The Department of Housing and Urban Development is taking aggressive actions to mitigate the negative impact of future Home Equity Conversion Mortgage books of business on the FHA Mutual Mortgage Insurance Fund. HUD said changes in borrower use of the HECM program, particularly among younger users, and the modeling changes in the FY2012 actuarial review of the MMI Fund show substantial stress in the HECM program. Besides softening the impact of HECM losses on the fund, the department wants to ensure that consumers are better protected and able to sustain their reverse mortgages. While the MMI Fund’s economic value fell to ... [1 chart]

Legislation drafted by Senate Democrats to expand the Home Affordable Refinance Program has made the short list of items to be considered during the lame-duck session of the 112th Congress, insiders say, but industry analysts see only marginal impact if the bill becomes law. The Responsible Homeowner Refinancing Act, S. 3522, sponsored by Senate Democrats Robert Menendez (NJ) and Barbara Boxer (CA), would provide equal access to streamlined refinancing under HARP, waive loan-to-value ratio requirements and prohibit the government-sponsored enterprises from charging upfront fees to refinance any loan they guaranty. A legislative staffer said...

Speculation abounds across Capitol Hill and within mortgage industry circles about how long the “temporary” head of the Federal Housing Finance Agency will remain at his post following the post-election shake out. However, it remains to be seen whether President Obama, flush from re-election, will seek a replacement for FHFA Acting Director Edward DeMarco, either by nominating a permanent agency director to the Senate or by the more politically problematic recess appointment.

In the wake of last week’s election, two congressional committees key to mortgage and housing issues face significant reorganization while the pending fiscal crisis will cause execution of Fannie Mae and Freddie Mac policy to remain on the backburner before lawmakers begin to reexamine GSE reform in earnest.The hard-fought electoral contest resulted in the status quo with Democrats in control of the White House and Senate, while Republicans retain their hold on the House. The House Financial Services Committee was poised for a leadership change no matter which political party prevailed with current chairman Spencer Bachus, R-AL, term-limited by House Republican Conference rules.

Democrat-sponsored, White House-approved legislation in the Senate to expand the Home Affordable Refinance Program has made the short list of bills to be considered during the post-election, lame-duck session of the 112th Congress. However, industry insiders say its final passage remains a tall order and the proposed HARP 3.0’s ultimate effectiveness is an open question.

The private mortgage insurance industry is expressing optimism with the positive changes seen lately in the housing market while hoping that Congress or the Obama administration do nothing to impede or spoil the market’s recovery. Industry executives say stabilizing home values, low interest rates, better quality mortgages and a shrinking FHA share of the mortgage market are helping MIs win back market share and write new business. “Everybody is trying to write as much business as they can to regain share,” said Michael Zimmerman, senior vice president for investor relations at Mortgage Guarany Insurance Corp. New insurance written is...

Although mortgage market watchers cautiously expect President Obama and the lame-duck session of the 112th Congress to come up with at least a stop-gap deal to avoid the looming “fiscal cliff” at year’s end, building uncertainty among homeowners and potential borrowers as to whether important mortgage tax deductions will exist in 2013 threatens to thwart housing’s fragile recovery. Unless Congress and the president create and sign new legislation to change existing law before Jan. 1, 2013, taxpayers are poised to be hit with a massive combination of expiring tax breaks, tax hikes and deep, automatic federal spending cuts. A report last week by the Congressional Budget Office concluded that a failure to avoid the cliff would push the economy back into recession with the unemployment rate shooting up to 9.1 percent by next fall. Fitch Ratings warns...

The United States just concluded an electoral campaign season that involved the expenditure of billions of dollars and resulted in no change in the balance of power on the federal level, beyond strengthening Democrats’ control in the U.S. Senate. But that doesn’t mean nothing important is going to happen over the next four years. Securitization industry officials, Washington insiders, political observers and policy wonks all expect hard financial realities to compel policymakers into responding to a host of issues that will significantly affect housing finance and securitization. “We don’t think the ‘status-quo election,’ as some have called it, means status quo for residential mortgage finance,” said Karen Shaw Petrou, a managing partner at Federal Financial Analytics, a Washington, DC, think tank. She thinks...

Complicating the post-election process of regulatory implementation is the expectation that a number of top officials at key agencies are likely to move on during President Obama’s second term. For the mortgage finance industry, perhaps the most notable potential departure among administration officials is that of Treasury Secretary Tim Geithner. Geithner has dropped hints more than once this past year that he wants to move on. Treasury officials did not respond to requests for confirmation of that as of press time. Other key officials on the industry’s departure watch list include...

There is substantial risk that the FHA may end up with a negative net worth, which would require congressional appropriations for the mortgage insurance fund and passage of legislation reforming the FHA, said a former top official at the Department of Housing and Urban Development. In remarks this week at the Urban Institute, John Weicher, former assistant secretary for housing and FHA commissioner in 2001-2005, said it is very unlikely in this weak economic recovery to see ...