The serious delinquency rate on servicer portfolios hasn’t improved much in the past year, from 5.7 percent in the fourth quarter of 2012 to 5.4 percent in the fourth quarter of 2013.

Fannie Mae this week released its STAR servicer rankings and hopefully a copy found its way to all those pesky regulators who think nonbank servicers can’t tell the difference between a debit and a credit.

Bank of America this week agreed to settle lawsuits filed by the Federal Housing Finance Agency regarding non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac. Eleven of the 18 non-agency MBS lawsuits filed by the FHFA in 2011 have now been settled and the claims against BofA and its affiliates were by far the largest. BofA said it agreed to make a total of $5.8 billion in payments to Fannie and Freddie as part of the settlement and spend $3.5 billion to ...

The monitor of the $25 billion national servicing settlement certified last week that the five participating banks completed their loss-mitigation obligations a year earlier than the three-year deadline set by the settlement. Regulators involved in the settlement continue to defend allowing the banks to complete a portion of their obligations by modifying mortgages in non-agency mortgage-backed securities. Bank of America, Citi, JPMorgan Chase, Residential Capital and Wells Fargo ...

Origination of FHA-insured reverse mortgages fell in the fourth quarter as borrowing costs increased and loan amounts shrank due to tighter agency rules for these loan products, according to Inside FHA Lending’s analysis of agency data. The FHA reported $15.3 billion Home Equity Conversion Morgages originations for 2013, which was up 20.6 percent from $12.7 billion in 2012. Production, however, fell 12.6 percent quarter over quarter as policy changes designed to stabilize the ailing Mutual Mortgage Insurance Fund and help ensure that HECM borrowers can sustain themselves for longer periods of time took effect on Sept. 30. The changes include limiting disbursements at loan closing, or during the initial 12 months after closing, to 60 percent of the initial principal limit. Borrowers who draw more than 60 percent will pay ... [1 chart]

Lenders are cautiously expanding their guidelines on FHA lending by reducing its minimum credit score to below 580 to qualify borrowers. Carrington Mortgage Servicers this week joined a cadre of some 80 FHA lenders that have lowered their minimum FICO scores and eased their overlays to better focus on borrowers, particularly those below the 640 FICO range. The Santa Ana, CA-based lender is doing it not only for its FHA business but also for its VA and USDA loan programs. Carrington lowered its minimum FICO score to 550 for FHA loans, showing more aggressiveness than Wells Fargo, which moved its own FHA FICO floor to 600 from 640 at the beginning of February for purchase mortgages originated through its retail channel. The FHA currently requires a minimum credit score of 580 for most borrowers for 3.5 percent downpayment loans. Borrowers below 580 undergo more stringent manual underwriting and ...

The Department of Housing and Urban Development has published a proposal to eliminate the requirement that an FHA borrower be required to pay interest even after the loan is prepaid. Specifically, the proposed change would prohibit FHA lenders from charging post-payment interest, allowing them instead to charge interest only through the date the mortgage is paid. The proposed rule change is necessary to avoid FHA loans being prohibited under new Consumer Financial Protection Bureau ability-to-repay rules and revised higher-cost loan regulations starting in January 2015. It effectively aligns FHA prepayment rules with the new CFPB rules. Comments on the proposal are due by May 12, 2014. The FHA currently allows lenders to charge interest for the full month if the borrower prepays on a date other than the installment due date. Regardless of whether the loan is FHA or non-FHA, there were complaints among borrowers that ...

The Association of American Retired Persons hit the Department of Housing and Urban Development again with another class-action lawsuit for allegedly failing to protect four surviving spouses of Home Equity Conversion Mortgage borrowers against foreclosure and eviction.The complaint was filed in the U.S. District Court for the District of Columbia, where last September a federal judge found HUD in violation of federal law in a similar case. The court remanded the case to HUD to determine the appropriate remedy for the problem. The AARP Foundation Litigation and the law firm of Mehri & Skalet, the same entities that successfully litigated last year’s reverse mortgage case, represented the plaintiffs, none of them younger than 65 years of age. The suit challenges HUD’s promulgation of HECM regulations, which allegedly is ...

Thirty-three FHA lenders were sanctioned and 32 others lost their FHA approval between October and December 2013 because of actions taken by the Department of Housing and Urban Development’s Mortgagee Review Board. The board also imposed $516,500 in civil money penalties and entered into one settlement agreement to bring an unidentified lender into compliance. During the three-month period, one lender entered into an indemnification agreement with the MRB over one FHA-insured single-family loan. FHA lenders were subject to MRB disciplinary actions for various reasons, including failing to establish and implement a servicing quality control plan and failing to perform loss mitigation as required by the agency. Actions were also taken against lenders for failing to conduct monthly reviews of delinquent loans to determine the type of loss mitigation needed, as well as for failing to repay HUD losses in connection with indemnification agreements. Noncompliance with HUD’s annual recertification requirements also resulted in ...

Old Republic Cancels Recapitalization Plan for its Mortgage Guaranty Subsidiaries. Old Republic International Corp. has withdrawn plans to secure capital market funding for its beleaguered consumer credit indemnity and mortgage guaranty subsidiaries for lack of investor interest. Both business segments are housed within the Republic Financial Indemnity Group and have been in a run-off mode since 2008 and 2011, respectively. ORI Chairman/CEO Al Zucaro said holding company funds would be used to shore up the regulatory capital of the mortgage guaranty subsidiaries. The completion of the recapitalization plan hinged on regulatory approvals in North Carolina, Florida and Vermont, as well as from the government-sponsored enterprises and the Federal Housing Finance Agency. ORI said that with all the complications, it could not be certain of getting the necessary approvals. A primary investor concern is that new capital would be used to pay for RMIC’s legacy problems, and investors want their money to ...