Two FHA lenders entered into settlement agreements with the Department of Justice and the Department of Housing and Urban Development last week to resolve allegations they violated the False Claims Act in connection with FHA-insured mortgages. PrimeLending of Dallas and Universal American Mortgage Co. (UAMC) of Miami have agreed to pay a total of $26.7 million without admitting to any liability or wrongdoing. As part of an industry-wide inquiry, PrimeLending received a subpoena from the HUD inspector general for documents and other information related to its mortgage practices, including origination of FHA loans. On Aug. 20, 2014, the DOJ issued a civil investigative demand announcing an investigation of PrimeLending for potential FCA violations in connection with the origination and underwriting of FHA single-family loans. On Oct. 23, 2018, PrimeLending entered into a settlement and ...

The Department of Housing and Urban Development’s inspector general recommended that HUD pursue the collection of $5.7 million in surplus proceeds it is entitled to reclaim from 2017 loan terminations. The IG found $6.8 million in uncollected surplus proceeds from non-conveyance foreclosures in the possession of custodians. The IG said it initiated a review when it discovered while doing an unrelated audit that a trustee attorney held surplus proceeds from two non-conveyance foreclosures and HUD had not claimed these funds to offset earlier partial claims it had paid for the properties. The latest audit found that HUD did not always do its job. Of the 81 foreclosures reviewed, 32 had nearly As a result, an estimated $6.8 million in surplus proceeds never made it into the FHA insurance fund. Various third parties benefited at HUD’s expense, and the unclaimed funds sat dormant with custodians. The IG recommended ...

FHA-approved servicers will now find it easier to file a Home Equity Conversion Mortgage claim under revised HECM rules announced by the Department of Housing and Urban Development last week. The new requirements apply to HECM loans that have reached 98 percent of their maximum claim amount, according to Mortgagee Letter 2018-08. The revised rules took effect on Oct. 22, but HUD will accept public comments for a period of 30 calendar days. Compliance experts say the change is good news for a program that has been experiencing substantial losses and lower volumes. Significant revisions were made last year to cut losses and make the product more efficient, but they have not been enough, said FHA Commissioner Brian Montgomery. Under the revised rules, HECM servicers can use alternative supporting documentation in lieu of previously required materials that ...

Certain potential changes could materially affect origination volume and determine the government-sponsored enterprises’ direction going forward, according to analysts. One of those changes could have a significant impact on the FHA market. Wells Fargo Securities analysts recently looked at three potential developments in the Fannie Mae/Freddie Mac sphere and evaluated their effects on the broader mortgage market. Two of those potential changes – loan limits and guarantee fees – are controlled directly by the Federal Housing Finance Agency, while the third relates to the temporary GSE qualified-mortgage exemption, or “QM patch,” which could affect the FHA market. All three factors loom over the mortgage landscape as the FHFA expects a new director in January 2019, who is likely to be more right leaning and could shift the focus back to shrinking the ...

Reporting on VA Loans Impacted by Natural Disaster. The Department of Veterans Affairs is cautioning servicers against reporting as delinquent VA loans that are impacted by a natural disaster. The electronic default notification (EDN) should only be reported prior to the 61st day of delinquency if the borrower intends to abandon the property or pursue an alternative to foreclosure, according to VA. Cite “property problems” as the reason for default, the agency added. On the 61st day of delinquency, servicers should use “casualty loss” as the reason for default when reporting the EDN. This will help VA identify loan defaults caused by a natural disaster. Texas USDA Guaranteed Housing Program See Increased Volume. The USDA guaranteed single-family guaranteed housing programs in the Lone Star State are experiencing significant volume increases, and consequently, ...

If anyone in the mortgage industry thought Ginnie Mae – and FHA for that matter – might take a kinder, gentler approach to the lenders it manages under the Trump administration, by now they are sorely disappointed. Over the past few weeks, Ginnie has suspended a mid-sized lender – 360 Mortgage Group – from its program and sent Executive Vice President Maren Kasper to the annual convention of the Mortgage Bankers Association to relay the message that agency stress tests are ...

The amount of single-family Ginnie Mae mortgage servicing rights increased a modest 0.9 percent during the third quarter, according to a new analysis and ranking by Inside FHA/VA Lending. Some $1.858 trillion of Ginnie mortgage-backed securities were outstanding at the end of September, a 6.2 percent gain over the previous 12 months. Loans guaranteed by the VA continued to be the fastest growing segment of the Ginnie market. Volume was up 1.3 percent from the end of June, hitting $630.9 billion, an 11.0 percent increase from the same time last year. The FHA segment remained far bigger: $1.114 trillion at the end of the third quarter. However, its growth rate has been slower: 0.7 percent from June and 3.9 percent compared to September 2017. Loan performance deteriorated slightly in both programs. Some 92.9 percent of FHA loans were current at the end of September, down from ... [Charts]

Participants in Ginnie Mae’s single-family mortgage-backed securities program may expect new policy changes, including servicer and credit ratings for the largest issuers, clarification of “appropriate sources of liquidity” and other financial requirements. The changes come as issuer liquidity continues to be a primary concern for Ginnie Mae, particularly with nonbanks now the dominant segment in the single-family MBS program. “We’re working on those policies right now,” said Leslie Meaux Pordzik, Ginnie’s acting senior vice president, Office of Issuer and Portfolio Management, at the Mortgage Bankers Association’s annual convention in Washington, DC, this week. Nonbanks account for nearly two-thirds of Ginnie MBS issuance and approximately 75 percent of FHA and VA lending. Nonbanks serviced a record 61.1 percent of outstanding Ginnie single-family MBS at the end of the ...

The Department of Veterans Affairs has asked the Office of Management and Budget to review a draft final rule that would establish major requirements for guaranteed cash-out refinance loans. The Economic Growth, Regulatory Relief, and Consumer Protection Act, which reformed the Dodd-Frank Act, gave VA the authority to regulate cash-out refis. The agency has 180 days from enactment to promulgate regulations. The final rule sets the parameters of VA cash-out home loans, to include defining net tangible benefit, recoupment and seasoning requirements. The Dodd-Frank reform act and Ginnie Mae have established similar requirements for Interest Rate Reduction Refinance Loans. IRRRLs and, to a much lesser extent, cash-out refis came under scrutiny due to loan churning or serial refinancing. Last year, a small group of lenders targeted servicemembers and veterans with VA loans to ...

Information technology improvement is the top priority of government lending programs in the coming months and into 2019. Agency representatives at the Mortgage Bankers Association’s annual convention in Washington, DC, said policy changes are in the works to enhance and improve operations, compliance and customer service. FHA Commissioner Brian Montgomery, who joined the agency four months ago, said IT modernization is his primary concern. A state-of-the-art IT system and advanced data analytics are needed to manage FHA exposures effectively, he said. Montgomery made clear FHA has no plans to build a proprietary system but is considering the idea of shared technology, possibly with VA and USDA; something based on Fannie Mae’s and Freddie Mac’s systems; or some off-the-shelf software. In his view, a modern IT system would have automated underwriting that provides ...