Most major servicers reported increases in mortgage delinquency rates during the fourth quarter of 2011, but some industry data suggest seasonal factors influenced the increase. According to the Inside Mortgage Finance Large Servicer Delinquency Index, 10.88 percent of loans serviced by 19 major companies were in some stage of default at the end of 2011. That was up from 10.70 percent at the end of September and marked the fourth consecutive increase in the index. The biggest increase was in the serious default category, loans 90 days or more past due but not yet in foreclosure. Some 3.27...(Includes one data chart)

The Department of Housing and Urban Development plans to use revenues from proposed FHA premium hikes and servicer settlements to stabilize the Mutual Mortgage Insurance Fund and bring capital reserves back to compliance. The proposals for annual premium increases on forward FHA-insured mortgage loans, multifamily and health care loans were laid out in the FY 2013 HUD budget, which the Obama administration sent to Congress this week. During a press briefing, HUD Secretary Shaun Donovan said raising FHA premiums further would improve the FHA insurance fund’s capital reserves, which fell ...

Citigroup, Inc. this week agreed to settle a civil fraud lawsuit with the Manhattan U.S. Attorney’s Office and the Department of Housing and Urban Development alleging reckless mortgage lending practices. The $158.3 million settlement was reached on Feb. 15, hours after Preet Bharara, the U.S. Attorney for the Southern District of New York, filed a civil fraud lawsuit against CitiMortgage, a subsidiary of Citibank. The suit sought treble damages and civil penalties under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the False Claims Act, a federal Civil War-era statute Congress passed to ...

Excluding streamlined FHA refinancing from the “Compare Ratio” loan review process to facilitate refinancing of underwater non-agency mortgages, as proposed by the Obama administration, would make sense. At the margin, however, the proposal would increase Ginnie Mae prepayment speeds on higher-coupon borrowers, analysts cautioned. The proposal is part of a broader administration plan for housing recovery, which calls on Congress to provide non-agency borrowers with access to low-cost refinancing through FHA, and fully streamlined refinancing for borrowers with Fannie Mae or Freddie Mac loans. Underwater borrowers who opt for streamlined refinancing in either agency or non-agency programs would have ... [one data chart]

Total delinquency rates and foreclosure start rates decreased for all loan types on a quarter-over-quarter basis, except FHA loans, according to the Mortgage Bankers Association’s National Delinquency Survey for the fourth quarter of 2011. All delinquency and foreclosure measures for FHA loans were up over the previous quarter because the agency’s book of business experienced rapid growth, and purchase loans originated in 2008 and 2009 are now only entering the peaks of a normal delinquency, the MBA explained. On a seasonally adjusted basis, the delinquency rate for FHA loans increased 27 basis points to 12.36 percent and the foreclosure inventory rate rose by ... [one data chart]

The Department of Housing and Urban Development last week withdrew a proposal that would have allowed the Farmer Credit System’s direct lenders to participate as approved lenders in the FHA insurance programs. In a notice published in the Feb. 13 Federal Register, HUD explained that while it supports having mortgage credit available to qualified borrowers, particularly in underserved areas, it remains committed to the administration’s goal of reducing the FHA’s market share and facilitating the return of private capital to the housing finance market. The FHA and its approved lenders will continue mortgage lending in rural areas to ensure ...

The Department of Housing and Urban Development is going all out to bolster FHA’s capital reserves with budgetary proposals to increase annual premiums beyond the 10-basis points hike authorized by Congress late last year. The proposed premium increases are expected to complement the $1 billion that Bank of America has agreed to pay to resolve claims against the bank and its subsidiary, Countrywide Financial Corp., for alleged underwriting and mortgage origination fraud. The BofA settlement, half of which is a penalty paid directly to the FHA, is part of a $25 billion agreement among 49 state...

The House Financial Services Subcommittee on Insurance, Housing and Community Opportunity this week approved legislation calling for an emergency capital plan and an independent GAAP-based audit of the FHA insurance funds and programs. The FHA Emergency Fiscal Solvency Act would set minimum annual mortgage insurance premiums for the FHA and is aimed at shoring up the Mutual Mortgage Insurance Fund. Introduced by Subcommittee Chair Judy Biggert, R-IL, the bill was approved by voice vote. An amendment introduced by Rep. Scott Garrett, R-NJ, sparked a heated partisan debate, which will likely continue when...

The mortgage industry is skeptical about President Obama’s proposal for low-cost, non-agency loan refinancing program, administered by the FHA for current, underwater borrowers. Some industry participants called the plan nothing but smoke and mirrors that would likely create unrealistic expectations. But deceptive or not, the proposal first announced by the president in his State of the Union address promises to be different from the earlier, huge unsuccessful FHA experiments in foreclosure prevention – Hope for Homeowners and FHA Short Refinance programs. The proposed refi plan is a combination of ...

With the recent issuance of streamlined regulations on lender indemnification, mortgagees participating in the FHA Lender Insurance program may increasingly find themselves the targets of HUD enforcement actions. Industry compliance experts anticipate an increase in agency audits and monitoring reviews because of the Department of Housing and Urban Development’s tightening of its indemnification rules. This could raise lenders’ compliance costs as well as legal costs if they find themselves the subject of an enforcement action, experts warned. “At an unprecedented time of change in the mortgage industry ...