CIT Group this week revealed that it was shoring up loss reserves tied to a reverse mortgage servicing operation it absorbed as part of its acquisition of OneWest Bank and its parent holding company, IMB HoldCo., last August. The loss of $167 million in discontinued operations relates to Financial Freedom, a reverse mortgage servicing subsidiary of OneWest Bank, which CIT shut down in December last year. In an earlier filing with the Securities and Exchange Commission, CIT management identified a material weakness in Financial Freedom related to estimates of the interest-curtailment reserve in its Home Equity Conversion Mortgage portfolio. The flawed estimates apparently have resulted in a material misstatement of CIT’s consolidated financial statements. Due to a change in estimates, and taking into consideration an investigation being conducted by the ...

The Department of Housing and Urban Development will look into certain downpayment-assistance practices that the department’s inspector general alleged are improper or unlawful. In a recent note to FHA lenders, FHA Commissioner Ed Golding said HUD would look into any inappropriate practices, including the extent to which government-sponsored downpayment-assistance programs disclose loan terms to borrowers. In addition, HUD will investigate IG allegations of inappropriate fees or costs being charged to borrowers, as well as reports of steering and coercion of borrowers, said Golding. In the note, Golding reiterated HUD’s support for government-backed DPA programs that enable families to access credit for purchasing homes. The note also carried a statement from HUD Deputy Secretary Nina Coloretti, which reiterated the department’s support for government-backed DPA programs. Coloretti also clarified a memorandum on DPA issued by Golding back in May, which, she said, “may have been misinterpreted by some to endorse otherwise unlawful practices.” She said HUD does not endorse such practices.

Unverified funds and undocumented deposits are the leading causes of high initial unacceptable findings in a post-endorsement review of a sampling of FHA-insured loans, according to the Department of Housing and Urban Development. Source-of-fund issues were found in 9.8 percent of FHA loans in the first quarter of 2016, up from 9.0 percent in the fourth quarter of 2015. The percentage of loans with such problems fell to 2.0 percent after going through loss mitigation. Specifically, auditors either found undocumented large deposits or deposits that are from unacceptable sources. In addition, auditors found loans in which borrower funds fell short of the minimum investment requirement or actual funds to close an FHA loan. Inadequate borrower funds or reserves were also found in certain loans that were run through the TOTAL Scorecard, invalidating them for FHA approval. The ...

We pick up where we left off last issue with the Department of Veterans Affairs attempting to clarify certain guidance in the VA Lender Handbook. ? If the TRID (Truth in Lending/Real Estate Settlement Procedures Act Integrated Disclosures) closing disclosures change after the veteran signs [the form], should the lender require the veteran to sign it again? VA: The short answer is yes. The lender is required to provide the TRID closing disclosure no later than three business days before consummation. The lender is required to provide a corrected closing disclosure to the borrower three days before consummation or closing in certain instances, and at or before consummation if other types of changes occur, such as adjustment of costs or credits. Therefore, any changes made that require an amended disclosure must have the borrower’s signature. ? Is the Amendatory Clause mandatory for all ...

Fannie Mae has announced new enhancements to its 97 percent loan-to-value mortgage product, including acceptance of FHA-approved housing counseling, to help attract more borrowers.The improvements would expand access to HomeReady, which allows borrowers to pay as little as 3 percent down on a home purchase. The 3 percent may include income from non-borrower household members. Fannie said it would accept one-on-one, pre-purchase counseling from providers that have been approved by the Department of Housing and Urban Development for FHA borrowers. The goal is to help conventional borrowers meet HomeReady’s homeownership education requirements. Later this year, Fannie will offer lenders a $500 credit to encourage borrowers to take advantage of the housing counseling option to help sustain long-term homeownership. In addition, Fannie simplified income-eligibility requirements for ...

FHA has announced updates to the Electronic Appraisal Delivery (EAD) portal and FHA Connection (FHAC) to make it easier for entities to view and work with appraisal reports. The latest improvement would ensure that EAD portal users, lenders/underwriters in particular, are approving appraisal reports for the FHA case number assigned to them. The FHA also released guidance regarding case transfers in relation to appraisal reports in the EAD portal and FHA Connection. If, prior to case transfer, the original mortgagee uploaded an appraisal, the new mortgagee to whom the case was transferred will be unable to view the appraisal in EAD. Hence, the new mortgagee must obtain a copy of the appraisal from the original mortgagee and submit it through the EAD portal. The original mortgagee must first transfer the case number to the new mortgagee in FHAC. Once the case transfer is complete, the ...

USMI Names MGIC Chief as Chairman. U.S. Mortgage Insurance has tapped Patrick Sinks, chief executive of MGIC Investment Corp., to be the trade group’s new chairman. Sinks succeeds USMI Chairman Rohit Gupta, president and CEO of Genworth Mortgage Insurance. Sinks served previously as USMI’s vice chairman. Bradley Shuster, chairman/chief executive for NMI Holdings, will take overNew Reverse-Mortgage Product. California Mortgage Advisors has expanded its reverse-mortgage menu, with the addition of a non-FHA reverse mortgage option of up to $6 million for select clients. With the new product, CMA joins a handful of private reverse-mortgage lenders that will consider properties valued up to $6 million. Last year, American Advisors Group, the largest Home Equity Conversion Mortgage lender, announced its AAG Advantage lending program, which features the ...

The decline in interest rates after the Brexit vote in late June has boosted mortgage originations in recent weeks and caused problems for holders of mortgage servicing rights, according to industry participants at the California Mortgage Bankers Association’s Western Secondary Market Conference in San Francisco this week. Mike Duncan, a hedge manager at Compass Analytics, said 25 percent of his firm’s clients were over capacity at the end of May and 40 percent were over capacity by the end of June. He predicted that over-capacity rates could go even higher if interest rates stay low, increasing demand for refinances. Compass provides pricing, valuation and interest rate risk-management services. Rob Branthover, a managing director at Mortgage Industry Advisory Corp., added...

In late January of this year, American International Group announced its intention to spin off 10 percent of its top-ranked mortgage insurance affiliate, United Guaranty Corp., but almost seven months later no deal has materialized. According to interviews conducted by Inside Mortgage Finance this week, it’s been “radio silent” regarding the initial public offering, but all that could change next week when AIG releases its second quarter results. A spokesman for UGC declined to comment on the matter. Most of the observers believe...

The Republican platform, released this week during the Republican National Convention, would scale back the government’s role in housing and make borrowers and lenders more responsible. But it offered a somewhat vague prescription for what to do with Fannie Mae and Freddie Mac. “Our goal is to advance responsible homeownership while guarding against the abuses that led to the housing collapse,” the platform states. The GOP said housing reform should include clear underwriting standards and guidelines on predatory and acceptable lending practices – standards that are arguably at the core of the Dodd-Frank Act that’s roundly criticized by the party. Republicans blamed...