The FHA Mutual Mortgage Insurance Fund account balances fell by $0.5 billion during the second quarter of 2014 to $45.3 billion due to higher claim payments and property expenses. Observers, nonetheless, remain optimistic the fund will return to full stability in 2015 with no further change in the mortgage insurance premium charged to borrowers. The MMIF’s total balances peaked at $48.4 billion in the third quarter of 2013 and then slipped gradually over the last three quarters, according to data in the FHA’s latest report to Congress regarding the financial health of the Mutual Mortgage Insurance Fund. Total revenues from premium collections, property sale, and note sale proceeds were $4.3 billion, while $5.1 billion was paid to cover claims and property expenses in the second quarter. This resulted in a negative$821 million cash flow in the quarter, the smallest outflow since ...

A Congressional Budget Office conclusion that the leading bipartisan mortgage-reform bill could save the government a lot of money likely won’t bring the legislation back to life in this Congress, but it could bolster a similar approach down the road. The CBO estimated that replacing Fannie Mae and Freddie Mac with a new securitization program that couples a first-loss position for private capital with back-end government insurance could reduce “direct spending” by $60 billion over the 2015-2024 period. The Housing Finance Reform and Taxpayer Protection Act of 2013, S. 1217, drafted by Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, would establish...

When lawmakers return from their five-week August recess next week, House and Senate members will face a lengthy agenda with just a short period of time to get it done. Conspicuously absent from the Congressional to-do list is housing finance reform. With approximately 12 scheduled legislative days before the Nov. 4 midterm elections, industry observers note that lawmakers won’t get to some things until they return for the lame duck session, while other bills will fade away as the clock runs out.

Bipartisan Legislation Would Increase Threshold for CFPB Supervision. Right before Congress took off for its summer recess, Republican Sen. Pat Toomey of Pennsylvania and Democrat Sen. Joe Donnelly of Indiana introduced S. 2732, the Consumer Financial Protection Bureau Examination and Reporting Threshold Act of 2014. The act would increase the current $10 billion asset threshold figure at which regulated depository institutions are subject to direct examination and reporting requirements of the CFPB to $50 billion. “The higher threshold would be substantially the same as the threshold for a bank to be designated ‘systemically important’ (i.e., assets of $50 billion or more),” said attorney Barbara Mishkin, of counsel with the Ballard Spahr law firm, in a recent client note. CBO Pegs ...

Two states have passed legislation placing varying spins on the Department of Housing and Urban Development’s counseling requirements for lenders and borrowers of FHA-insured reverse mortgages. In California, the state Senate unanimously approved AB 1700, which would mandate a seven-day “cooling off” period between the time a borrower receives counseling and when an application is taken. AB 1700 passed the CA Assembly by a vote of 73 to 1. In addition, the bill would require a lender to provide a worksheet guide that addresses certain issues the borrower should consider and discuss with the counselor, such as income and ability to repay as well as taxes and insurance. The counselor and the borrower are both required under the bill to sign the worksheet guide before any reverse mortgage application is taken. No schedule has been set for ...

There is little to no chance of legislative GSE reform occurring until at least 2016, so market participants should plan accordingly, predicted a report issued last week. Despite two separate bills awaiting a floor vote in both the House and Senate, Kroll Bond Rating Agency said there’s little chance housing reform legislation will garner enough support to pass until after the next presidential election.

The False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) not only have become strong enforcement tools in the fight against FHA mortgage fraud but also an efficient means of recovering taxpayer losses. Having used both federal statutes effectively to wrangle huge settlements from large banks, federal prosecutors now have their eyes set on mid-level banks, according to compliance experts during a recent webinar hosted by Inside Mortgage Finance Publications. “Because these FCA [and FIRREA] lawsuits have been a cash cow for the Department of Justice and the Inspector General of the Department of Housing and Urban Development, I think these agencies will target mid-level banks next,” said ...

Another CFPB Official Heads for the Private Sector. CFPB Enforcement Attorney Manuel Alvarez has been hired away by Affirm, a young financial services company based in San Francisco, to be its first chief compliance officer and general counsel. In his new role at Affirm, Alvarez will oversee and manage the company’s regulatory compliance program and related actives to prevent illegal, unfair or deceptive conduct. He will also take charge of the firm’s working relationships with regulators and Affirm’s service providers. “Consumers often don’t understand the fees or interest they pay on a revolving account. That has to change,” said Alvarez. “Affirm’s commitment to delivering honest and transparent financial products totally aligns with my long-standing commitment to consumer protection.” Alvarez was ...

The FHA’s widespread reduction in loan limits for 2014 has had a mixed impact on production levels so far this year, according to a new Inside FHA Lending analysis of FHA endorsement data. Through the first four months of 2014, FHA endorsements were down 55.6 percent from the same period last year. But in counties where loan limits were lowered, FHA production was down 57.5 percent from early 2013. In the relatively few counties where loan limits actually increased in 2014, FHA endorsements were also down from a year ago, but by a less severe 47.4 percent. The biggest decline in endorsements has been in refinances, especially FHA-to-FHA refinances. In areas with lowered loan limits, production of these loans has plummeted 87.0 percent, and even areas with raised loan limits saw an 81.1 percent drop in streamlined refis. Purchase-mortgage originations have taken less of a ...

The Mortgage Bankers Association is pressing regulators and legislators for uniform national requirements for testing of loan originators. In a shift from the bank-friendly issues frequently pursued by the trade group, the MBA is calling for testing requirements that currently apply to nonbanks to be expanded to banks. “MBA believes that all consumers should know that every LO, regardless of what type of lender they work for, meets a demonstrated minimum threshold of knowledge of mortgage lending by passing a test,” the trade group said. The changes sought by the MBA would also allow...