Major banks significantly increased their use of principal reduction loan modifications in 2012, according to new data from the Office of the Comptroller of the Currency. The eight banks and one thrift tracked by the OCC completed 126,283 principal reduction mods in 2012, up from 43,396 the previous year. Principal reduction was used on 20.0 percent of all loss mitigation actions taken by the firms in the fourth quarter, up from an 8.5 percent share in the fourth quarter of 2011. Mortgages in non-agency MBS ...

Reaction to a report about Obama administration efforts to get banks to increase their purchase mortgage lending, particularly through the FHA, has ranged from supportive to dire warnings of déjà vu. Apparently, administration officials are trying to push banks to make more loans to qualified lower-income borrowers as well as minority and first-time homebuyers who have been shut out of the mortgage market because of stringent credit overlays. The report, which ran in the April 2 Washington Post, described the targeted borrowers as “people with weaker credit,” which, for some, conjures up the ...

The FHA is seeking comment on a proposal to change the period for reviewing loans for direct endorsement from pre- to post-closing in order to increase the number of acceptable loans and, therefore, reduce any potential risk to the Mutual Mortgage Insurance Fund. Under the proposal, a lender applying for unconditional direct endorsement authority would be required to submit the necessary loan files only after closing. After determining that the mortgage is acceptable and meets all FHA requirements, the agency would notify the lender that the loan has been endorsed. Current regulations provide for ...

Borrowers rushing to get their purchase-mortgage applications submitted before FHA’s higher annual mortgage insurance premiums took hold April 1 helped boost total purchase applications last week, according to the latest data from the Mortgage Bankers Association. The MBA’s weekly mortgage applications survey for the week ending March 29 showed a surge in purchase applications for government loans. The surge, fueled mostly by FHA applicants, helped boost the total number of purchase applications received by lenders during the period. “Total purchase applications increased last week, due to an almost ...

With the deadline for filing individual income tax returns just around the corner, the FHA has reminded lenders of its rules regarding the eligibility of a borrower who has a delinquent federal tax debt or lien. According to the FHA, an individual with an overdue federal tax debt or tax lien is not eligible for an FHA-insured mortgage loan until the delinquent account is either brought current, fully paid or is resolved by a satisfactory repayment plan agreed to by the borrower and the federal agency owed. Tax liens may remain unpaid as long as the lien holders subordinate the tax lien to the ...

The FHA may allow a borrower’s 401(k) retirement fund to be included in the calculation of debt-to-income (DTI) ratio, according to the agency. Normally, up to 60 percent of the fund’s value may be included in the DTI ratio, the agency said. Fund assets, such as Individual Retirement Accounts, thrift savings plans, 401(k) retirement plan and Keogh Accounts, may be counted in the underwriting, it added. The rule remains applicable unless the borrower presents proof that a higher percentage may be withdrawn after subtracting any federal income tax and withdrawal penalties. In such cases, the lender would ...

Funding for a federal program providing guarantees to mortgage loans to Native Americans and other indigenous peoples has been spared from mandatory budget cuts under a temporary budget measure signed into law by President Obama last month. The Department of Housing and Urban Development has resumed accepting new loan applications under the Section 184 Indian Home Loan Guarantee Program. The mortgage product is for American Indian and Alaska Native families, Alaskan tribal members and tribally designated housing entities. Congress established the program in 1992 to ...

Four private mortgage insurance companies this week agreed to pay $15.4 million in penalties to resolve government charges that they improperly paid kickbacks to mortgage lenders for business referrals in violation of the Real Estate Settlement Procedures Act. The Consumer Financial Protection Bureau filed complaints and proposed consent orders against Genworth Mortgage Insurance Corp., Radian Guaranty, Inc., Mortgage Guaranty Insurance Corp. and United Guaranty Corp. for the alleged illegal business practices that contributed to the financial crisis. The CFPB said the MI companies engaged in illegal ...

The U.S. Department of Agriculture’s rural housing program finances only modest homes for low- to moderate-income borrowers, not properties for millionaires as alleged in a news account published by Reuters, according to the program’s top executive. “USDA continues to operate its housing programs under the law and in accordance with the will of Congress,” said Tammye Trevino, administrator of the USDA Rural Housing Programs. Trevino disputed the Reuters report, which claimed that the USDA had guaranteed loans to “dozens of millionaires” by backing at least 500 loans of $500,000 or more, including more than ...

Ginnie Mae issuance fell in the first quarter of 2013 but was easily offset by significant gains from a year ago, according to Inside FHA Lending’s analysis of FHA data. Mortgage-backed securities production at the government facility dropped 5.1 percent to $104.1 billion in the first quarter but increased 28.6 percent year-over-year , which was more than enough for an offset. The securities were backed mostly by FHA and VA loans with a combined total of $99.33 billion. Federally guaranteed rural housing loans totaling $4.84 billion were also in the mix. Wells Fargo and Chase Home Finance led the Ginnie Mae market with a combined ... [1 chart]