One of the goals in the recent revisions to the Home Affordable Refinance Program is to stimulate more interest among lenders, largely through relaxed requirements on representations and warranties and some streamlining of the process. But HARP 2.0 also includes new guidelines on soliciting potential customers, both from the lender’s own portfolio and from borrowers currently serviced by another firm. A handful of lenders have begun touting the expanded program to consumers. The new program includes specific refi solicitation practices that lenders must...

The National Community Reinvestment Coalition improperly accepted approximately $2.4 million in donations from 10 of 38 lender organizations it tested under its Fair Housing Initiatives Program grant agreement with the Department of Housing and Urban Development, thereby creating conflict-of-interest situations in violation of the agreement, according to a new report from HUD’s Office of Inspector General. The NCRC immediately challenged the report and maintained it was politically motivated. The OIG said NCRC generally completed administrative and program activities and tasks in accordance with its agreement, the OIG said. The audit also found nonprofit improperly accepted donations from organizations it tested, thereby creating conflict-of-interest situations involving $59,800 of $230,000 in the grant funds (26 percent).

Although primary market lenders will face fewer hurdles in originating refinance loans for underwater Fannie Mae and Freddie Mac borrowers, detailed guidelines released by the government-sponsored enterprises this week confirm that it will take several months before the expanded programs are fully implemented. And when they are, the revamped Home Affordable Refinance Program will generate up to one million new loans that otherwise wouldn’t have happened, according to estimates by Keefe, Bruyette & Woods. That’s just about what the market expected, and it will mean... (Includes one data chart)

President Obama this week signed into law a stop gap spending measure, which, among other things, reinstates temporary higher limits for loans insured by FHA. The minibus bill, which combines several appropriations bill, passed the house on a vote of 298-121. The Senate approved previously approved it 70-30. The measure raises the FHA’s maximum loan limit back up to $729,750 after it had fallen to the permanent statutory level of $625,500 on Oct. 1, and extends it through the end of 2013. The new limit is effective immediately. After being extended three times – in 2008, 2009 and 2010 – the higher loan limits finally expired on Oct. 1 this year and were ...

The FHA Mutual Mortgage Insurance Fund for single-family loans again fell short of minimum capital standards, spurring renewed warnings of a taxpayer bailout if losses continue to mount. According to FHA’s annual report to Congress on its financial status and the condition of the MMI Fund, reserves dropped to 0.24 percent in 2011 from 0.50 percent last year. This means that the agency is holding only $2.6 billion of excess reserves, down from $4.7 billion the year before, against roughly $1.1 trillion of FHA-insured loans. The report also noted that unless housing prices stabilize and losses drop, the fund has a 50 percent chance of a taxpayer bailout. The negative effects in the report’s “base case” scenario were caused by ...

The fallout from Taylor, Bean & Whitaker’s collapse in 2009 continues to haunt Ginnie Mae after a recent independent auditor’s report found a potential overstatement of the agency’s portfolio of mortgages-held-for-investment (MHFI) apparently linked to the TBW debacle.The report by Clifton Gunderson, a Fairfax, VA-based certified public accounting firm, attributes the apparent portfolio anomaly to the current document custodian’s failure to complete a review and provide a final certification on the non-performing TBW loans. Ginnie Mae repurchased the loans from the defaulted TBW mortgage-backed securities pools and reclassified them as MHFIs. Overall, independent auditors signed off on Ginnie Mae’s FY 2011 balance sheet and found no material weaknesses in internal control over financial reporting or any instance of noncompliance. Auditors, however, noted ...

The Department of Housing and Urban Development will integrate risk management efforts as soon as the agency’s new Office of Risk Management (ORM) is up and running, according to a new report from the Government Accountability Office. Although the report provides no timeline, it said that HUD has indicated a willingness to adopt changes the GAO recommended to speed up the implementation of an overall risk management strategy. The FHA needs to reassure Congress that it has the proper controls in place to minimize financial risks arising from increased reliance on FHA mortgage insurance, the GAO said. Lawmakers are concerned that ...

Legislation that would keep VA funding fees at their current levels through FY 2016 was sent this week to President Obama for signature. The House of Representatives passed the bill, H.R. 674, the 3 Percent Withholding Repeal and Job Creation Act of 2011, on Nov. 16, with amendments from the Senate. The Senate approved the bill on Nov. 10. The president is expected to sign the bill. However, if the bill is not signed by Nov. 18, funding fees will decrease as scheduled for a short period, according to the Department of Veterans Affairs in a published guidance to VA lenders. If funding fees do reset to the lower amounts ...

The FHA and the Internal Revenue Service are working on implementing electronic signatures in loan documents and certain federal tax forms in 2012. In a recent letter to members, David Stevens, president and chief executive officer of the Mortgage Bankers Association, said the trade group has been working with both agencies for the past 18 months to allow the use of e-signatures on FHA loan documents and to automate the IRS Form 4506-T process as early as next year. Form 4506-T is a request for a transcript of a filer’s tax return.

A federal judge in Houston ruled that Allied Home Mortgage Corp. can continue to originate and underwrite FHA-insured loans, putting into question the validity of the Department of Housing and Urban Development’s suspension of the lender’s FHA privileges. U.S. District Court Judge Melinda Harmon, in a 22-page decision issued filed on Nov. 15, said the “potential destruction” of Allied’s business outweighs any harm the government would suffer before the issues can be litigated.