to Inside FHA Lending’s analysis of FHA data. Purchase-mortgage originations comprised 68.7 percent of FHA business for the month as rising interest rates slowed refinancing activity. Despite the increase in purchase lending, FHA lenders noted it was ... [1 chart]

The Department of Housing and Urban Development’s inadequate response and poor implementation of corrective actions recommended by its own inspector general did little to stop claim files from squeezing through without reviews. HUD’s Office of the Inspector General urged Charles Coulter, deputy assistant secretary for single-family housing, to go back and implement the IG’s recommendations properly. The process HUD said it had implemented had failed to select all FHA loans that met review criteria, resulting in more than ...

The FHA and the Department of Veterans Affairs this week appealed to lenders to be more sensitive to federal employees who might be struggling with their mortgage payments due to the government shutdown. FHA Commissioner Carol Galante said all approved lenders should make every effort to reach out and assist affected borrowers, which include those who have been furloughed, laid off or suffered a decline in income due to the shutdown. FHA would assist furloughed government workers by offering informal forbearance plans and other loss mitigation options to help affected borrowers avoid foreclosure. Lenders are also encouraged to ...

The MGIC Investment Corp. reported its second straight profitable quarter in 2013 and another increase in new insurance written. While the numbers may not yet indicate a trend, it certainly appears that the Milwaukee-based mortgage insurer is slowly but consistently showing improvement in its performance since posting a net loss of $246.9 million for the same quarter a year ago. MGIC reported net income of $12.1 million in the third quarter and $12.4 million in the second quarter, compared with a net loss of ...

Ginnie Mae this week acted quickly to dispel rumors of a plan to sunset the agency’s single-issuer MBS program, saying the report was nothing but unwarranted speculation. Agency officials assured participants during a Ginnie issuer and investor symposium in Austin, TX, earlier this month that the reports were untrue. The false buzz spooked the markets early this week, causing price spreads between Ginnie Mae I and II programs to narrow, officials acknowledged. In an Oct. 7 memo to program participants, Ginnie Mae clarified...

After an eight-year hiatus, the Federal Home Loan Bank of San Francisco announced last week it would renew its participation in the Mortgage Partnership Finance program, which is managed by the FHLBank of Chicago. Starting in 2014, the San Francisco Bank will purchase conventional, conforming fixed-rate mortgages and FHA/VA products, as well as purchase fixed-rate loans from its members for sale to Fannie Mae through the MPF Xtra program.

Capitalizing on the uncertainty of a government shutdown, private mortgage insurers are stepping up to provide conventional mortgage insurance on any loan with FHA documentation that could not close on time due to delays at the undermanned agency. Private MIs say they are “ready to help with FHA uncertainty,” urging lenders to consider switching to conventional mortgage insurance if they have any government-insured or guaranteed loan that is at risk of not closing due to the shutdown. United Guaranty said...

With some federal agencies effectively downsized by the government shutdown, Ginnie Mae continues to guarantee MBS, but it’s unclear how long it can go on with limited staff and commitment authority. Under the shutdown contingency plan drafted by the Department of Housing and Urban Development, Ginnie has limited its operations to key functions fulfill its obligations to issuers and investors. The agency said MBS guaranties would be honored during the shutdown. While the rest of the workforce is on furlough, some 44 essential salaried employees will continue...