The qualified residential mortgage requirements recently proposed by federal regulators could force banks to retain mortgages in portfolio instead of issuing non-agency mortgage-backed securities, according to industry participants. The Dodd-Frank Act requires that non-QRMs be subject to required risk retention of at least 5 percent. In August, federal regulators proposed aligning the definition for QRMs with the definition for qualified mortgages established by the Consumer Financial Protection Bureau ...

Underwriting standards for jumbo mortgages decreased slightly in September compared with the previous month, according to a Mortgage Bankers Association analysis of data from AllRegs... Joseph Smith, the monitor for the $25 billion national servicing settlement with five banks, released a report this week detailing for the first time how the servicer loss mitigation actions have been credited. While the banks reported $38.72 billion in gross relief via loss mitigation and refinances through the end of 2012 ...

SunTrust Banks has agreed in principle with the Department of Housing and Urban Development and the Department of Justice to settle certain FHA-related claims. Separately, a federal judge in Texas refused to dismiss a government suit against two FHA lenders accused of manipulating HUD into insuring poorly underwritten loans which later resulted in massive losses to the agency. Announced on Oct. 10, SunTrust’s agreement with the government agencies is part of a broader resolution of certain legacy matters and repurchase agreements with Fannie Mae and Freddie Mac. SunTrust has agreed to settle certain ...

The Department of Housing and Urban Development’s proposed “qualified mortgage” rule attaches certain conditions to QM treatment that may complicate matters for participating lenders, said attorneys with K&L Gates in Washington, DC. On Sept. 30, the Department of Housing and Urban Development published its own proposed QM rule for FHA loans. The CFPB rule takes effect on Jan. 14, 2014, and will apply to FHA loans until HUD issues a final rule. Under the CFPB rule, many FHA loans would not qualify for the rule’s safe harbor because the higher mortgage insurance premiums would make them “higher priced mortgage loans.” Thus, in order to ...

The U.S. Court of Appeals for the First Circuit has affirmed a district court’s dismissal of a putative class action alleging that a lender improperly required FHA borrowers to buy and maintain higher flood insurance coverage than that indicated in their mortgage contracts. According to an analysis by the Washington law firm BuckleySandler, the ruling from an equally divided en banc court allows mortgage lenders to require borrowers to maintain flood insurance equal to the replacement value of their homes. In Kolbe v. BAC Home Loans Servicing, LP, No. 11-2030, 2013 WL 5394192 (1st Cir. Sept. 27, 2013), plaintiff Stanley Kolbe contends ...

Two surviving spouses of deceased reverse mortgage borrowers won their case against the Department of Housing and Urban Development after a U.S. court found HUD in violation of federal law for failing to protect the spouses from foreclosure. The court’s decision marks a turning point for surviving spouses, such as Robert Bennett of Annapolis, MD, and Leila Joseph of Brooklyn, NY, and ensures that they will be protected against eviction and foreclosure, despite the loss of their husband or wife, said Jean Constantine-Davis, a senior attorney with the AARP Foundation Litigation. In March 2011, the AARP and the law firm of Mehri & Skalet of Washington, DC, filed ...

FHA loan originations declined by 10.5 percent in August from July, following a downward trend that seems to suggest that private mortgage insurance companies are gaining the upper hand against their biggest government-backed competitor. Volume dropped to $16.8 billion in August from $18.8 billion in July, and from $22.1 billion a year ago, according to Inside FHA Lending’s analysis of FHA data. Purchase-mortgage originations comprised 68.7 percent of FHA business for the month as rising interest rates slowed refinancing activity. Despite the increase in purchase lending, FHA lenders noted it was ... [1 chart]

The Department of Housing and Urban Development’s inadequate response and poor implementation of corrective actions recommended by its own inspector general did little to stop claim files from squeezing through without reviews. HUD’s Office of the Inspector General urged Charles Coulter, deputy assistant secretary for single-family housing, to go back and implement the IG’s recommendations properly. The process HUD said it had implemented had failed to select all FHA loans that met review criteria, resulting in more than ...

For the nation’s three largest originators of home mortgages – Wells Fargo, JPMorgan Chase and Bank of America – the third quarter of 2013 turned out the way most observers expected, with slumping production, less revenue and tighter profit margins. The three major lenders, which accounted for almost 30 percent of loan originations in the first half of the year, saw big drops in refinance volume. Although they all unveiled plans to cut thousands of mortgage jobs, efforts to trim expenses did not come fast enough. Wells Fargo said...

The Federal Housing Finance Agency failed to clarify the goals and objectives for its real-estate owned pilot program, as well as for the future of the GSEs’ REO disposition activities as the program evolved, according to a recent audit by FHFA’s Office of Inspector General. The FHFA-OIG report criticizes both the Finance Agency and Fannie Mae for shortfalls in their planning and oversight of the REO pilot program.