An FHA proposal aimed at clarifying loan-certification rules is a step in the right direction but it needs more work, according to industry observers. Lenders declined to comment on the proposed form changes but they all agree that the proposal does not go far enough. The revisions aim to make the language in Form 92900-A (HUD Addendum to Uniform Residential Loan Application) clearer for both borrower and lender. Applicants for an FHA or a VA loan sign the addendum to certify to the government that the information provided by the borrower on the mortgage loan application is correct. By signing the addendum, the borrower certifies that he or she will make payments on the home loan or become indebted to the federal government upon failure to repay the loan. For lenders, signing the form certifies that the loan application meets all of FHA’s insurance requirements. This is where lenders often ...

Security issuances backed by VA loans totaled $35.5 billion in the first quarter of 2015, with VA streamline refinance loans accounting for 57.7 percent, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. Approximately $20.5 billion in VA interest rate reduction refinancing loans were securitized during the first three months as borrowers took advantage of lower interest rates.“For the last three to four months, rates have been bottoming out again, and if rates are lower it makes sense to refinance,” said Jon Shrum, vice president of Commerce Home Mortgage, a VA-certified lender in Huntington Beach, CA. An estimated $14.5 billion in VA purchase mortgages also were securitized during period. VA loans comprised 13.1 percent of all loans in Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities. California, Virginia, Texas, Florida and Washington, ... [2 charts]

NTFN Inc., a direct-endorsement lender in the Dallas-Ft.Worth area, may have to indemnify FHA for losses incurred allegedly due to sloppy underwriting. Results of an audit performed by the Department of Housing and Urban Development inspector general found that 23 loans out of the 3,046 FHA loans originated by NTFN from July 2012 through June 2014 were seriously delinquent in the first year. FHA is considering whether to require indemnification. Despite its low FHA origination volume, NTFN was targeted for a compliance audit because its loan default rate was the second highest in its principal area of business during the audit period. HUD auditors attributed the subpar underwriting to the lender’s poor due diligence, failure to perform early payment default and quality control reviews and to not having an adequate quality control system. The unpaid principal balance of the ...

Whistleblowers that bring a False Claim Act claim against an FHA lender based on previous publicly disclosed information have no standing, according to a recent federal district court ruling. Judge Jack Zouhary of the U.S. District Court for the Northern District of Ohio dismissed an FCA lawsuit against U.S. Bank because the whistleblower had neither direct nor independent knowledge of the bank’s alleged false claims – two basic requirements for standing in a whistleblower suit. The Advocates for Basic Legal Equality (ABLE), an Ohio-based legal aid group, filed an FCA lawsuit against U.S. Bank for allegedly disregarding and violating FHA regulations. The group accused the bank of filing false claims and collecting payments without evaluating loss mitigation alternatives before foreclosing on properties. According to ABLE, it had consulted with “many people,” whose mortgage loans were ...

The Department of Veterans Affairs has issued a policy clarifying that VA lenders must treat veterans in same-sex or opposite-sex marriages equally and fairly when processing and underwriting their home-loan applications. The policy is effective immediately. Under the new policy announced on May 19, the VA will process all claims and applications involving same-sex marriages in the same manner as claims and applications based on opposite-sex marriages, “without any additional scrutiny or development.” Language on VA forms, web pages and other VA communication materials will be revised to ensure that all veterans, VA program administrators and personnel are aware of the equal-treatment policy. The new instructions require VA lenders to accept a claimant’s or an applicant’s assertion of ...

VA loan servicers are now required to request a redemption quote from the agency’s property management contractor, Vendor Resource Management (VRM), to avoid any confusion in the future about such quotes. In recently issued guidance, the VA established standard procedures for redeeming VA property, after foreclosure, in states that allow “statutory redemption.” Statutory redemption refers to a borrower’s right to regain ownership of his or her home that has been foreclosed. Statutory redemption laws allow the borrower a limited amount of time to redeem their property if they are able to buy it back at the price for which it was sold at foreclosure. The redemption window varies by state and ranges from 30 days to 2 years. At the time of redemption, the entire underlying mortgage debt plus interest, foreclosure fees and other costs are due. In most cases, the servicer has ...

Nonbanks have indisputably bought a bigger share of the mortgage servicing market in recent years, but that doesn’t mean some banks haven’t been buyers during the migration. The servicing asset was a pariah not long ago, said Mark Garland, president of MountainView Capital Holdings, during a panel session at the recent secondary market conference sponsored by the Mortgage Bankers Association. “It was stepping into a buyback obligation. Suddenly, two years ago, it became the greatest asset ever,” he said. And although Bank of America, JPMorgan Chase, Wells Fargo and Citibank have pruned...

The Federal Home Loan Bank system earned $1.015 billion in the first quarter of 2015, according to figures compiled by the system’s Office of Finance, an 82.6 percent increase when compared to the same quarter in 2014. The sharp increase was primarily the result of higher gains on litigation settlements, according to the Office of Finance. Litigation settlements accounted for $480 million in gains for the three months ending on March 31. The OF said the bulk of it was “driven by the FHLBank of San Francisco’s $450 million settlement of certain claims arising from investments in private-label mortgage-backed securities.” Total FHLBank assets for the first three months of the year were down at $879.9 billion, a 3.7 percent decrease from...

Commercial banks and thrifts earned $3.99 billion from their mortgage-banking operations during the first quarter of 2015, according to a new ranking and analysis by Inside Mortgage Trends. Mortgage-banking income was up 12.7 percent from the previous quarter and 19.0 percent ahead of the pace set in the first three months of 2014. Early 2015 was no record-setter, by any means, but profits were well below the levels reached in the middle of last year. The call-report data do not separate...[Includes one data table]

With the April acquisition of Home Loan Servicing Solutions’ assets and liabilities, New Residential gained a significant portion of the clean-up call rights for outstanding non-agency MBS. Officials at the real estate investment trust said New Residential plans to execute the call rights and acquire more rights as the MBS feature presents strong profit potential. New Residential owns the clean-up call rights on more than 2,100 non-agency MBS with an outstanding balance of about $235 billion. That’s about 34 percent of the non-agency MBS market. “This should be...