The Senate Committee on Appropriations last week unanimously approved legislation setting aside $40.2 billion in discretionary funding for the Department of Housing and Urban Development for fiscal 2018. The Senate HUD appropriations bill passed by a vote of 31-0 and, like the House version, did not include authority for HUD to charge a fee to cover FHA’s administrative costs and systems upgrades as proposed in the Trump administration’s budget request. Rather, both bills set aside $130 million for administrative expenses with the House adding another $5 million for technological improvements. In addition, the committee recommended...

House Democrats are trying to persuade Housing and Urban Development Secretary Ben Carson to reinstate a 25-basis-point FHA mortgage insurance premium cut scheduled under the Obama administration, citing continuing improvement of the FHA Mutual Mortgage Insurance Fund. In a letter to Carson last week, 21 Democrats led by Rep. Joyce Beatty, OH, called upon the secretary to place homeownership within the reach of families, especially millennials and minorities, by lowering the FHA annual MIP rates to the same level that was announced during the waning days of the Obama administration. On Jan. 9, 2017, encouraged by the strong recovery of the MMI Fund, former HUD Secretary Julian Castro announced...

The VA home loan guaranty program continued to grow faster than the FHA program during the second quarter of 2017, according to a new analysis and servicer ranking by Inside FHA/VA Lending. At the end of June, Ginnie Mae mortgage-backed securities pools included $548.04 billion of VA loans, a 3.3 percent increase over the previous quarter. Compared to a year ago, the volume of VA loans was up a hefty 15.6 percent. The $1.055 trillion of FHA loans in outstanding Ginnie MBS was still nearly twice the volume of VA loans. But the FHA total was up a more subdued 1.8 percent from March and by 5.4 percent from a year ago. One reason the VA market grows somewhat faster than the FHA is that it loses fewer loans to default. For starters, the VA delinquency rate is lower – 3.03 percent in the second quarter of 2017 vs. 5.52 percent for FHA. Over the past three and a half years, the ... [ Charts]

The House Appropriations Committee this week approved a FY 2018 spending bill for the Department of Housing and Urban Development with a $135 million allocation for information technology upgrades in lieu of a proposed lender fee. The set-aside also covers quality control and risk management improvements as well as other administrative costs. The recommended funding is $5 million more than the FY 2017 enacted level for administrative contract expenses and $25 million below the budget request. Approved by a vote of 31 to 20, the bill provides HUD with $38.3 billion in discretionary spending for FY 2018, down $487 million from the current level. The House bill authorizes $400 billion for loan guarantees under the FHA Mutual Mortgage Insurance Fund, including the Home Equity Conversion Mortgage program, and $500 billion for Ginnie Mae. Ginnie will also receive $25.4 million for agency staffing, which is ...

An internal watchdog audit alleges that the Department of Housing and Urban Development has been auctioning distressed notes to investors with no formal guidance or procedures in place. In a recent audit report, the HUD Office of the Inspector General said the department did not conduct rulemaking or develop standards for its single-family note sales program. The IG said it performed the audit due to the large amount of FHA claims paid on note sales as well as public concerns over the creation and administration of the program. In addition, the IG has never audited the program. In 2002, HUD referred to the initial note sales program as the Accelerated Claims Disposition Demonstration Program. The department later renamed it the Loan Sales Program, and subsequently to its current name: Distressed Asset Stabilization Program. DASP accepts assignment of eligible, defaulted single-family mortgage loans in ...

The Department of Housing and Urban Development’s lender disciplinary arm, the Mortgagee Review Board, has suspended a Pennsylvania FHA lender from originating or underwriting any new agency-insured loans. In addition, HUD’s enforcement center suspended owner John Seckel from doing business with the federal government. According to HUD, Seckle Capital of Newton, PA, and its owner submitted statements and certifications purporting to show the firm was properly audited by independent certified public accountants, when, in fact, it was not. The MRB said Seckel and his firm engaged in a “years-long pattern” of deceit and falsehoods. The action is the result of HUD’s ongoing effort to hold the mortgage industry accountable for the loans it originates, underwrites or services. According to HUD’s Neighborhood Watch website, Seckel Capital has a compare ratio of 164 percent. Of the 557 loans the ...

The Department of Veterans Affairs is ratcheting up enforcement of its so-called Tidewater process to prevent veterans from paying more than the appraised value of the property when using a VA loan. In recent guidance, the VA reaffirmed its 2003 Tidewater Appraisal Initiative to help reduce the number of cases where appraisers have been asked to reconsider their initial appraisal, which had come in below the sales price. The guidance emphasizes procedures for improving communication of new sales data to VA fee and staff appraisers for a reevaluation of the low initial appraisal. “These guidelines should help limit the number of cases that reach the reconsideration-of-value phase and also provide a more timely response to those cases that are submitted for reconsideration,” the VA explained. The Tidewater procedure provides a designated “point of contact” (POC) the opportunity to ...

The Department of Veterans Affairs is warning VA lenders to adhere strictly to the agency’s requirements for safe potable water for veteran homebuyers. The agency recently provided clarification and guidance concerning the testing of private, individual water-supply systems for properties backed by VA mortgage loans. The VA has long treated potable water as a health and safety issue, including as part of its minimum property requirements that water used for drinking, washing and other in-house uses must be safe for consumption. According to the guidance, which went into effect on July 19, 2017, a disinterested third party must perform all water testing. This includes the collection and transport of water samples from the supply source. Only the local health authority, a commercial testing laboratory, a licensed sanitary engineer, or any other party that is acceptable to the local health agency may test ...

The House Appropriations Committee has recommended $50 million to fund the Department of Housing and Urban Development’s FY 2018 housing counseling assistance to homebuyers, homeowners and low and moderate-income renters. The allocation is $3 million more than the Trump administration had requested and $5 million below the amount appropriated for housing counseling in fiscal year 2017. In its budget report, the committee noted the continued improvement in the economy, which has resulted in fewer foreclosures. Foreclosure filings from 2016 were reported on 933,000 properties, representing a 10-year low and a 14 percent reduction from 2015, the report pointed out. “The foreclosure rate has stayed within a historically normal range for three years, even with the pipeline of legacy foreclosures resulting from the housing bubble,” it said. In addition, the bill retains language that ...

Affordability and job availability are driving millennials to seek homes in more affordable markets, particularly in the upper Midwest, according to Ellie Mae data for the month of May. Ellie Mae’s Millennial Tracker, which monitors millennial mortgage applications during specific times, found that the higher percentages of loans made to millennial borrowers are in Hutchinson and Austin, MN, and Wahpeton and Williston, ND. Anniston-Oxford-Jacksonville, AL, rounded out the top-five markets. Ellie Mae defines millennials as applicants born between 1980 and 1999. Data showed that 48 percent of millennial borrowers who closed loans in May were single. In Hutchinson, for example, the majority of borrowers were single men. “This suggests millennials may be embracing homeownership in these areas for reasons other than what we have historically seen, which was family formation,” explained ...