The rising number of conventional purchase loans with debt-to-income ratios exceeding 45 percent combined with low credit scores has prompted two private mortgage insurers to take drastic action. Mortgage Guaranty Insurance Corp. and National MI have announced they will insure loans with DTIs exceeding 45 percent only when their credit score is 700 or greater. Mark Zimmerman, MGIC’s senior vice president for investor relations, said origination of such loans took off last summer when Fannie Mae eased guidelines on loans with 45 percent and above DTI. Fannie updated Desktop Underwriter by removing offsetting and compensating factors and started accepting the loans automatically instead of by referral. Freddie Mac does not accept such loans. Zimmerman said MGIC’s new guideline applies to loans with an agency automated underwriting system response. The company’s non-agency ...
The Senate Committee on Banking, Housing and Urban Affairs has reapproved the nomination of Brian Montgomery to lead the FHA even as Democrats reiterated their concerns about the candidate. The committee favorably reported Montgomery’s nomination previously in November by an 18-5 vote. The Senate, however, was unable to confirm the nominee for the post before the end of the legislative year. In order to be considered again for the post, Senate procedures required Montgomery to resubmit his financials and again wait for a full Senate vote. Five Democrat senators on the committee – Ranking Member Sherrod Brown (OH), Elizabeth Warren (MA), Jack Reed (RI), Catherine Cortez Masto (NV), and Brian Schatz (HI) – objected to the Montgomery nomination because they perceived him as “too close” to the mortgage industry. Brown expressed concern about Montgomery’s intention to ...
President Trump this week signed a short-term spending bill that would keep the government operating until Feb. 8, 2018. The bill ended a three-day shutdown after the previous spending authority for most of the government expired at midnight on Jan. 19. However, the threat of another shutdown looms. FHA and Ginnie Mae both had contingency plans in place in case the short-lived shutdown dragged on, as it had in 2013. That event lasted for 16 days, at a loss of $1.6 billion a day to the federal government. Under FHA’s emergency plan, the agency would continue to endorse new single-family forward mortgages, but not Home Equity Conversion Mortgages and Title I loans. Ginnie would reduce staffing to essential personnel but continue its secondary market operations. It would continue to remit timely payment of principal and interest to investors, grant commitment authority and support issuance of ...
Recoveries from FCA Settlements Involving FHA Loans Down Dramatically in 2017. The Department of Justice reported collecting more than $543 million in False Claims Act settlements and judgments to resolve housing and mortgage fraud complaints in FY 2017, down from $1.6 billion in FY 2016. The largest settlement of a False Claims Act case was $296 million, which involved an FHA lender and the DOJ. In September 2017, a unanimous jury in Houston, TX, found that Allied Home Mortgage Capital Corp. and Allied Home Mortgage Corp. violated the FCA and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 by falsely certifying that thousands of high-risk, poor-quality loans were eligible for FHA insurance. The companies were also accused of originating FHA loans from more than 100 “shadow” branch offices without authorization from the ...
A staggering 15.8 percent of the island commonwealth’s FHA loans were more than 90 days late as of Dec. 31, and another 13.0 percent were 30-90 days in arrears.
Bipartisan legislation was introduced last week in the U.S. Senate to protect veterans and service members from predatory serial refinancing by requiring lenders to show the transaction actually bene-fits the borrower.
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