The Mortgage Bankers Association and the National Association of Realtors have recommended policy changes the VA Home Loan Guaranty program could adopt to make it work better for veteran borrowers. The two industry groups offered their recommendations during a hearing before the House Committee on Veterans Affairs, Subcommittee on Economic Opportunity on the VA program. Testifying on behalf of the MBA, James Danis, president of Residential Mortgage Corp., urged the VA to issue a clear, final qualified mortgage rule for VA lending. The agency has had an interim final rule on QM and ability to repay in place since May 9, 2014, when it was published in the Federal Register. The VA recently issued guidance for lenders to better understand the standards but gave no indication as to when a final rule will be released. Danis recommended that the final rule provide an ample implementation period to ...

On Jan. 20, the Department of Veterans Affairs published a Frequently-Asked-Questions (FAQ) guide to its qualified mortgage interim final Rule. We are picking up from where we left off last issue: Will VA still guaranty the loan if the Interest rate Reduction Refinance Loan (IRRRL) does not meet the recoupment period of less than 36 months, or does not meet the six-month seasoning requirements? Yes, VA will guaranty the loan. However, the loan will not have a safe harbor QM status. Instead, it will be a rebuttable presumption QM. VA does not condition the guaranty on satisfaction of all of the QM requirements. Lenders should consult their legal staff regarding safe harbor and rebuttal presumption QMs. What is the date that begins the seasoning and recoupment periods? The date of the note is the date on which legal obligations are established between borrower and lender. Therefore, to calculate the ...

While they are effective, the VA’s Frequently-Asked-Questions on the qualified mortgage interim final rule provide helpful guidance on certain aspects of Interest Rate Reduction Refinance Loans (IRRRLs) origination as they relate to the VA QM rule, according to an analysis by the Washington, DC, law firm K&L Gates. The intricacies of IRRRL treatment under the interim final rule suggest the product may continue to be subject to ambiguities disproportionate to its limited role in the mortgage marketplace, wrote authors Kristie Kully and Eric Mitzenmacher, attorneys with the firm. VA’s interim final rule provides that all VA loans are QMs. The authors note that while most VA loans are safe harbor QMs under the rule, certain streamlined refinance loans (IRRRLs) are entitled only to a rebuttable presumption. Under the VA interim final rule, an IRRRL is deemed to have safe harbor QM status if the ...

The Department of Housing and Urban Development has updated guidance regarding its requirement for lenders to utilize loss mitigation options on a distressed loan or initiate foreclosure within six months of the default date. Specifically, guidance issued earlier this month reiterates the existing eight automatic extensions available to mortgagees when they are unable to initiate foreclosure within the allotted timeframe. In addition, the guidance introduces two new automatic extensions that would align with the Consumer Financial Protection Bureau’s Real Estate Settlement Procedures Act regulations. The guidance is effective for all FHA-insured mortgages in default on or after Oct. 1, 2015. The CFPB RESPA regulations require an appeals process for borrowers when their request for loan modification is denied. Through this guidance, HUD provides an automatic 90-day extension to the ...

Certain aggregators of FHA loans are reportedly refusing to purchase FHA streamline refinance loans, fearing shoddy underwriting on the original loan might raise compliance issues down the road. How widespread is the problem is unclear but an industry consultant, who was tipped off by other aggregators, said the problem seems more of a servicing nature, rather than origination. Prior to 2010, FHA lenders originated many streamline refis with seller-funded downpayment assistance. Many of these loans ended up with high default rates, prompting FHA to eliminate seller-funded DPA and to tighten the FHA streamline refi program. Streamline refi originations fell and the program saw very little activity until the FHA revived the program with changes during the crisis to spur lending and help FHA borrowers refinance. Streamline refis do not require full underwriting. The basic requirements are that the mortgage to be refinanced must be FHA-insured, current on the ...

Rep. Elijah Cummings, D-MD, ranking member of the House Committee on Oversight and Government Reform, and Sen. Sherrod Brown, D-OH, ranking member of the Senate Committee on Banking, Housing and Urban Affairs, earlier this month expressed concern about the sale of nonperforming loans to private investors without sufficient protections for homeowners and neighborhoods. Both lawmakers fear that FHA may not be providing enough incentives to servicers to modify ailing mortgages and that certain investors may be more interested in foreclosure than a cure. The influx of private investors has crowded out first-time homebuyers and raised concerns about the long-term effects of investor-owned homes in communities where foreclosures run high. In a joint letter, the two lawmakers sought information from the Department of Housing and Urban Development about ...

House Approves Legislation Streamlining FHA Condo Rules, Allowing DE Lenders for USDA. Housing reform legislation that would ease FHA restrictions on condominium financing and allow delegation of loan approval authority to qualified lenders under the U.S. Department of Agriculture’s rural housing programs passed the House last week by a vote of 427-0. Described as an FHA reform bill, H.R. 3700, the “Housing Opportunity Through Modernization Act,” would modify FHA requirements for condo mortgages by streamlining FHA’s project certification requirements to qualify condominiums for FHA financing as well as making recertification less burdensome. H.R. 3700 would also expand the USDA’s Section 502 Guaranteed Rural Housing Loan Program for single families by delegating loan-approval authority to certain participating lenders. FHA and VA loan programs already ...

Don’t tell Bernie Sanders this, but the upper class appeared to suffer less than other folks during the fourth-quarter decline in mortgage production, according to a new Inside Mortgage Finance ranking and analysis. Mortgage lenders produced an estimated $78 billion of big-ticket home loans to, hopefully, well-to-do borrowers during the final three months of last year. That was down 8.2 percent from the third quarter, a little over half the rate of decline in total mortgage originations during the period. For the full year, jumbo mortgages accounted...[Includes two data tables]

While the mortgage insurance industry patiently waits to see if the FHA will cut government MI premiums further this year, the sector is facing another potential threat to profitability: pricing concessions from the nation’s second largest retail originator, Quicken Loans. Moreover, Quicken – also the largest nonbank lender in the U.S. – is promising to pass on 100 percent of the cost savings to its customers, at least that’s what a company spokesman told Inside Mortgage Finance this week. “We take...

A recent amendment by Congress to the Telephone Consumer Protection Act was helpful for mortgage servicers but further action is necessary, according to industry participants. Servicers continue to raise concerns about the TCPA due to an order issued by the Federal Communications Commission in June. The order placed restrictions on auto-dialed calls to cell phones, subjecting servicers and others to penalties of $500 per call with no cap on statutory damages. The TCPA allows...