The Department of Housing and Urban Development is set to receive more than $140 million in settlements with three individual lenders in connection with defective loans they originated with FHA insurance. Freedom Mortgage Corp., M&T Bank, and Land Home Financial Services all reached separate agreements this year with the Department of Justice on behalf of the HUD Inspector General to resolve the allegations. On April 15, Freedom agreed to pay $113 million, in response to charges that “it engaged in certain conduct in connection with its origination, underwriting, property appraisal and quality of certain single-family mortgages insured by FHA.” The disputed forward loans were insured by FHA between Jan. 1, 2006, and Dec. 31, 2011, which resulted in claims submitted to HUD on or before June 15, 2015. HUD incurred substantial losses when it paid claims on the ...

The Department of Veterans Affairs has made recommendations to VA lenders and borrowers calling in with questions and problems at VA regional centers to avoid long wait times and have their concerns resolved as quickly as possible. In a recent memo to lenders, the VA Loan Guaranty Service is reporting that many of its regional loan centers (RLC) are being swamped with calls due to record increases in VA originations in recent months. While this suggests that more veterans are using their housing loan benefit than ever before, the large volume of calls to VA has caused long hold times for callers and delayed processing of borrower certificates of eligibility (COE). To cut down on the waiting time, the VA urged lenders and borrowers to consider several things before making the call. First, do not call to check on the status of a COE request if there is no urgent need, like an ...

VA Home Loan Guaranty has issued clarification regarding title requirements for manufactured or mobile homes conveyed to the Department of Veterans Affairs. Effective immediately, VA is requiring proof of noteholders’ compliance with the agency’s requirements for guaranteed mobile-home financing. Foreclosure title packages that do not include the required documents will be rejected, the agency warned. Under federal law, a manufactured home must be permanently affixed and classified as real property in the state where it is located. VA will not guarantee financing if the property does not meet the criteria. To ensure that a guaranty claim is fully payable and that the holder has the option to convey the manufactured home to VA, servicers must ensure that home loans with a VA guarantee meet federal requirements. Under the clarified VA guidelines, servicers may submit the ...

New FHA guidance for dealing with mortgages with a Property Assessed Clean Energy (PACE) obligation went into effect last week but uncertainty lingers and its full impact remains to be seen, according to an industry attorney. The Department of Housing and Urban Development has issued guidance specifically allowing properties encumbered by a PACE lien to be eligible for FHA mortgage financing for both purchase and refinance loans. The department of Veterans Affairs has issued similar guidance. According to Erika Sonstroem, an attorney with the law firm Bradley Arant Boult Cummings, the PACE industry is touting the guidance in its pitches to lenders as posing no risk to mortgage investors. PACE is a program that lends money to homeowners for home-energy savings projects. It is treated much like a tax lien on a property and is included in the ...

An increasing share of purchase mortgages have missed their scheduled closing dates in recent months, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Many of the delays are tied to a shortage of appraisers as home sale activity increased during the spring and summer. Just before the start of the spring home-buying season, the on-time share of closings was at high levels for mortgage-financed purchases. Some 76.6 percent of purchases in April with a low downpayment mortgage securitized by Fannie Mae and Freddie Mac closed on time, based on a three-month moving average. The on-time closing share has declined...

Freddie Mac is partnering with two lenders for a mortgage pilot program that will consider a wider range of underwriting criteria, including income from seasonal work, to help promote homeownership in diverse communities. The pilot, based on certain borrower characteristics, was launched with New American Funding, headquartered in Dallas, and Las Vegas-based Alterra Home Loans. It was announced this week during the national convention of the National Association of Hispanic Real Estate Professionals. The NAHREP said the narrow definitions of creditworthiness make it especially difficult for minority and first-time borrowers to qualify for and obtain a mortgage. The two nonbank lenders, which specialize in serving the Hispanic community and low-income borrowers, will build...

Retail lending through brick-and-mortar branches and consumer-direct programs was the biggest production channel in conventional mortgage lending but had a somewhat smaller share in government-insured lending, according to an exclusive analysis by Inside Mortgage Finance. Retail production played a dominant role in the jumbo market, where it accounted for 79.3 percent of originations over the 18-month period ending in June 2016. Correspondent production played a meaningful role, accounting for 16.1 percent of jumbo originations, but brokers (4.6 percent) had a relatively thin share of the jumbo market. Brokers’ strength was...[Includes one data table]

The House Financial Services Committee this week marked up, mostly on party lines, a comprehensive alternative to the Dodd-Frank Act that would, among other things, create a legal safe harbor for mortgage loans that are originated by a lender and then held in portfolio on its balance sheet. Democrats unanimously opposed the bill and refused to offer a single amendment, continually railing against Wells Fargo and accusing the Republicans of wanting to take the nation “back to the regulatory Stone Age.” The bill passed...

An internal compliance audit has uncovered weaknesses in the FHA’s information systems that could expose the agency to hacking. The Department of Housing and Urban Development’s Inspector General recently issued an audit report indicating that FHA’s Single Family Insurance System (SFIS) and Single Family Insurance Claims Subsystem could be in danger of security breaches. However, the report withheld details of the audit, saying the findings were not for public disclosure. The report explained that the audit was part of the internal-control assessments required for the FY 2015 financial statement audit under the Chief Financial Officer’s Act of 1996. The audit’s objective was to provide an assessment of SFIS control compliance with HUD’s information-technology policies and federal IT system security and financial management requirements. The SFIS contains information on FHA borrowers, including ...

The FHA is seeking comment on proposals for revising the schedule of fees an agency-approved consultant may charge on a Section 203(k) property repair and rehabilitation mortgage. The agency wants public comment on whether fees charged by FHA 203(k) consultants should be based on the total cost of repairs, as they are currently, or on other metrics. Consultants charge varying fees on a standard 203(k) mortgage and a limited 203(k) mortgage. The standard FHA repair/rehab mortgage is designed for remodeling, rehabilitation and repairs that involve structural or more complex work that will cost more than $5,000. The limited 203(k) home loan is only for minor remodeling and non-structural repairs. An FHA-approved consultant is required for all standard 203(k) mortgages but not necessarily for a limited 203(k) home loan. FHA-approved 203(k) consultants who are placed on ...