The FHA’s net-worth requirement, now fully phased in nearly three years since it was revised, will help ensure that only responsible, well-capitalized lenders and mortgagees are involved in the origination of FHA-insured loans. However, small FHA lenders may get squeezed out in the process. On May 20, the second and final phase of FHA’s new net-worth rule became effective. The final rule provides that, regardless of size, all applicants for FHA approval and those with current approval must have a ...

Lenders are at odds with housing finance agencies over the benefits of a new FHA guidance, which calls for documentation of downpayment assistance (DA) that HFAs provide to borrowers. The new guidance requires mortgagees to show written proof that funds provided by a federal, state or local government entity to help borrowers meet the FHA’s 3.5 percent minimum cash investment requirement actually came from the entity and not from some impermissible source. The guidance follows up on a rule issued by HUD last year clarifying an interpretation of the National Housing Act. The rule expressed HUD’s view that ...

A recent Federal Reserve survey of bank lending practices further confirmed a continuing trend among FHA lenders of refusing to lend to borrowers with FICO scores below 620 even though they qualify for the loan and could afford the required minimum 3.5 percent cash investment. About a third of senior loan officers who responded to the April 2013 survey indicated they were less likely to approve FHA home-purchase loan applications within the 580-620 FICO range this year compared to last year. They prefer lending to borrowers with a 720 FICO and who are making a 10 to 20 percent downpayment, the survey showed. An estimated 75 percent of banks cited the ...

The Texas House of Representatives has approved legislation that will let voters decide on Nov. 5 whether to allow home-equity purchase lending in the Lone Star State. The bill would amend the Texas constitution to authorize Home Equity Conversion Mortgage for Purchase loans, which would make the program available to Texans for the first time. The state legislature voted 139 to 1 in favor of Senate Joint Resolution 18, which the Texas Senate approved unanimously in March. Specifically, the bill would amend the state constitution to ... [One chart]

Wall Street raised no objections to a Ginnie Mae proposal to consolidate its two mortgage-backed securities programs, indicating the move would be good for securitization and result in other positives. However, there appeared to be no consensus among players on how to get there. Representatives of Ginnie Mae and the Securities Industry and Financial Markets Association met early this month to discuss the agency’s proposal. Analysts agreed it is far too early in the game to discern a clear path towards a single Ginnie Mae MBS program and that implementation is likely years away. Nevertheless, there were ...

The prospect of legislation being offered that would grant the Department of Housing and Urban Development greater authority to manage the Home Equity Conversion Mortgage program has improved significantly after two House lawmakers declared their intention to introduce a bipartisan bill. Reps. Michael Fitzpatrick, R-PA, and Denny Heck, D-WA, announced during a recent hearing by the House Financial Services Subcommittee on Housing and Insurance that they will co-sponsor legislation to give the FHA the authority it needs to swiftly implement HECM reforms by mortgagee letter. Fitzpatrick expressed his support for ...

A top official of the Department of Housing and Urban Development said the agency is as concerned as Congress and the industry about mortgages seized through the power of eminent domain and will not refinance any mortgage taken in this manner. Testifying at a recent hearing before the House Financial Services Subcommittee on Housing and Insurance, Charles Coulter, deputy assistant secretary for housing, said FHA leadership is very much concerned about the idea of seizing troubled mortgages held in private-label securitizations under the power of ...

Lender Violated FHA’s ‘Outside Employment’ Rule. The Department of Housing and Urban Development’s Office of the Inspector General recommended action against a Las Vegas FHA lender for violating the agency’s rules on outside employment and timely quality control reviews. An OIG audit of All Western Mortgage, a former loan correspondent and current nonsupervised FHA lender, found that two of the company’s loan officers were allowed to moonlight as real estate agents. To their credit, the two loan officers originated just ...

Mortgage underwriting standards have loosened slightly recently, though nowhere near levels seen during the subprime boom. Federal regulators are concerned that not enough lending is being directed toward borrowers with lower credit scores. In November 2012, the average credit score on newly closed loans was 750, according to Ellie Mae. Average scores have largely declined each month since then, to 742 in April. During that time, credit scores on conventional mortgage originations declined by ...

After increasing for three consecutive months, the first-time homebuyer share of home purchases declined in April, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Industry analysts suggest that the decline of first-time buyers is due to an increase in pricing for FHA mortgages and other changes aimed at reducing the FHA’s market share and losses. First-time homebuyers accounted for 35.8 percent of home purchases in the April HousingPulse survey, based on the three-month moving average, down from a 36.1 percent share the previous month. At the beginning of April, the annual premium for all FHA forward mortgages with a downpayment of less than 5 percent increased by 10 basis points. The upfront mortgage insurance premium also increased 75 basis points to 1.75 percent. Thomas Popik, research director for Campbell Surveys, said...