Congress has approved legislation directing the Department of Housing and Urban Development to raise FHA mortgage insurance premiums by 10 basis points within the next two years. The FHA premium increase provision was a late addition to the contentious payroll tax cut extension bill, corresponding to an intensely debated 10 bps increase in guarantee fees charged by Fannie Mae and Freddie Mac on single-family mortgage-backed securities. H.R. 3765, the Temporary Payroll Tax Cut Continuation Act of 2011, was approved by unanimous consent in the House and was previously cleared by the Senate. It extends...

The FHA has extended for one more year a temporary waiver of a regulation prohibiting property flipping in order to facilitate faster sale of its bulging real estate-owned inventory. The agency hopes that having the waiver in place until Dec. 31 will stimulate the rehabilitation of foreclosed and abandoned homes for another year, including properties being resold within 90 days of acquisition. The waiver is not limited to the resale of foreclosed properties. “Property flipping” occurs when a property acquired at a discounted price is resold for a considerable profit with an...

The one category of distressed loan that the federal government has the most control over – mortgages insured by the FHA and VA – continues to show the worst success rates for loan modifications. After 12 months of post-modification seasoning, over half (51 percent) of government-insured loans were 60 days or more past due, according to a report issued this week by the Office of the Comptroller of the Currency. That compared to an overall 60+ re-default rate of 39 percent. Fannie Mae and Freddie Mac mortgages, along with loans held in the servicer’s portfolio, showed the best...

The timing and method of disposing of real estate owned properties will have significant implications for home prices, according to Fitch Ratings analysts. The supply of REO homes is unprecedented, with the large overhang of distressed properties in the housing market and weak demand, analysts said. The REO industry estimates that more than 2 million properties nationwide are in foreclosure and that 25 percent to 35 percent of all home sales are related to properties whose mortgages have defaulted. In a recent home-price projection report, which uses the rating agency’s Sustainable Home...

The FHA will continue to play a critical role in the nation’s housing markets in 2012 even as it tries to balance the need to extend credit while reducing its market share to open the way for private capital to return to the mortgage market, according to industry observers. That means walking a tightrope in trying to keep the Mutual Mortgage Insurance Fund actuarially sound while trying to avoid piling on more fees and additional restrictions, which could hamper housing recovery, observers said. “We can’t have an economic recovery without a housing recovery,” said Brian Chappelle, a mortgage industry consultant. “The philosophical debate about the role of government in housing should be ...

The recent change in the FHA’s maximum loan limits would have relatively limited impact for current borrowers trying to refinance, according to analysts. FHA loans insured prior to Oct. 1, 2011, were already grandfathered in for streamlined refinancing regardless of loan size, said analysts with J.P. Morgan Securities. In addition, the analysts said they do not expect many conventional jumbo-to-FHA refinances in this market segment because the mortgage insurance premiums make FHA loans less attractive. Last month, President Obama signed an appropriations bill into law, reinstating the pre-Oct. 1 formula for calculating the “temporary” loan limits for high-cost areas, which is ... [With one chart]

Expenses for maintaining foreclosed properties before their transfer or conveyance are much higher for FHA than for Fannie Mae or Freddie Mac, according to a recent Government Accountability Office report. The report, which focuses on the growing number of vacant properties and the costs and challenges of maintaining them, found that FHA’s pre-conveyance reimbursements to servicers are higher than the government-sponsored enterprises’ pre-foreclosure reimbursements. In 2010, the FHA reimbursed servicers about $1,982 compared to the GSEs’ $235 per property for maintenance-related expenses prior to ...

The Department of Housing and Urban Development has proposed to create a new system that would facilitate the transfer and streamline the collection of records under the FHA’s lender approval and recertification process. The new, fully automated records system, the Lender Electronic Assessment Portal, will assume full custody and control of lender records currently maintained by the HUD/FHA Lender Approval Files System of Records Notice (SORN), which is a manual and labor-intensive process. The current system contains records of principals or officers of financial institutions who are approved or seeking approval to ...

Only state-certified appraisers can conduct appraisals of properties securing an FHA-insured mortgage under a final rule adopted recently by the Department of Housing and Urban Development. At the same time, the new rule made clear that FHA would no longer allow state-licensed appraisers to perform FHA appraisals. The FHA has not been accepting applications by state-licensed appraisers since Oct. 1, 2008, following the enactment of the Housing and Economic Recovery Act. Previous HUD regulations required that an appraiser be state-licensed or state-certified in order to be placed on the department’s official roster of appraisers. However, HERA mandated only ...

Ginnie Mae may have reported potentially inaccurate data to Congress about its exposures because estimates were not based on the best available data, according to a recent report by the Government Accountability Office. The agency’s sensitivity analysis also ignored important data, which could affect the accuracy of its cash-flow forecasts, the report said. Although Ginnie Mae has revised its cash-flow forecast model, it has not implemented practices identified in Federal Accounting Standards Advisory Board guidance and risk-budgeting guidance, the report noted. By ignoring such practices, Ginnie Mae’s model may not be ...