The Department of Housing and Urban Development is doing a poor job of overseeing FHA lenders, according to the agency’s Office of the Inspector General, which has found high error rates in ongoing reviews of underwriting. FHA continues to struggle with poorly underwritten mortgages, according to testimony by HUD Inspector General David Montoya in a hearing this week before the House Financial Services Oversight and Investigations Subcommittee. In light of “the apparent systemic problems with the underwriting of FHA insured loans” and successful pursuit of civil enforcement against violators, the HUD IG joined with the Department of Justice and HUD’s Office of General Counsel in early 2012 to focus on the underwriting practices of 10 of the largest FHA-approved lenders. “To date, the underwriting of thousands of FHA insured...

Fewer borrowers are using FHA financing, which has enabled private mortgage insurers to take back more market share from the FHA, according to Inside FHA Lending’s analysis of industry data. Borrowers are shying away from FHA due to higher mortgage insurance premiums (MIPs) that took effect early this year and to the new policy eliminating MI cancellation. Private MIs accounted for 36.6 percent of primary mortgage insurance written in the second quarter, their highest level since 2008. This was up from 32.7 percent in the first quarter and from 30.5 percent a year ago. Private MIs also provided coverage on ...

At the end of FY 2013, Congress will be looking at the results of two, separate actuarial audits of the FHA Mutual Mortgage Insurance Fund that may or may not agree with each other’s findings. Nonetheless, the FHA contends it needs a second actuarial opinion on the FY 2013 audit to ensure that the review of the financial condition of the MMI Fund is robust, thorough, consistent, accurate and transparent. “The FHA recognizes the value of having ‘fresh eyes’ on our insurance fund – new perspectives and different analytical models will give us a more ...

The Department of Housing and Urban Development is phasing out the Saver and Standard loan products under the Home Equity Conversion Mortgage program in favor of a new reverse mortgage that limits the amount of money a borrower can draw at closing to 60 percent of the value of the home. The fixed and adjustable HECM Standard and Saver options will still be available until Sept. 29, said HUD. The revised principal limit, pricing and disbursement policies for the new HECM product will become effective on Sept. 30. The revised HECM guidance also ...

The Department of Housing and Urban Development has issued guidance establishing general procedures for mortgages and foreclosures on tribal lands. The Model Tribal Mortgage Lending Code is designed to meet the needs of mortgage loan guaranty, insurance and direct loan programs of the FHA, the Home Loan Guaranty program of the Department of Veterans Affairs, and the Rural Housing Program of the Department of Agriculture. Each of the federal agencies offers various mortgage-loan programs for Native Americans who wish to live on tribal trust lands or within a tribal area. The Housing and Community Development Act of 1992 created ...

A direct-endorsement (DE) lender in Arizona is on the hook for 789 FHA-insured loans with unallowable “gifts,” placing the Mutual Mortgage Insurance Fund at greater risk and causing the FHA to incur losses. Phoenix-based The Lending Company, Inc. (TLC) allegedly entered into agreements with two nonprofit groups, Family Housing Resources and Affordable Housing Partners, using gift programs that did not comply with FHA requirements, according to the Department of Housing and Urban Development’s Office of the Inspector General. The IG audit also found that TLC originated and underwrote FHA loans and did not ...

The Department of Housing and Urban Development has charged Fifth Third Bank and a mortgage broker with discrimination for allegedly requiring medical proof from a couple with disabilities who were seeking FHA refinancing. Fifth Third Bank, Fifth Third Mortgage Co. and Cranbrook Mortgage Corp. were accused of violating the Fair Housing Act, which makes it illegal for creditors to deny or discriminate against borrowers based on disability, race, color, religion, national origin, gender or family status, including imposing different application or criteria on protected classes. The married couple, whose names HUD withheld, receive ...

Many of the lenders with high default rates are smaller companies while those with larger portfolios tend to perform better than the national average, according to Inside FHA Lending’s analysis of compare ratios on two-year FHA loan portfolios. The compare ratio is the percentage of a lender’s default and claim rate compared to the national average. It is shown as a numerical value, which HUD uses to determine lender performance. A compare ratio of over 150 percent will land a lender on HUD’s watch list and a ratio greater than 200 percent could result ... [1 chart]

The Department of Veterans Affairs has announced it will accept electronic signatures in closing home loans with a VA guaranty. The VA said lenders are not required to use electronic signatures in VA loans but if they choose to, they must comply with the Federal Electronic Signatures in Global and National Commerce Act, or the E-Sign Act. The measure was signed into law in June 2000. The E-Sign Act establishes the baseline rules for Internet commerce, including nondiscrimination between handwritten and electronic signatures. The law also requires that electronic records be ...

VA Loan Guaranty: New Percentage to Determine Net Value of Collateral. The Department of Veterans Affairs has revised the percentage lenders and mortgage holders in the VA loan guaranty program use in calculating the purchase price of a property that secured a terminated loan. Effective Oct. 8, 2013, the new percentage is 14.95 percent, up from 11.87 percent, which has been in place for the past 12 years. North Carolina Amends Anti-Predatory Lending Law. The Tar Heel State enacted HB 692 on Aug. 23 to strengthen current consumer protections against ...