The Senate Appropriations Committee last week approved funding for several housing provisions in the government’s Transportation and Housing and Urban Development fiscal year 2017 budget proposal, including FHA technological improvements, while the full Senate passed an amendment to include energy costs in FHA underwriting and appraisals. Approved by a unanimous vote of 30 to 0, the T-HUD budget bill, among other things, would provide federal funding for FHA technological upgrades rather than charge lenders an administrative fee as HUD had proposed. The committee appropriated $13 million in specific funds to improve FHA’s information technology. The proposed per-loan fee charged to lenders was projected...

Ginnie Mae is shutting down its long-running Targeted Lending Initiative (TLI) because it has not made much of an impact on lending to underserved urban and rural areas in recent years. Launched in 1997, the TLI was designed to encourage lenders to finance housing in underserved areas through a reduced guaranty fee. In 2005, the program played a major role in offering relief and financial assistance to homeowners in areas hardest hit by Hurricane Katrina. Under the TLI, Ginnie Mae’s guaranty fee is reduced...

The Ginnie Mae servicing market continued to grow during the first three months of 2016, with most of the impetus coming from the VA home loan guaranty program. A new Inside FHA/VA Lending analysis of mortgage-backed securities data reveals that the amount of Ginnie servicing outstanding swelled to $1.544 trillion as of the end of March, a 1.65 percent gain from the previous quarter. Because issuer-servicers regularly repurchase seriously delinquent loans out of Ginnie MBS pools, the actual volume of government-insured loans outstanding was somewhat higher. The VA program saw the most growth, increasing by 3.25 percent in just three months, while FHA servicing in Ginnie MBS rose only 0.96 percent from December 2015. Servicing of rural housing loans guaranteed by the U.S. Department of Agriculture was up 1.34 percent, while the FHA insurance program for Native Americans ... {4 charts]

FHA’s Streamline Refinance program went through an erratic pace in 2015 as business exploded in the second quarter and declined over the second half of the year. FHA lenders closed 2015 with $67.5 billion in total streamline refis, a 252.4 percent improvement over volume in 2014. Production fell 30.0 percent in the fourth quarter from the prior quarter. The second-quarter spike – which caused streamline refi volume to jump from $12.1 billion in the first quarter to $25.0 billion in the second quarter – was fueled apparently by FHA’s reduction of the annual mortgage insurance premium. In January 2015, the FHA cut its MIPs on 30-year loans, making it less expensive to carry an FHA home. Under the revised MIP schedule, a 30-year FHA streamline refi with a loan-to-value ratio over 95 percent is charged an annual MIP of 0.85 percent. For a 30-year loan under 95 percent LTV, the annual MIP is ... [ 1 chart ]

More large lenders may pull back from FHA lending in the wake of this month’s massive settlements between two major FHA lenders and the Department of Justice to resolve alleged violations of FHA lending guidelines and the Federal Claims Act, warned a Baker Donelson attorney in a recent analysis. As DOJ increases its use of the FCA, “large lenders will continue to step away from FHA originations,” said Craig Nazarro, of counsel at Baker Donelson in Atlanta and author of the analysis. Nazarro also warned nonbank FHA originators of the risk they are taking on by continuing to originate FHA loans and growing their government-backed loan portfolio as the larger banks exit or limit their participation in the FHA market. “Many large lenders have faced or are currently facing these [enforcement] actions, and from the [DOJ’s] recent statements, it does not appear that they are slowing down ...

The Department of Veterans Affairs has issued new guidance clarifying how VA lenders should comply with the disclosure requirements of the new TRID rule. TRID, which stands for Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Disclosures, was adopted in final form by the Consumer Financial Protection Bureau on Oct. 3, 2015. Specifically, TRID establishes new requirements regarding mortgage disclosure forms, which lenders must use for all home loans. Lenders are required to itemize the services and fees they charge to borrowers on the TRID disclosure forms, instead of on the HUD-1 closing statement, in connection with a loan application to purchase or refinance an existing mortgage. However, switching from the HUD-1 to the TRID form has caused uncertainty among VA lenders as to how to complete the new forms. VA’s TRID guidance lays out ...

The Department of Housing and Urban Development has revised guidance to lenders for calculating monthly student-loan payments for debt-to-income ratio purposes. The change is aimed at helping more borrowers with student-loan obligations to qualify for an FHA-insured mortgage. Currently, the FHA requires lenders to calculate a monthly payment for deferred student loans based on 2.0 percent of the outstanding balance, and include it in the borrower’s DTI for qualifying purposes. The disadvantage of the current method of calculation is that it makes it harder for the borrower to qualify for an FHA loan, according to Marc Savitt, president of The Mortgage Center, an exclusively FHA/VA lender in Martinsburg, WV. Under the revised guidance, regardless of the borrower’s payment status, the lender must use: (a) the greater of 1.0 percent (a 50 percent reduction from the current 2.0 percent) of the ...

The Department of Housing and Urban Development has issued a notice to establish a computer-matching program between FHA and the VA that would enable the two agencies to prescreen mortgage applicants. The notice was published in the April 15 Federal Register. The computer-matching program would allow HUD to incorporate VA debtor files into the department’s Credit Alert Verification Reporting System (CAVRS). Consequently, both the FHA and VA would be able to prescreen loan applicants and identify who is delinquent or in default on a federally guaranteed mortgage loan. The use of CAVRS would allow HUD to monitor its FHA programs better and prevent the extension of credit to individuals who are delinquent or in default on their obligations to HUD and other federal agencies. Meanwhile, VA expects to achieve savings through risk reduction and ...

Freedom Mortgage Corp. has agreed to pay the federal government $113 million to resolve alleged violations of the federal False Claims Act and FHA requirements in connection with the origination of FHA-insured single-family mortgages. The April 15 settlement agreement between the New Jersey-based mortgage lender and the Department of Justice comes in the wake of a record $1.2 billion settlement between DOJ and Wells Fargo, which earlier admitted to false certification of defective mortgages for FHA insurance and failure to file timely reports on several thousand loans that were materially defective or badly underwritten. Like Wells Fargo, Freedom Mortgage failed...

Borrowers saddled with student loan debt now have a better chance of qualifying for an FHA mortgage, thanks to a recent change in the way lenders factor such payments in the calculation of a borrower’s debt-to-income ratio. Under newly revised guidance announced by the FHA recently, lenders may apply the same calculation criteria used in the mortgage industry regardless of the type of student loan-payment plan (such as income-based payment plans) or a deferred-payment plan. Currently, there are...