The Department of Justice shows no sign of letting up in its pursuit of FHA lenders that originate improperly underwritten mortgages that later result in significant taxpayer losses. MetLife Home Loans, which is no longer in operation, became the newest addition to the government’s growing list of financial institutions that opted to settle allegations brought under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act, in connection with the origination and servicing of FHA-insured mortgages. Under the agreement, MetLife will pay $123.5 million to resolve allegations that its predecessor it “[turned] a blind eye to mortgage loans that did not meet basic FHA underwriting standards,” and stuck the FHA and taxpayers with the bill when the loans defaulted. In June 2013, MetLife Bank merged into MetLife Home Loans, a mortgage finance company ...
The FHA’s recent decision to reduce its annual mortgage insurance premium by 50 basis points pushes back the agency’s timeline for attaining the 2 percent capital reserve requirement by 2016 and limits private mortgage insurance companies’ ability to serve borrowers with higher loan-to-value ratios, warned MI industry representatives. Testifying before the House Financial Services Subcommittee on Housing and Insurance, Clifford Rossi, chief economist of Radian Group, said the FHA sought to justify the premium cut by saying it far exceeded the amounts necessary to cover new FHA-insured mortgages. “But this ignores the higher expected losses on earlier insured loans,” he said. Comparing lifetime premiums on current borrowers to their projected average lifetime losses is not a meaningful comparison for an insurance portfolio comprised of borrower risk profiles over book years subject to different economic scenarios, Rossi argued. Moreover, comparing premiums to average losses overlooks ...
The FHA bucked a decreasing delinquency-rate trend for all other types of loan by posting an increase in past-due loans during the last three months of 2014, according to the Mortgage Bankers Association’s latest national delinquency survey. On a seasonally adjusted basis, the overall delinquency rate fell 17 bps for all loan types to 5.68 percent, MBA data showed. Data compiled by the Inside Mortgage Finance Large Servicer Delinquency Index also showed a sizeable decline of 32.7 basis points in the fourth quarter from the prior quarter. The 24 servicers covered by the index had a delinquency rate of 6.34 percent in the fourth quarter, down from 7.59 percent in the same period the prior year. The IMF data are not seasonally adjusted. In contrast, the FHA delinquency rate rose to 9.73 percent in the fourth quarter, up 4 bps from the previous quarter, according to the MBA. On the other hand, loans with a ...
Although the new rules for surviving spouses of borrowers with FHA-insured reverse mortgages address many of the issues raised by non-borrowing spouses, some questions remain unanswered, according to legal experts. The guidance in Mortgagee Letter 2015-03 provides insufficient answers to the issues it was meant to address, said Robert Couch, a partner with the Birmingham, AL, law firm of Bradley Arant Boult Cummings and former general counsel at the Department of Housing and Urban Development. Servicers should take note of those issues and seek further clarification, he said. Issued on Jan. 29, the guidance provides a way for lenders to proceed after a borrower with a Home Equity Conversion Mortgage loan dies and is survived by a non-borrowing spouse. It allows a lender to assign to HUD HECMs that are in default due to the death of the borrower, as long as certain ...
Endorsements of FHA-insured reverse mortgages jumped 31.7 percent in the fourth quarter of 2014 from the previous quarter with purchase HECMs accounting for more than 22 percent of the total. On the other hand, endorsements were down 9.1 percent year-over-year because of new restrictive HECM rules that were implemented last year. Endorsements totaled $13.9 billion for the year. All top five HECM lenders posted sequential gains. Leader American Advisors Group had a 12-month total of $2.0 billion, representing 14.7 percent of the market. Second-ranked Reverse Mortgage Solutions closed out the year with $1.0 billion in total endorsements and a 7.4 percent market share. One Reverse Mortgage, Liberty Home Equity Solutions and Proficio Mortgage Ventures comprised ... [1 chart}
HUD Announces Revised Implementation Date for HECM Financial Assessment Guidance. The Department of Housing and Urban Development further delayed the effective date of new guidance requiring a financial assessment of Home Equity Conversion Mortgage loan applicants. Issued in November last year, the new guidance becomes effective for HECM case numbers issued on or after April 27, 2015. The FHA said the change was due to a delay in efforts to align vendor software with HUD software to get the system up and running. Last month, HUD moved the guidance’s implementation date to March 2. The guidance requires lenders to evaluate borrowers’ willingness and capacity to meet their HECM obligations and to comply with program requirements. HUD Aligns QM Points-and-Fees Limit to Newly Recalculated CFPB Standards. The Department of Housing and Urban Development has aligned the points and fees limit under its qualified-mortgage rule to the ...
Mortgage delinquencies continue to decline, prompting servicers to focus on customer service and refinances as opposed to loan modifications. The Inside Mortgage Finance Large Servicer Delinquency Index declined by 32.7 basis points in the fourth quarter of 2014 compared with the previous quarter. The 24 servicers tracked by the index had a delinquency rate of 6.34 percent in the fourth quarter compared with a rate of 7.59 percent in the fourth quarter of 2013. The Inside Mortgage Finance data are not seasonally adjusted. Improvements in performance were seen...[Includes one data chart]
At Dec. 31, depositories held $964.2 billion of pass-through securities issued by Fannie Mae, Freddie Mac and Ginnie Mae, a gain of 1.3 percent from the third quarter.
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