Solicitation of VA purchase loans for streamline refinancing within weeks of closing is apparently continuing despite Ginnie Mae’s efforts to stop the harmful practice. The Mortgage Bankers Association has expressed concern that guidance on pooling eligibility for streamlined refinance loans, which Ginnie issued in October last year, was far less effective than expected. Although the aggressive refinancing trend has slowed due to Ginnie’s action, there are still “pockets of that activity” being reported, said Pete Mills, MBA senior vice president. Refinancing a veteran’s purchase mortgage less than six months after its origination is not in the vet’s best interest because it strips equity from the house and results in higher financing costs, said Mills. While the rapid refi trend involves only a small number of loans in Ginnie mortgage-backed securities pools, investors do not get the full benefit of their investment because of early prepayment. Mills said there are a handful of lenders and brokers that ...

A favorable court ruling on the statute of limitations for filing claims under the False Claims Act gave Quicken Loans its first win in a closely watched government case involving allegedly fraudulent FHA loans. Judge Mark Goldsmith of the U.S. District Court for the Eastern District of Michigan dismissed portions of the Department of Justice’s lawsuit against Quicken in a March 9 decision, narrowing the lender’s potential liability for FHA losses. The losses were blamed on sloppy underwriting, fraudulent certification and loan performance. The DOJ said the FHA would not have knowingly insured the loans had it known they were defective. The DOJ and the Department of Housing and Urban Development’s inspector general began an investigation of Quicken’s FHA lending activities in April 2012. The investigation encompassed some 246,000 FHA loans, which Quicken originated from ...

A Georgia appellate court recently handed Wells Fargo Bank a provisional win in a lawsuit in which a VA borrower alleged breach of contract and wrongful foreclosure. In Wells Fargo Bank, N.A., d/b/a Wells Fargo Home Mortgage v. LaTouche, the court ruled that Wells did not breach its duty to the borrower to comply with VA foreclosure regulations. The court concluded that the trial court had erred in denying Wells Fargo’s motion for summary judgment as to the defendant’s claims for wrongful foreclosure that hinged upon the same VA regulations. The reversal stemmed from Wells Fargo’s request for an interlocutory review of the trial court’s denial of its motion for summary judgment on defendant Michael LaTouche’s claims for breach of contract, wrongful foreclosure and “surprise. An interlocutory review is undertaken when a question of law must be answered by an appellate court before ...

The Trump administration has proposed deep budget cuts in 2018 for the Department of Housing and Urban Development and the U.S. Department of Agriculture, but whether the agencies’ critical housing insurance programs would be affected is unclear. The cuts are part of the administration’s plan to reduce non-defense discretionary spending dramatically in order to fund increased defense spending and President Trump’s southern border wall, and to bring down a projected $9.4 trillion U.S. deficit over the next decade.Released this week, the preliminary 2018 budget seeks $40.7 billion in gross discretionary funding for HUD, $6.2 billion or 13.2 percent lower than the department’s approved spending in 2017. The $47.3 billion in discretionary budget authority enacted for fiscal 2017 does not include offsetting receipts from FHA and Ginnie Mae, which lowered the congressionally appropriated cost for ...

Security National Mortgage Co. of Salt Lake City has paid $4.25 million to the Department of Housing and Urban Development to settle allegations of failing to comply with FHA loan requirements. Security National, a retail lender, has been an FHA-approved direct endorsement lender since October 1993, the year it was founded. The settlement resolves a joint civil investigation by the HUD Office of the Inspector General, Department of Justice and the U.S. Attorney’s Office for the District of New Jersey into Security National’s FHA origination and underwriting practices in connection with 100 FHA-insured loans. As part of the settlement, the lender “agreed it engaged in certain conduct in connection with its origination and underwriting of the loans.” The HUD OIG provided no details about the investigation. The OIG said the loans that were certified as compliant would not have been insured had ...

The volume of home mortgages outstanding continued to grow during the final three months of 2016, no thanks to the commercial banking industry. Recently released data from the Federal Reserve show $10.266 trillion of mortgage debt outstanding at the end of last year. That was up 0.7 percent for the quarter and reflected a 2.3 percent gain for the full year. The market still has a long way to go to catch up to the $11.240 trillion of mortgage debt outstanding at the end of 2007, but growth has been steady since bottoming out in mid-2014. The agency market continued...[Includes two data tables]

The banking industry continued to backpedal away from the business of servicing home mortgages for other investors during 2016, according to an exclusive new Inside Mortgage Trends analysis of call-report data. Commercial banks and savings institutions serviced $3.808 trillion of home mortgages for other investors at the end of 2016, most of which are connected to loans in mortgage-backed securities trusts. That was down $71.6 billion from the end of the third quarter, or 1.8 percent. Over the past two years, banks reduced...[Includes one data table]

There are currently more buyers for retail origination platforms than there are entities available for sale, according to Strategic Mortgage Finance Group. Stratmor helped advise First Priority Financial last year as the lender was being acquired by Caliber Home Loans. First Priority had more than 370 employees with branches in California, Oregon, Washington, Idaho and Iowa. Terms of the transaction weren’t disclosed. “This deal, along with several other transactions in the Stratmor pipeline, now enable...

Retail banks and mortgage lenders have enjoyed a pretty good run of consistently improving customer satisfaction and loyalty over the last five years, but they could blow it if they’re not careful by exerting excessive sales pressure on borrowers, a new report by market research company J.D. Power suggests. In response to the recent fraudulent account creation scandal at Wells Fargo, J.D. Power decided to take a closer look at how this development affected retail bank customers across the U.S. and to get a better sense of the phenomenon of cross-selling. The survey found...

The nation’s residential subservicing specialists increased their contract base to $1.93 trillion at the end of 2016, a 2.7 percent sequential gain and an impressive 22.9 percent improvement over yearend 2015, according to survey figures compiled by Inside Mortgage Finance. It’s a sign that this segment of the industry is beginning to look a bit crowded, which means profit margins could come under pressure. Over the past year, several fairly large players in the market – Flagstar, Nationstar Mortgage, Walter/Ditech and PHH Mortgage – have sold...[Includes one data table]