The final rule issued by the Consumer Financial Protection Bureau this week to define ability-to-repay requirements and “qualified mortgages” puts non-agency and subprime mortgages at a significant disadvantage to prime and agency mortgages. The slant against non-agency loans goes beyond what was required by the Dodd-Frank Act, according to industry analysts. The rule is set to take effect Jan. 10, 2014. Under the final rule, qualified mortgages must meet...

Mortgage industry participants are confident that newly confirmed FHA Commissioner Carol Galante will deliver on reforms she committed to in an effort to reach out to Republican critics. Eighteen Senate Republicans veered away from their hardline party colleagues to help Carol Galante secure confirmation of her nomination as the Department of Housing and Urban Development’s chief overseer of the FHA mortgage insurance program and overlord of housing policies. Galante broke through the GOP firewall Dec. 30 after the Senate voted 69 to 24 to approve her nomination. She needed at least 60 votes to ...

Although it is far from settled that the FHA will raise its downpayment threshold from the current 3.5 percent, there is a growing fear among some lenders that Republicans in Congress might push for a 10 percent downpayment. If that happens, said David Lykken, managing partner of Mortgage Banking Solutions, Austin, TX, “it would bring HUD to its knees.” Lykken and others fear that anything north of 5 percent would hammer the market, in particular first-time homebuyers who use the program heavily for purchases as opposed to refinancings. “We need the FHA charter to help first-time buyers,” he said. How much of a downpayment hike certain House GOP members might demand will be ...

A federal appeals court in Washington, DC, has overturned a lower court’s dismissal of a lawsuit accusing the Department of Housing and Urban Development of denying protection for surviving spouses of deceased principal borrowers of reverse mortgages against ejection due to foreclosure. The case, Robert Bennett, et al. v. Shaun Donovan, revealed an apparent inconsistency between HUD regulations and the federal statute that created the FHA’s Home Equity Conversion Mortgage Program. This inconsistency was at the root of the district court’s previous decision to dismiss plaintiffs’ claim for lack of standing, which the ...

Homeowners may seek to stop a non-judicial foreclosure if the lender fails to comply with the Department of Housing and Urban Development’s servicing requirements, according to a California appeals court. In Pfeiffer v. Countrywide Home Loans, the plaintiffs sued to halt foreclosure proceedings that the lender initiated after the FHA mortgage went into defThe complaint alleged that Countrywide failed to provide the borrowers the 30-day advance notice required by the federal Fair Debt Collection Practices Act or to conduct a face-to-face interview, which HUD requires prior to initiating foreclosure proceedings. In addition to the injunction, the plaintiffs ...

The Department of Housing and Urban Development is implementing changes to FHA Connection to ensure FHA-approved lenders are providing accurate identification information about their loan officers for better monitoring and supervision. Effective Jan. 28, the FHA will not assign case numbers to lenders if the names and registration numbers of their loan officers under the National Mortgage Licensing System are entered incorrectly into the system. The same requirement applies to lenders registering a new third-party originator (TPO) in the ...

Competition in FHA lending may get a boost following the easing of reporting requirements for insured depository institutions with $500 million or less in total assets. The Department of Housing and Urban Development recently announced a policy change to eliminate a requirement for small supervised lenders and mortgagees to submit internal control and compliance reports under the FHA’s interim financial reporting rules. Independent mortgage companies, regardless of their asset size, are not covered by the exemption. A supervised lender or mortgagee is a financial institution that is a member of ...

Residential Capital, a former subsidiary of Ally and currently in Chapter 11 bankruptcy, has asked the court for permission to sell an estimated $130 million in FHA-insured mortgage loans. ResCap made the request in a recent filing with the U.S. Bankruptcy Court in Manhattan, which monitors and approves all of the beleaguered company’s activities and requests during bankruptcy. According to the company, its unsecured creditors have signed off on the prospective sale of the FHA loans although the court would still have to approve the request during a scheduled hearing on Jan. 16. ResCap sought bankruptcy protection on ...

Excluding Home Equity Conversion Mortgage loans, total FHA originations topped $21 billion in November, which was down 7.7 percent from October but up a substantial 44.4 percent from the same period a year ago, an Inside FHA Lending analysis of government data shows. Accounting for 99.3 percent of FHA originations, insured fixed-rate mortgages were the flavor of the month. Completed purchase money mortgages accounted for 47.1 percent of the month’s activity while refinancing comprised 52.9 percent. FHA data also showed that nearly 80 percent of FHA endorsements were for ... [1 chart]

The Department of Housing and Urban Development and Bank of America have announced an agreement to settle a claim that BofA refused to provide mortgage financing to a lesbian couple. BofA allegedly violated a HUD rule prohibiting lenders from basing borrowers’ eligibility for an FHA-insured loan on their sexual orientation, gender identity or marital status. The new “equal-access” rule applies in all FHA programs. The enforcement action is HUD’s first against a lender involving the equal-access rule. BofA agreed to pay a $7,500 fine, a middling sum compared to ...