Wells Fargo this week reinstated the 640 minimum credit score requirement, following through on its threat to re-impose credit overlays due to its frustration with FHA’s republished loan-level certification proposal. Officials said the re-proposed version of the proposal, which was initially issued for comment in May, still disappoints in spite of industry input to put concerned FHA lenders at ease (See next story for background). In 2014, Wells dropped the minimum credit-score requirement to 600 for FHA borrowers after talks with the Department of Housing and Urban Development and policymakers. The FICO readjustment applies to Wells’ FHA retail purchase loans, aligning it with the 640 minimum credit score requirement for the bank’s correspondent business. In a previous statement, Wells reiterated the need for clearer rules in order to ...

A major player in the Home Equity Conversion Mortgage market has agreed to pay $29.6 million to resolve allegations of submitting false claims related to the servicing of FHA-insured reverse mortgages. According to the Department of Justice, Walter Investment Management Corp., through its mortgage subsidiaries, violated the False Claims Act by submitting false claims for debenture interest from the Department of Housing and Urban Development. A debenture is a type of debt instrument not secured by physical assets or collateral. It is backed only by the issuer’s general creditworthiness and reputation. HUD requires lenders to self-report curtailment of debenture interest if it misses any foreclosure deadlines. Under the HECM program, a loan becomes due and payable when the home is sold, remains vacant for more than 12 months or upon the ...

FHA lenders funded $7.8 billion in new Home Equity Conversion Mortgage loans during the first half of 2015, up 8.2 percent from the same period a year ago. HECM loan production was slower in the second quarter with originations down 1.1 percent from the prior quarter. Purchase loans accounted for 86.1 percent of all HECM transactions during the first six months. Interestingly, borrower bias against adjustable-rate loans appeared to have eased. Fixed-rate HECMs accounted for only 15.4 percent of originations during the first half of the year. Initial principal amount at loan origination totaled $4.6 billion over the same period. On a fiscal year-to-date basis, the FHA reported a total of 53,372 HECM endorsements, up from 47,662 HECM endorsements in fiscal YTD 2014. Meanwhile, HECM endorsed cases increased to 5,750 in August compared to ... [ chart ]

The Department of Housing and Urban Development recently saw its long-running attempt to recover $179 million from a bankrupt FHA lender come to a disappointing close, receiving only a little over half-a-million dollars after liquidation. HUD’s Inspector General gave the agency the green light to book its share of funds available to pay an $89.9 million HUD claim against the now-defunct lender Taylor, Bean & Whitaker, ending further action against the company. In 2006, whistleblowers filed a “qui tam” lawsuit in federal district court in Georgia alleging that TBW and Home America Mortgage had falsely certified and approved poorly underwritten loans for FHA insurance. In 2009, the two mortgage lenders filed for bankruptcy separately but were later consolidated by the court into one bankruptcy case. In May 2010, the Department of Justice, on behalf of HUD, filed a ...

Institutional investors are beginning to have major doubts about certain mortgage stocks, reducing their positions in companies such as PHH Corp. and Ocwen Financial as they struggle to present convincing evidence that better days are ahead – especially with 2016 just months away. Ocwen, in particular, has been savaged by investors over the past 18 months, its share price falling from an all-time high of $60 to $5.66. This past summer, Ocwen’s share price stabilized somewhat before getting clobbered early this week after disclosing that it expects to post a loss for all of 2015. For many investors it has...

A stable private mortgage insurance industry is expected to emerge as the residential real estate market continues its recovery but uncertainty related to new risk-based regulatory capital standards from the National Association of Insurance Commissioners could derail or hinder progress, according to a new analysis by Fitch Ratings. So far, the MI industry has returned to profitability with more stability in the market and the continued presence of Fannie Mae and Freddie Mac in the residential market. Stronger regulatory standards bode well for the industry’s stability as well, Fitch noted. The long-term viability of the MI industry does not appear...

Guaranteed Rate, a retail mortgage lender, continued to expand its business with the acquisition of new call centers and 75 loan officers from Discover Home Loans, which recently announced its decision to exit the mortgage origination business. The new loan officers will join Guaranteed Rate and help generate more loans through its new Digital Mortgage technology, which the company launched in June. The software uses encrypted cloud storage and ...

Commercial banks and thrifts continued to back away from the business of servicing home mortgages for other investors during the second quarter of 2015, according to a new Inside Mortgage Trends analysis of call reports. At the end of June, the industry owned the servicing rights on $4.187 trillion of home loans held by other investors, typically as a result of mortgage securitization. That was down $94.2 billion from the previous quarter, a 2.2 percent decline ... [Includes one data chart]

Improved production efficiency and a favorable outcome on hedges for mortgage servicing rights helped drive a significant increase in mortgage banking profits during the second quarter. The Mortgage Bankers Association reported that average net pretax income jumped 55.7 percent from the first quarter to $3.50 million in the second. That was the best pretax income figure since the first quarter of 2013, when the average in the MBA quarterly performance survey was ...

When autumn rolls around, most mortgage firms begin paring staff where they can and start focusing on what lies ahead for the new year. But this time around – thanks to the recent drop in rates – cost-cutting measures may be put on hold, at least for a little while. One area where there could be a spate of new hiring is in senior management positions. Rick Glass, who runs the mortgage recruiting firm RT Glass & Associates, Carmichael, CA, said his phone ...