The FHA has clarified the meaning of “continuous income” and announced other updates to its loss mitigation home-retention options to help distressed borrowers retain their homes and, thus, reduce the number of claims against the Mutual Mortgage Insurance Fund. FHA lenders are required to implement the updated policies in Mortgagee Letter 2013-32 by Dec. 1, 2013. “Continuous income” is one of the criteria a defaulting borrower must meet in order to qualify for a loan modification. While it generally refers to employment income (e.g., wages, salary or self-employed earnings), it may also include ...

Wells Fargo claimed partial victory after a Manhattan federal district court judge dismissed certain claims against it in a government lawsuit alleging the bank lied about the quality of defaulted mortgages insured by the FHA. District Court Judge Jesse Furman ruled that legal injury claims based on events that happened prior to June 2009 were time-barred and that the government had waited too long to file a lawsuit. He also threw out claims of negligence and unjust enrichment. On the other hand, Furman let stand claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which the ...

HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

The Federal Housing Finance Agency has yet to show its hand on 2014 conforming loan limits for Fannie Mae and Freddie Mac, but that isn’t stopping elected officials from sticking their noses in the issue. In particular, a recent letter sent by 13 senators – 11 Democrats and two Republicans – addressed to FHFA Acting Director Edward DeMarco puts pressure on the agency to show what legal authority it has to declare new loan limits and requests a “quantitative analysis” on what impact it will have on “the economy and national and regional housing markets.” The 13 senators want...

The FHA raised red flags late last week when it announced it will need to draw $1.7 billion from the Treasury, not because the agency’s claims-paying ability is at risk, but rather to comply with federal law requiring it to have reserves to cover anticipated future losses and mandatory capital reserves. The mandatory appropriation is an accounting transfer and does not reflect an up-to-date view of the FHA’s Mutual Mortgage Insurance Fund, its long-term fiscal health or its current cash position, said FHA Commissioner Carol Galante in a letter to Sen. Tim Johnson, D-SD, chairman of the Senate Committee on Banking, Housing and Urban Affairs, and Sen. Mike Crapo, R-ID, ranking minority member. The calculation used...

Top officials in the Federal Reserve System were making the rounds of the financial and economic intelligentsia this week, shedding some light on the central bank’s decision to prolong its support of the financial and housing markets through its admittedly “unconventional means” of massive asset purchases, accommodative monetary policy and explicit forward guidance. “Several questions have emerged following the meeting” of the Federal Open Market Committee, said FOMC member William Dudley, president and chief executive officer of the Federal Reserve Bank of New York, during a speech this week in New York City. “Most noteworthy was – given that market expectations were skewed towards anticipating the beginning of a taper at this meeting – why the committee did not begin to reduce the pace of asset purchases.” Although he was not presuming to speak for the committee, Dudley did provide...

The House Republic legislation to eliminate the government-sponsored enterprises and replace them with private capital has no chance of passing in the Senate, according to Sen. Bob Corker, R-TN. He said the bipartisan approach he crafted with Sen. Mark Warner, D-VA, has a better chance of passing through Congress and maintaining wide availability of 30-year fixed-rate mortgages. “Going to a completely privatized system today to me is not something that has one chance of passing,” Corker said late last week in a conversation with Warner, hosted by Zillow. Corker was referring to H.R. 2767, the Protecting American Taxpayers and Homeowners Act, which the House Financial Services Committee approved in July. The bill isn’t on the House’s fall legislative agenda. “What Mark and I have done is...

The Office of Management and Budget has cleared a proposed rule setting qualified mortgage standards for FHA-insured single-family mortgages for issuance in the coming weeks. The OMB signed off on the proposed standards on Sept. 12 and the Department of Housing and Urban Development has a few more refinements to perform before publishing the proposal for public comment. HUD declined to discuss the contents of the proposed standards or indicate a timetable for a final QM rule. Industry participants, on the other hand, said they would be surprised if ...

As leaders of the Senate Banking, Housing and Urban Affairs Committee double down on their efforts to craft a bipartisan mortgage finance reform bill, experts told lawmakers during a hearing this week that any reform effort must preserve the “smooth functioning” of the to-be-announced market. Given that it is reliant on MBS guaranteed by the government, the TBA market is “extremely sensitive” to any changes to the role that the government will have in the future housing finance system, according to Richard Johns, executive director of the Structured Finance Industry Group. “SFIG believes...

After a long period of inertia, Senate leadership from both sides of the aisle have seized the initiative in the effort to reform mortgage finance with the first of a series of hearings this week aimed at crafting a comprehensive, bipartisan bill by year’s end. Meanwhile, a largely partisan House Republican bill that would seal the fate of Fannie Mae and Freddie Mac has been shut out of the floor vote schedule this fall amid significant opposition from industry trade groups.Last month, at the direction of Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, senior staffers met with various industry “stakeholders” to get field reform input in advance of the hearings.