FHA lenders and servicers commencing foreclosure on FHA-insured mortgage loans in the Commonwealth of Virginia must first meet with the borrower personally before proceeding or risk voidance of the foreclosure sale, the state supreme court ruled recently. Because of the decision by the Supreme Court of Virginia, the state has joined a growing list of states that require a face-to-face meeting between a mortgage lender and a borrower before initiating foreclosure proceedings on an FHA-insured mortgage loan. In Mathews v. PHH Mortgage Corp., the court upheld ...

FHA production of mortgages with loan amounts exceeding $417,000 rose to $4.8 billion during the first three months of 2012, according to Inside FHA Lending’s analysis of FHA data. The FHA posted a significant 21.1 percent increase in agency jumbo production from the fourth quarter of 2011, offsetting the 17.9 percent drop in production year over year. The agency’s maximum loan limit remained at $729,750 in high-cost areas while those of its competitors, Fannie Mae and Freddie Mac, were at the lower $625,500. Purchase loans accounted for 42.4 percent of FHA jumbo originations in ... [1 chart]

Surging streamline refinancing activity is helping boost FHA lending but the benefits of increased originations may be restricted to financial institutions that have the ability to retain servicing and are not dependent on selling FHA loans to larger banks, according to some lenders. Applications for government-insured refinance loans more than doubled last week as reduced mortgage insurance premiums for the FHA streamline refinances went into effect, according to the Mortgage Bankers Association’s latest survey of mortgage applications. The MBA’s government refinance index jumped from 4010 last week to...

The FHA Mutual Mortgage Insurance Fund, which has been below the levels mandated by Congress for the past two years, appeared to come under more pressure in the first quarter of 2012. The Department of Housing and Urban Development reported that total capital resources available to the MMIF declined by $1.0 billion to $32.3 billion as of the end of March. Total MMIF capital has hit lower marks over the past two years – it fell to $31.6 billion in the first quarter of 2011 – but the fund’s total exposure has been climbing steadily. HUD reports the financial health of the MMIF only at the end of its fiscal year...

The Department of Housing and Urban Development is working on a mortgagee letter to guide FHA-approved lenders on their use of credit overlays to protect themselves from potential liability in single-family mortgage transactions. In remarks at a Women in Housing and Finance meeting this week in Washington, DC, Acting FHA Commissioner Carol Galante said the department is concerned about FHA lenders boosting credit score requirements much higher than what the FHA would allow. Galante said lenders are requiring credit scores of 700 and higher, well above the traditional FHA score requirement of 640...

Members of Congress are leaning on the Department of Housing and Urban Development to loosen FHA underwriting standards for condominiums, echoing trade group concerns, although most financing for these properties is provided by Fannie Mae and Freddie Mac. The letter from 69 congressmen, which included members from both sides of the aisle, asked HUD to relax guidelines on owner-occupancy limitations which require that at least 50 percent of a building’s units be occupied for borrowers to be eligible for FHA financing. They also want the FHA to ease up on delinquent assessment standards and certification...

The Department of Housing and Urban Development will sell an estimated 5,000 nonperforming mortgages on the brink of foreclosure in September under an expanded FHA loan-sale program aimed at preventing further growth of the agency’s massive inventory of real estate owned properties. How the deals under the Distressed Asset Stabilization Program will be structured and priced is still not clear. The details are being worked out, said a HUD spokesman. The DASP is an expansion of an FHA pilot program, the Mortgage Acquisition and Disposition Initiative, which began in 2010 and has resulted in the purchase...

The Department of Housing and Urban Development and Lender Processing Services are trying to find out whose data on FHA foreclosure starts were flawed, leading to a dispute over a controversial LPS report. The April Mortgage Monitor report released by LPS shows that, while overall foreclosure starts fell 2.6 percent in April, FHA foreclosure starts jumped 73 percent to 60,000 during the month. LPS explained that the high default rate of FHA’s 2008-2009 books of business and high origination volume in those years drove the increase. Although all FHA vintages saw increases in foreclosure starts in April, those from 2009 onward have ...

Three more FHA-approved lenders have found themselves under government scrutiny as the Department of Housing and Urban Development’s Office of the Inspector General broadened its investigation of potential abuses of the FHA single-family program. The OIG reportedly issued subpoenas to three large financial institutions last month to submit information on their FHA operations to determine whether the lenders followed HUD requirements when originating and underwriting FHA loans. The inspector general also would look to see whether quality control programs are ...

The Department of Housing and Urban Development is expanding an existing FHA note sales program as an alternative strategy for disposing of foreclosure property from the department’s bulging real estate-owned inventory. HUD Secretary Shaun Donovan announced enhancements to the accelerated claims disposition (ACD) program, which was designed primarily for delinquent FHA loans, at the 2012 Clinton Global Initiative America Meeting held this week in Chicago. The event brings together government and private sector leaders to discuss ways to ...