A direct-endorsement (DE) lender in Arizona is on the hook for 789 FHA-insured loans with unallowable “gifts,” placing the Mutual Mortgage Insurance Fund at greater risk and causing the FHA to incur losses. Phoenix-based The Lending Company, Inc. (TLC) allegedly entered into agreements with two nonprofit groups, Family Housing Resources and Affordable Housing Partners, using gift programs that did not comply with FHA requirements, according to the Department of Housing and Urban Development’s Office of the Inspector General. The IG audit also found that TLC originated and underwrote FHA loans and did not ...

The Department of Housing and Urban Development has charged Fifth Third Bank and a mortgage broker with discrimination for allegedly requiring medical proof from a couple with disabilities who were seeking FHA refinancing. Fifth Third Bank, Fifth Third Mortgage Co. and Cranbrook Mortgage Corp. were accused of violating the Fair Housing Act, which makes it illegal for creditors to deny or discriminate against borrowers based on disability, race, color, religion, national origin, gender or family status, including imposing different application or criteria on protected classes. The married couple, whose names HUD withheld, receive ...

Many of the lenders with high default rates are smaller companies while those with larger portfolios tend to perform better than the national average, according to Inside FHA Lending’s analysis of compare ratios on two-year FHA loan portfolios. The compare ratio is the percentage of a lender’s default and claim rate compared to the national average. It is shown as a numerical value, which HUD uses to determine lender performance. A compare ratio of over 150 percent will land a lender on HUD’s watch list and a ratio greater than 200 percent could result ... [1 chart]

The Department of Veterans Affairs has announced it will accept electronic signatures in closing home loans with a VA guaranty. The VA said lenders are not required to use electronic signatures in VA loans but if they choose to, they must comply with the Federal Electronic Signatures in Global and National Commerce Act, or the E-Sign Act. The measure was signed into law in June 2000. The E-Sign Act establishes the baseline rules for Internet commerce, including nondiscrimination between handwritten and electronic signatures. The law also requires that electronic records be ...

VA Loan Guaranty: New Percentage to Determine Net Value of Collateral. The Department of Veterans Affairs has revised the percentage lenders and mortgage holders in the VA loan guaranty program use in calculating the purchase price of a property that secured a terminated loan. Effective Oct. 8, 2013, the new percentage is 14.95 percent, up from 11.87 percent, which has been in place for the past 12 years. North Carolina Amends Anti-Predatory Lending Law. The Tar Heel State enacted HB 692 on Aug. 23 to strengthen current consumer protections against ...

Federal regulators dealt the private mortgage insurance industry a setback last week when they opted to ignore the presence of private MI coverage in defining “qualified residential mortgages” under a new proposed rule governing securitization. The new rule will require issuers of mortgage securities that are not backed by QRMs to retain a 5 percent share of the risk. As a practical matter, it won’t apply to Fannie Mae and Freddie Mac business as long as the government-sponsored enterprises are in conservatorship, although this exemption would not necessarily be extended to any post-GSE entity that Congress may create. If the agencies stick...

Fannie Mae is lowering its maximum loan-to-value ratio to 95 percent come November, a move that could lead to more business going to the FHA. The policy change was confirmed by the GSE when it recently sent out an update to users of its automated underwriting program, Desktop Originator. It also means that mortgage insurers could lose business at a time when many have shown a new willingness to take on more credit risk amid improving delinquencies and earnings.

Fannie Mae is lowering its maximum loan-to-value ratio to 95 percent come November, and there is speculation that the decision could force some of that business over to FHA. The policy change was confirmed by the GSE when it sent out an update to users of its automated processing program, Desktop Underwriter. It also means that mortgage insurers could lose business at a time when many have shown a new willingness to take on more credit risk amid improving delinquencies and earnings. Mark Goldhaber, a former executive at Genworth Financial, which owns an MI company, told ...

Cancelled Furlough Days. The Department of Housing and Urban Development has reduced the number of furlough days from seven to five days due to progress made in achieving the $69.6 million spending cuts mandated by sequestration. In this regard, previously scheduled furlough days of Aug. 16 and Aug. 30 are cancelled. As the end of FY 2013 approaches, HUD is making significant progress towards reaching its sequestration target, without needing additional furlough days, said Deputy Press Secretary George Gonzalez of HUD’s Office of Public Affairs. Government-wide automatic spending cuts became effective ...

FHA lenders have gradually stretched to originate loans for borrowers with more modest credit scores in recent quarters, although these borrowers typically are better positioned to keep up with their payments, according to an Inside FHA Lending analysis of data released by the agency. The average credit score for single-family loans endorsed in the second quarter of 2013 was 693 – the lowest such average in nearly four years. This is partly the result of a shift toward more purchase-money mortgages, which generally have ... [1 chart]