The mortgage industry is skeptical about President Obama’s proposal for low-cost, non-agency loan refinancing program, administered by the FHA for current, underwater borrowers. Some industry participants called the plan nothing but smoke and mirrors that would likely create unrealistic expectations. But deceptive or not, the proposal first announced by the president in his State of the Union address promises to be different from the earlier, huge unsuccessful FHA experiments in foreclosure prevention – Hope for Homeowners and FHA Short Refinance programs. The proposed refi plan is a combination of ...

With the recent issuance of streamlined regulations on lender indemnification, mortgagees participating in the FHA Lender Insurance program may increasingly find themselves the targets of HUD enforcement actions. Industry compliance experts anticipate an increase in agency audits and monitoring reviews because of the Department of Housing and Urban Development’s tightening of its indemnification rules. This could raise lenders’ compliance costs as well as legal costs if they find themselves the subject of an enforcement action, experts warned. “At an unprecedented time of change in the mortgage industry ...

The Department of Housing and Urban Development has announced a new regulation prohibiting lenders from using sexual orientation or gender identity as a basis for determining borrower eligibility for FHA-insured mortgage financing. The regulation specifically extends federal anti-discrimination protections to lesbians, gays, bisexuals, transgender persons and their families when applying for HUD-assisted or HUD-financed rental housing or an FHA-insured mortgage loan. The regulations will become effective 30 days after their publication in the Federal Register. HUD Secretary Shaun Donovan said the policy will ...

The National Association of Realtors recently asked the Department of Housing and Urban Development to allow investors to participate in the FHA’s property rehabilitation program. The FHA’s 203(k) Rehabilitation Mortgage Insurance Program allows homebuyers to take out a mortgage to purchase a house, including the cost of its rehabilitation. The program also allows the current owners to finance the rehabilitation of their own homes. Currently, investors and cooperative units are barred from using the 203(k) programs. Individual condominium units may be insured if ...

President Obama this week called on Congress to enact legislation to refinance non-agency borrowers through the FHA, to be paid for by large financial institutions, and to force Fannie Mae and Freddie Mac to be more accommodating. Most observers say the proposals stand little or no chance in the bitterly divided Congress, and that they might have little more success than earlier FHA refi programs for non-FHA borrowers. Under the latest proposal, borrowers with conforming-balance loans not financed by the government-sponsored enterprises would be able to get refi loans from the FHA. To be eligible, the...

If there was any question about what was driving the housing market in 2011, some year-end housing numbers have provided two clear answers: investors and distressed properties. The combination of investors buying up large amounts of distressed properties not only put downward pressure on home prices, but also cut into the home-purchase mortgage business by generating a significant number of cash sales. These are some of the major conclusions that can be drawn from a look at 2011 results from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Last year’s housing...(Includes one data chart)

President Obama used his State of the Union address this week to announce a new federal-state law enforcement project aimed at mortgage origination and securitization practices and to propose a broad federal refinance program for performing underwater non-agency mortgages that would be funded with fees imposed on banks. Most observers say the refi proposal stands little chance in Congress and is mostly a campaign tool aimed at banks and the track record of Republican lawmakers. “I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a...

The Department of Housing and Urban Development rejected a number of industry recommendations to ease the impact of new lender indemnification regulations. The final rule imposes indemnification provisions on all FHA lenders with Lender Insurance authority and revises the methods determining an acceptable claim and default rate. It also amends the two-year performance requirements for considering mortgagees for Lender Insurance (LI) authority in connection with a merger, acquisition or reorganization. The primary change under the new rule is that all direct endorsement lenders with LI authority...

The Department of Housing and Urban Development this week announced new regulations strengthening the process by which it requires errant lenders to indemnify the agency for insurance claims paid on ineligible mortgages. The final rule is the latest in a series of steps HUD says it has undertaken to protect and strengthen the FHA’s Mutual Mortgage Insurance Fund while providing qualified borrowers access to government-backed mortgage financing. The health of the MMI fund has come under scrutiny after a recent independent audit reported further decline in the FHA’s capital reserves for unexpected losses. Testifying before Congress in December, HUD Secretary Shaun Donovan discussed ...

Congress should repeal legislation raising the FHA’s maximum loan limit before the agency’s losses skyrocket, triggering a massive taxpayer bailout, warned the American Enterprise Institute. In a new research paper, Peter Wallison and Edward Pinto, resident fellows at the AEI, urged Congress to correct its mistake of restoring the pre-Oct. 1 temporary maximum loan limits of $729,750 for FHA while leaving Fannie Mae and Freddie Mac at the lower “permanent” high-cost loan limit of $625,500 set by Congress in 2008. “Congress should bite the bullet – recognize the losses that are already embedded in the FHA’s insurance fund and adopt reforms to the agency’s accounting and underwriting that will stop the bleeding,” the two public policy analysts said. Last fall, the FHA came under fire from Republicans and conservatives after an independent actuarial review of the agency’s Mutual Mortgage Insurance Fund found ...