Fannie Mae and Freddie Mac late last week announced another round of changes in the Home Affordable Refinance Program for underwater borrowers, including more liberal repurchase standards that some say may spur lenders to refinance other servicers’ loans. For HARP loans sold to the government-sponsored enterprises on or after Jan. 1, 2013, repurchase risk will be lowered if the borrower stays current in the loan for 12 months. Under a revised repurchase policy announced last week, representation and warranty risk will be eased for non-HARP loans that stay current for 36 months. Effectively immediately, the government-sponsored enterprises reduced...

As federal regulators move to raise Fannie Mae and Freddie Mac guaranty fees for the second time this year, some industry analysts question whether it will help shrink the role of government programs in the mortgage market or simply shift more business to the FHA. “That’s a concern,” said Meg Burns, senior associate director for housing and regulatory policy at the Federal Housing Finance Agency, during the American Mortgage Conference sponsored by the North Carolina Bankers Association last week. “There are discussions all the time about what will FHA do when Fannie and Freddie are raising the g-fees, and whether FHA is actually in position to move the premium charges?” Burns noted that the government-sponsored enterprises have...

Preemptive federal legislation may discourage states and local governments from using their eminent domain powers to seize mortgages, but it will not bar them from exercising such statutory rights, according to legal experts. Rep. John Campbell, R-CA, last week introduced the Defending American Taxpayers from Abusive Government Takings Act, which would prevent Fannie Mae, Freddie Mac, the FHA and the Department of Veterans Affairs from originating, insuring or guaranteeing mortgages from jurisdictions that have seized mortgage assets through eminent domain within the last 10 years. The proposed ban on FHA financing would...

The House of Representatives this week overwhelmingly approved legislation that would help the FHA remain solvent and avoid a potential taxpayer bailout. Lawmakers passed the FHA Fiscal Solvency Act of 2012 by a vote of 402-7 on the heels of a Department of Housing and Urban Development report to Congress showing a slight second-quarter decline in the single-family Mutual Mortgage Insurance Fund. The report, which provides a quarterly view of the composition and credit quality of new insurance, showed FHA capital decreasing slightly over the last quarter from $32.3 billion to $31.6 billion. FHA’s total capital is ...

Cash flow from FHA’s business operations funded almost 70 percent of net claims losses over the last year, according to the Department of Housing and Urban Development’s quarterly report on the FHA Mutual Mortgage Insurance Fund programs. HUD paid $5.4 billion in claims in the second quarter of 2012, more than twice the amount of premiums collected during the period. As a result, net cash flows from business operations were negative $1.7 billion during the quarter. Premium collections contributed $8.1 billion over the last four quarters even as paid claims totaled $17.2 billion over the same period. This indicates that ...

The reverse mortgage industry is at odds with consumer advocates and the Consumer Finance Protection Bureau over a recent CFPB study, which claimed that consumers find reverse mortgages too complex and difficult to understand and that the risk of fraud and other scams persist. The latest dispute flared as reverse mortgage lenders and consumer groups responded to the CFPB’s request for information on abusive financial practices that affect elderly Americans. The comment period ended on Aug. 31. To assist its ongoing study of reverse mortgage transactions, the CFPB in July sought ...

The Department of Housing and Urban Development’s disciplinary arm hit 14 FHA-approved lenders with civil money penalties totaling $2.31 million for various violations of FHA regulations. HUD’s Mortgagee Review Board imposed the fines as a result of separate administrative actions against the lenders from Aug. 1, 2011, to Dec. 31, 2011. The MRB report, which was published in the Sept. 10 Federal Register, cited various offenses, including improper lending practices, failure to follow FHA origination guidelines, fraudulent reporting, failure to remit mortgage insurance premiums, failure to report ...

SunTrust Banks, Inc. is planning to shift $3 billion of loans, including an undetermined number of delinquent Ginnie Mae loans and other nonperforming loans, to its held-for-sale portfolio and record a $375 million provision for mortgage repurchases in the third quarter of 2012. The moves are expected to strengthen SunTrust’s mortgage portfolio and put the company in a better position by improving its risk profile and balance sheet and stabilizing its capital ratios. The $3 billion transfer of loans to the held-for-sale (HFS) category will include ... (1 chart)

An approved FHA lender in Brentwood, TN, is reporting a mini boom in its FHA refinance business, thanks to the FHA Streamline Refinance program. Churchill Mortgage, a provider of conventional and government-backed loans in 26 states, has reported a 540 percent increase in its FHA refi business through the agency’s streamline program. According to Matt Clarke, chief operating officer, Churchill Mortgage is expecting this year to top last year’s FHA refi production as well as its FHA streamline originations. In 2011, the company reported an estimated ...

Legislation was introduced this week in the House of Representatives that would effectively neutralize a proposal for local governments to use “eminent domain” powers to seize underwater mortgage loans and perform controversial modifications. Rep. John Campbell, R-CA, has introduced The Defending American Taxpayers from Abusive Government Takings Act, which would prohibit the FHA and VA from originating, insuring or guaranteeing a mortgage loan in jurisdictions that have invoked the power of eminent domain to seize a loan within the last 10 years. Fannie Mae and Freddie would be subjected to ...