Deep-freezing the Home Equity Conversion Mortgage program’s full-draw, fixed-rate standard product apparently has not diminished borrowers’ appetite for reverse mortgages as indicated by a significant increase in HECM originations in the first quarter of 2013. FHA endorsements under the HECM program surged 36.2 percent during the first three months of 2013, with lenders reporting $3.84 billion at the end of the quarter, according to Inside FHA Lending’s analysis of FHA data. Volume was also up a modest 5.3 percent from the same period a year ago. The Department of Housing and Urban Development announced the ... [1 chart]

HUD Explains ‘Good Neighbor Next Door’ Program. The Department of Housing and Urban Development has issued Mortgagee Letter 2013-20 to clarify certain things about the FHA’s Good Neighbor Next Door Sales program. The program allows eligible borrowers to purchase, at 50 percent off the list price, a HUD-acquired single-unit home located in an area that the department has targeted for revitalization. According to HUD, the mortgage insurance premium should be based on the first mortgage only. The agency also clarified the process for allowing interruptions to ...

The City Council of North Las Vegas, NV, is the latest local jurisdiction to be drawn by the eminent domain siren song of Mortgage Resolution Partners, despite the near-certain prospects of eventually crashing upon the rocks of opposition from federal agencies. Last week, the city council voted four-to-one in favor to approve a two-month advisory services agreement with MRP to advise the city on the seizure of mortgage loans through the use of eminent domain. Under the parameters of the agreement, MRP is to inventory potential loans in North Las Vegas that could be affected by its program, at no cost to the city, and to design a program for those loans that are inventoried. That program is to be brought back before the city council within 60 days at its Aug. 21, 2013, meeting. Also, the agreement prohibits...

Republican and Democrat lawmakers in the Senate formally unveiled their ambitious plan to replace Fannie Mae and Freddie Mac with a new federal entity providing backstop guaranties for securities backed by high-quality conventional mortgages. Although they made a variety of changes to a “discussion draft” version of the legislation that has been widely circulated in recent weeks, the proposal still faces a huge hurdle in the House despite winning generally favorable reactions from industry groups. As it was introduced this week, S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2013, would create...

The Department of Housing and Urban Development is seeking additional authority from Congress to transfer FHA mortgage servicing in order to facilitate loss mitigation. The change would allow the FHA to require specific actions when a servicer is underperforming or has a low score on HUD’s Tiered Ranking System, including the transfer of servicing to an FHA-designated special servicer or requiring a servicer to enter into a sub-servicing agreement. With expanded powers, the FHA also may require a servicer to engage a third-party to assist in loss mitigation services. Such authority would enable the FHA to better avoid losses due to poor servicing and, thus, protect the MMI Fund, HUD said. Testifying before a Senate appropriations subcommittee, FHA Commissioner Carol Galante noted...

Investors have significantly reduced their home-purchase activity in recent months, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Current homeowners and first-time homebuyers have filled the void and are much more likely to finance a home purchase with a mortgage compared to investors. Investors accounted for 20.2 percent of home purchases in May, based on the three-month moving average, the third consecutive decline in investor share. Market share for both current homeowners and first-time homebuyers increased in recent months, with current homeowners accounting for 43.8 percent of home purchases in May. The trends present...

Fannie Mae and Freddie Mac would be wound down and terminated in the housing finance system of the future that combines greater private sector participation with a clearly delineated emergency government backstop, according to a reform plan released this week by four industry experts. Sponsored by the Milken Institute, the Urban Institute and Moody’s Analytics, the “Pragmatic Plan for Housing Finance Reform” would see the government play an “explicit and transparent” role to cover catastrophic losses but with an emphasis on mortgage funding diversity. The authors envision...

The American Bankers Association asked the CFPB for more detailed guidance on the “temporary qualified mortgage” for government-sponsored enterprise and agency mortgage loans. Earlier this year, the bureau proposed some amendments to its mortgage rules under the Real Estate Settlement and Procedures Act and the Truth in Lending Act. Among them are some proposed revised commentaries regarding the standards that a creditor must meet when relying upon a written guide or the automated underwriting system of one of the GSEs, the...

The FHA and the Department of Justice have ramped up enforcement actions against more than a dozen mortgage lenders in recent weeks for alleged agency rule violations. At least two of the lenders have received notices from the DOJ that they are in violation of the False Claims Act. According to the Collingwood Group, a Washington-based business advisory firm, the agencies have sent notices of enforcement or “administrative” actions to as many as 15 FHA direct endorsement (DE) lenders, some of whom could lose their DE status if found to have engaged in improper lending practices that resulted in huge losses for the FHA. The latest enforcement actions have ...

The Department of Veterans Affairs is planning to raise the residual income limit requirement for home loan applicants by 15 percent – a move that could shut out many veterans who have limited income. The proposal is one of several measures under consideration for the VA’s Home Loan Program, said Carol Barnard, a loan production officer in the VA Regional Loan Center in Denver, during a recent webinar hosted by the Collingwood Group, a Washington-based advisory firm. Barnard is also a senior consultant with Collingwood. This change means that, for a family of four in the VA’s Northeast region, the required income residual could jump to ... [1 chart]