Panelists with opposing views of the FHA this week supported raising the single-family mortgage insurance program’s minimum credit score to keep borrowers with questionable credit quality out and help preserve the high quality of FHA’s newer books of business. Despite their disagreements over whether the FHA will ultimately need a taxpayer bailout, participants in a policy forum hosted by the Cato Institute called for reforms to reduce government presence in the mortgage market and help the FHA to avoid ...

As part of negotiations regarding the fiscal cliff, the Obama administration and Democrats in the House are seeking principal reduction loan modifications for borrowers with negative equity. The Treasury Department has reportedly proposed a program targeting borrowers with mortgages in non-agency mortgage-backed securities while the debate about principal forgiveness for loans held by the government-sponsored enterprises has also been rekindled. The Obama administration would neither confirm nor deny the non-agency proposal, but details regarding the Market Rate Modification program have prompted talk among industry participants and a detailed analysis. “In order to assist...

The Department of Housing and Urban Development announced FHA loan limits for calendar 2013 that include higher amounts for 19 counties, according to an Inside Mortgage Finance analysis. Of the 19 counties getting higher loan limits for FHA forward mortgages, 10 are part of the Houston metropolitan area, where the one-unit limit is going up just $1,500, to $272,550. The remainder are in various counties in Alaska. The “emergency” loan limits for high-cost markets – still $729,750 for FHA and $625,500 for Fannie Mae and Freddie Mac – were authorized...

The mortgage industry is fearful of expanded liability after the Consumer Financial Protection Agency reportedly asked financial institutions with wholesale mortgage operations to monitor and ensure correspondents’ compliance with consumer protection laws and regulations. Lenders are said to be anxious about being held liable for purchased defective mortgages originated by unaffiliated third parties, and they are wary about new entrants that are trying to fill the void left by the traditional, larger players when they exited the wholesale broker/correspondent market. The CFPB has not issued...

Expressing concern about a potential FHA bailout, Sen. Tim Johnson, D-SD, chairman of the Senate Committee on Banking, Housing and Urban Affairs, said that he is prepared to work with Republicans on a bipartisan solution to keep the FHA solvent should government measures fail. This week, Johnson called a hearing to know more about the administrative and legislative action plan the Department of Housing and Urban Development has put together to restore the financial health of the FHA’s Mutual Mortgage Insurance Fund. A recent independent actuarial audit revealed that ...

The FHA is working on a statistical model that incorporates new factors to help the agency target loan-level compliance reviews and in-depth lender examinations more precisely, according to a top agency official. The model’s selection criteria is not lender-specific but focus instead on attributes in the loan file that have the highest propensity or probability of containing a material deficiency or defect that could result in a loss for the FHA insurance fund, said Justin Birch, director of the FHA Quality Assurance Division. The model was developed for post-endorsement reviews, which currently are ...

The mortgage banking industry is urging Congress to reject the FHA’s call to eliminate the existing “knew or should have known” standard in the National Housing Act in connection with an agency proposal to extend indemnification authority to all direct-endorsement lenders. Both proposals are part of legislative and administrative measures sought by the FHA to strengthen its capability to manage risk and protect its Mutual Mortgage Insurance Fund. A recent independent actuarial review of the fund found that in FY 2012 the economic value of the FHA’s single-family portfolio had dropped to negative $13.5 billion (excluding Home Equity Conversion Mortgage loans) and that ...

The Department of Housing and Urban Development this week clarified that mortgages using cash investment funds provided under a government housing assistance program to meet the FHA’s 3.5 percent downpayment requirement are eligible for FHA insurance. HUD issued the interpretive rule to clarify the confusion caused by a provision in the National Housing Act that prohibits certain sources of a homebuyer’s funds for the required minimum FHA downpayment on a home loan. Because of this provision, cash investment funds provided by federal, state and local homeownership assistance programs to first-time and lower-income homebuyers may be deemed ...

The FHA has extended a temporary waiver of its regulation that prohibits property flipping in the single-family mortgage insurance program to encourage more investors to participate in agency efforts to ease its burgeoning inventory of real estate-owned properties. First issued in January 2010, the regulatory waiver is now effective through Dec. 31, 2014, after two previous adjustments since issuance. Prior to the waiver, a mortgage was not eligible for FHA insurance if the purchaser sold the property within 90 days of its acquisition and is ...

FHA endorsements jumped 18.8 percent in October from the previous month and by more than half from a year ago, with mortgagees accounting for 80 percent of production, according to Inside FHA Lending’s analysis of FHA data. FHA originations, excluding Home Equity Conversion Mortgage loans, totaled $22.8 billion in October, up from $19.2 billion in September and 56.4 percent more than a year ago. Fixed-rate forward mortgages accounted for nearly all FHA loans produced during the month, with purchase mortgages having a slight edge in the mix over refinances. Top-ranked Wells Fargo outdid other lenders in October with ...