The Mortgage Bankers Association is calling for improvements and clarifications of the new Loan Review System and the Defect Taxonomy to provide FHA lenders greater certainty as to the type of errors that can expose them to False Claims Act risk. The LRS unifies FHA quality control processes into a single system, including test cases from post-closing lenders, post-endorsement loan reviews, lender monitoring reviews and lender self-reporting. It streamlines all the review processes and analysis of results. The new system includes the defect taxonomy, a streamlined rating system for documenting loan-review results and finding the root cause of defects. In MBA’s view, the defect taxonomy shows how far FHA has advanced to ensure lender accountability for the quality of their loans, protecting borrowers and managing its financial risks. However, the Department of Housing and Urban Development needs to ...
The initial material defect rate on sampled FHA loans targeted for a post-endorsement technical review was down in the fourth quarter of 2016 from the previous quarter, according to the FHA’s latest quarterly loan review update. FHA’s Lending Insight reports the material defect rate prior to curing fell to 49 percent in 4Q16 from 53 percent in the previous quarter, based on an analysis of 5,267 sampled FHA loans endorsed between Oct. 1, 2016, and Dec. 31, 2016. Of the loans sampled, 75 percent were purchase-money mortgages; 10 percent were streamlined refinances; 7 percent rate and term refinances, and 8 percent, Home Equity Conversion Mortgage loans. Twenty percent of the sample, 1,081 loans, were conforming while 25 percent, or 1,313 loans, were found to be defective. About 13 percent of the loans were denied endorsement. On the other hand, approximately 41 percent of loans ...
The Trump White House has yet to fill key positions at the Department of Housing and Urban Development and agencies that fall under the HUD umbrella, including the FHA and Ginnie Mae. According to industry officials who claim to have some knowledge of the process, the administration is seriously considering Pam Patenaude to be the deputy HUD secretary. Patenaude is president of the J. Ronald Terwilliger Foundation for Housing America’s Families. She served as HUD assistant secretary for community, planning and development during the George W. Bush administration. Meanwhile, Michael Bright has been mentioned as a candidate to be the next president of Ginnie Mae. Bright currently serves as director, Center for Financial Markets at the Milken Institute. During his career he has worked for mortgage lender/servicer PennyMac, investment banking firm BlackRock and ...
Judgment Imposed on Former President and Founder of Loan Correspondent Firm. A federal court in Chicago ordered the former president and founder of MDR Mortgage of Palatine, IL, to pay more than $10 million to the Department of Housing and Urban Development for submitting false certifications on FHA loans. The HUD Inspector General Office and the Department of Justice withheld the identity of the former bank official, who was found liable under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act. The violations allegedly involved loans the FHA insured from 2006 through August 7, 2008, the period during which MDR submitted the allegedly false certifications. The DOJ identified 237 loans that MDR processed during the period in question. The loans defaulted and resulted in $3.4 million in claims paid by the FHA. In addition, MDR provided annual verifications to ...
The Department of Veterans Affairs this week expressed willingness to work with Congress and mortgage industry participants to find a solution to the agency’s ongoing appraiser shortage. Testifying during a hearing held by the House Veterans Affairs’ Subcommittee on Economic Opportunity, representatives of the VA Home Loan Guaranty Service, the National Association of Realtors, the Appraisal Institute and Clear Capital said the shortage of appraisers has led to long delays in obtaining appraisals and loan closings, as well as high appraisal costs. The VA appraisal program has been...
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