As much as the False Claims Act has been a formidable government enforcement tool against FHA loan originators, the statute is also being used increasingly against mortgage servicers, according to compliance experts. Within the last 18 months, the DOJ has expanded FCA use to reverse mortgages and loan servicing, according to Phil Schulman and Krista Cooley, both partners in Mayer Brown’s Washington office and members of the firm’s Consumer Financial Services group, during a recent podcast. While the Department of Justice has consistently used the FCA and its treble-damage provision to enforce FHA loan origination rules, the economic downturn and foreclosure crisis has put...

A group of servicers and other industry participants is focusing on issues with government-insured mortgages and has plans to simplify servicing practices. The Mortgage Servicing Collaborative was organized by the Urban Institute’s Housing Finance Policy Center. It includes representatives from a number of major servicers along with some officials from trade groups, consumer groups, investors, mortgage insurers, vendors and academics. The goal is...

Wells Fargo fell a notch as PennyMac raced to the top to become the leading VA jumbo securitizer for the first quarter of 2017 – a period in which VA jumbo loan securitization took a sharp nose dive. The volume of VA jumbo loans securitized during the first three months plunged 36.8 percent, compared to the meager 2.0 percent decline seen in the fourth quarter. The drop reflected a 32.9 percent drop in jumbo mortgage production during the first quarter, along with similar large drops in virtually every product segment in the mortgage market, according to an analysis by Inside FHA/VA Lending affiliate Inside Mortgage Finance. The agency jumbo market was down 39.1 percent from the fourth quarter despite the bump up in high-cost loan limits to $636,150, an increase of $10,650 that became effective in January. All components of the agency jumbo market took big hits in the first quarter, including ... [ Charts ]

Industry comments on the Department of Housing and Urban Development’s plan to streamline and clarify agency regulations and discard those that have outlived their usefulness reflect mixed priorities.The Mortgage Bankers Association and the American Bankers Association chose to focus on a single issue, while the National Association of Realtors, the Community Home Lenders Association and the Consumer Mortgage Coalition called for changes on multiple issues. A HUD task force is sifting through department regulations to identify those for repeal, replacement, clarification or amendment. The regulatory review is in response to President Trump’s directive to reduce regulatory burden and control regulatory costs. While the MBA called for a freeze on all future False Claims Act enforcement actions against lenders (see story on p. 6), the ABA raised concerns about ...

The VA condominium-financing process can be difficult for both veteran borrowers and lenders, according to experts at a recent VA lender conference. The big issue for borrowers is finding a condo development that has VA approval or one that can obtain approval quickly enough to complete the loan process in the shortest time possible. A development that has a high number of foreclosures, a significant number of condo owners that are behind on their association dues, or pending litigation against the homeowner association is unlikely to win VA approval, experts said. Such factors could put the VA and the lender at risk. As such, securing VA approval for a development is crucial. In 2009, VA stopped accepting HUD/FHA condo project approvals in lieu of a VA project review, said Phyllis Chilton, valuation officer at VA’s Phoenix regional loan center. Condo projects that were accepted previously by ...

The FHA has issued guidance to lenders and appraisers regarding problems that have arisen since the agency announced its Electronic Appraisal Delivery (EAD) portal in 2015. Effective June 27, FHA will require appraisals for new FHA originations to be submitted through the EAD. The portal’s use has been voluntary. Users without a valid user ID for accessing the EAD portal will be locked out of the system after the effective date, the FHA warned. Users that have not signed on the FHA Connection will lose their user ID. Only their organization’s FHAC application coordinator can reinstate them and restore access to the portal. “Hard stop” messages, which are built into the EAD portal, indicate data errors that must be resolved before the appraisal can be successfully transmitted to FHA. This helps avoid potential data conflicts between the portal and FHA. The FHA has identified five hard-stop errors ...

VA troubleshooters have identified the technical glitch that has prevented servicers from uploading current servicing data to the agency’s VALERI system. According to a VA spokesperson, the problem was caused by faulty uploading procedures, not by malware within the documents as earlier feared. “Dridex was originally suspected because we became aware of it at the same time the uploading problem occurred,” he explained. “Our warning to servicers was an emphasis on the side of caution.” The Dridex malware, which can go undetected, targets customers of financial institutions by stealing their personal information through HTML injections. The VA Loan Electronic Reporting Interface (VALERI) is a loan administration system that servicers use to oversee loan servicing, monitor loan defaults, and accept and pay claims and incentives. Servicers experiencing problems with uploading servicing data should immediately ...

The Department of Housing and Urban Development could soon face a technology crisis with roughly 87 percent of its antiquated information-technology systems dying or on the verge of collapse. The warning came from the HUD inspector general in a semiannual report to Congress. The report raised concerns about the poor state of HUD’s IT systems, “of which 87 percent are at or near the end of their life cycle.” These systems include 400 IT products that no longer have technical support, the report noted. The problem is so bad that HUD is having trouble doing mathematical ...

House Financial Services Committee Approves Flood Insurance Reform Measures.The House Financial Services Committee this week reported out several bills to reform and reauthorize the National Flood Insurance Program, which is set to expire on Sept. 20, 2017. The bills that passed included H.R. 2875, the National Flood Insurance Program Administrative Reform Act of 2017, which would protect taxpayers from program fraud and abuse; H.R. 1588, the Repeatedly Flooded Communities Preparation Act, which would ensure community accountability for areas frequently damaged by floods; and H.R. 1422, the Flood Insurance Market parity and Modernization Act, which would increase the availability of private flood insurance. The committee also approved H.R. 2246, the Taxpayer Exposure Mitigation Act of 2017, which would shift flood insurance risk for commercial and multifamily properties in ...

Securitization rates appeared to rebound strongly in the first quarter of 2017, with an estimated 79.5 percent of primary-market mortgage originations finding their way into a variety of MBS, according to a new Inside MBS & ABS analysis. That’s up from a 69.1 percent securitization rate for all of 2016 and, if it keeps up for the rest of 2017, it would be the highest mark since 2013. In the fourth quarter of 2016, the rate was 72.7 percent. Both new MBS production and primary-market originations were...[Includes one data table]