The Association of American Retired Persons hit the Department of Housing and Urban Development again with another class-action lawsuit for allegedly failing to protect four surviving spouses of Home Equity Conversion Mortgage borrowers against foreclosure and eviction.The complaint was filed in the U.S. District Court for the District of Columbia, where last September a federal judge found HUD in violation of federal law in a similar case. The court remanded the case to HUD to determine the appropriate remedy for the problem. The AARP Foundation Litigation and the law firm of Mehri & Skalet, the same entities that successfully litigated last year’s reverse mortgage case, represented the plaintiffs, none of them younger than 65 years of age. The suit challenges HUD’s promulgation of HECM regulations, which allegedly is ...

Thirty-three FHA lenders were sanctioned and 32 others lost their FHA approval between October and December 2013 because of actions taken by the Department of Housing and Urban Development’s Mortgagee Review Board. The board also imposed $516,500 in civil money penalties and entered into one settlement agreement to bring an unidentified lender into compliance. During the three-month period, one lender entered into an indemnification agreement with the MRB over one FHA-insured single-family loan. FHA lenders were subject to MRB disciplinary actions for various reasons, including failing to establish and implement a servicing quality control plan and failing to perform loss mitigation as required by the agency. Actions were also taken against lenders for failing to conduct monthly reviews of delinquent loans to determine the type of loss mitigation needed, as well as for failing to repay HUD losses in connection with indemnification agreements. Noncompliance with HUD’s annual recertification requirements also resulted in ...

A mortgagee that no longer wishes to participate in FHA programs must submit a letter requesting voluntary withdrawal of its FHA approval, signed by a senior executive of the company, according to guidance published in the March 2014 issue of FHA’s Lender Insight. Lenders may not simply let their FHA approval expire by failing to complete FHA’s required annual recertification process, the guidance warned. “Failing to recertify will result in a referral to the Mortgagee Review Board for administrative action,” it said. The board’s withdrawal of a lender’s FHA approval could have an adverse impact on the lender should it reapply for FHA approval in the future. A lender requesting voluntary withdrawal of FHA approval is subject to a review before the agency signs off on the request. The request would be denied if the lender has an MRB administrative action pending against it or if it is behind on its mortgage insurance premium payments. A lender whose FHA approval has been withdrawn may ...

Old Republic Cancels Recapitalization Plan for its Mortgage Guaranty Subsidiaries. Old Republic International Corp. has withdrawn plans to secure capital market funding for its beleaguered consumer credit indemnity and mortgage guaranty subsidiaries for lack of investor interest. Both business segments are housed within the Republic Financial Indemnity Group and have been in a run-off mode since 2008 and 2011, respectively. ORI Chairman/CEO Al Zucaro said holding company funds would be used to shore up the regulatory capital of the mortgage guaranty subsidiaries. The completion of the recapitalization plan hinged on regulatory approvals in North Carolina, Florida and Vermont, as well as from the government-sponsored enterprises and the Federal Housing Finance Agency. ORI said that with all the complications, it could not be certain of getting the necessary approvals. A primary investor concern is that new capital would be used to pay for RMIC’s legacy problems, and investors want their money to ...

Carrington Mortgage made a big splash this week, unveiling a plan to offer to fund FHA loans for borrowers with credit scores as low as 550, but already some skeptics are openly questioning just how many such loans Carrington – or any company – can produce. Carrington Executive Vice President Ray Brousseau declined to estimate production. The company’s minimum FICO score for FHA loans had been 580. The expanded FHA program will be...[Includes one data chart]

The Federal Open Market Committee this week voted to scale back the central bank’s purchases of agency MBS again, dropping the monthly growth target to $25 billion, but the deceleration is barely keeping even with the rapid slowdown in new MBS issuance. At its December meeting, the FOMC decided to drop its MBS purchases to a pace that would add $35 billion per month, and lowered that by another $5 billion at its January meeting. The program began in late 2012 at $40 billion a month. The central bank will continue to reinvest principal and interest payments on its holdings in the agency MBS market. The most recent available data show...[Includes two data charts]

The mortgage market has gradually shifted upstream since the collapse of the housing market and the painstakingly slow recovery, with big-ticket mortgages capturing a growing share of new originations, according to a new Inside Mortgage Finance analysis. Mortgages exceeding the traditional conventional loan limit of $417,000 accounted for 19.8 percent of new originations in 2013, up from 16.2 percent during the previous year. And with overall mortgage-production volume slumping over the second half of 2013, the jumbo share of new originations rose to 23.3 percent in the fourth quarter. The secondary-market agencies accounted...[Includes three data charts]

The residential MBS issued in 2013 equaled 78.5 percent of primary market originations, the highest securitization rate since 2010, according to a new Inside MBS & ABS analysis. The mortgage securitization rate typically moves higher when primary-market originations are declining because of the time lag between loan closing and MBS issuance. Last year started with a bang – $560 billion in new originations – and ended with a whimper, $305 billion. In the conventional conforming market, Fannie Mae and Freddie Mac MBS issuance – even after excluding loans that were more than three months old when they were securitized – represented...[Includes one data chart]

More lenders have expressed concern about a provision in the proposed FY 2015 federal budget seeking congressional authority to collect $30 million to help improve and strengthen FHA quality assurance reviews. Under the president’s budget proposal, FHA would collect an “administrative fee” from FHA lenders to implement the quality assurance (QA) changes needed to provide a clearer, more transparent picture of enforcement going forward. The improvements are meant to provide lenders not only information about early payment default or other kinds of default characteristics through loan sampling but also an accurate snapshot of their “manufacturing risk,” which is the risk that a loan is not underwritten properly. “The purpose is for lenders to have the information six to nine months after they have originated the loan as opposed to ...

Penalties in legislation that would restrict the use of eminent domain to resolve foreclosure problems could cripple state and local governments financially and provide no relief to property owners, warned the bill’s critics. H.R. 1944, the Private Rights Protection Act, would prohibit city and county governments that get federal funding for economic development from using their eminent domain powers to seize underwater mortgage notes from investors and unilaterally restructure the loans before selling them to other investors. Violators would be ineligible for federal economic development funds for two fiscal years following a court’s finding of guilt. The bill also provides the attorney general with broader enforcement authority. The necessity for legislation arose in the wake of efforts last year by certain municipalities in California to ...