While the Department of Housing and Urban Development’s proposed definition of a “qualified mortgage” is superior to the treatment FHA-insured mortgage loans would receive under the Consumer Financial Protection Bureau’s QM rule, it would add significant regulatory burden and costs and increase litigation risks, warned mortgage lenders. HUD’s proposed distinction between safe harbor and rebuttable presumption loans is unnecessary for FHA loans because they already meet QM requirements, according to industry trade groups. Rebuttable presumption would only impose more costs and reduce credit availability for borrowers who need FHA credit the most and likely create more confusion, lenders said. The inclusion of the FHA annual mortgage insurance premium (MIP) in the annual percentage calculation under the CFPB rule would cause...
Housing Commissioner Carol Galante warned that with interest rates rising, the FHA may have reached a “tipping point” with its mortgage insurance premiums.
Financial industry trade groups want all Title II forward mortgage loans that meet FHA requirements to be treated as “safe harbor” qualified mortgage loans instead of being lumped in either of two QM buckets as proposed by the Department of Housing and Urban Development. Commenting on HUD’s proposed definition of a “qualified mortgage,” the industry groups – Mortgage Bankers Association, Consumer Bankers Association, Consumer Mortgage Coalition, American Bankers Association, and the Independent Community Bankers of America – urged HUD to ...
Proposed options for adjusting FHA products, market presence and powers could have a direct effect on the availability of credit for borrowers and on the FHA’s ability to respond to changing market conditions, according to a new study by the Government Accountability Office. In certain instances, the recommended changes would entail tradeoffs – a downside for every upside. Industry participants, researchers and the FHA have suggested these options to improve FHA’s long-term viability or for shrinking the agency’s footprint in the mortgage market. The GAO undertook the study to determine ...
Establishing a higher, mandatory capital reserve requirement for the FHA under the Protecting American Taxpayers and Homeowners Act, or PATH Act, would help reduce discretionary spending over 10 years, according to the Congressional Budget Office. According to CBO estimates, implementing the legislation would result in a net decrease in discretionary spending of $41.2 billion over the 2014-2023 period. This assumes future appropriations laws are enacted to implement the act’s provisions. The potential reduction in government spending would stem from ...
The Department of Housing and Urban Development may not be raising FHA mortgage insurance premiums for a while for fear that further aggressive pricing could shut out traditional and first-time homebuyers. In testimony before the House Financial Services Committee this week, FHA Commissioner Carol Galante warned that, with interest rates rising, the FHA may have reached a “tipping point” with its mortgage insurance premiums and that it may be time to pull back and ponder the next move. “As we continue to seek a balance between strengthening the [Mutual Mortgage Insurance Fund] and ensuring access to credit, we must ...
The Department of Housing and Urban Development is seeking comment on a draft of a comprehensive Single Family Housing Policy Handbook, which is designed to eliminate confusion in the way the FHA does business. The draft document consolidates all FHA single-family requirements for applying for Title II forward mortgages into a single, authoritative source for FHA single-family policy. It represents the first part of a multi-phased effort to make single-family documents easier to understand and navigate, according to HUD Secretary Shaun Donovan. “With more than 1,000 mortgagee letters, housing notices, handbooks and other materials – we are taking action,” said Donovan. “We have ...
There is real opportunity for both private mortgage lenders and the FHA to take the initiative in housing reform and not wait for Congress to do the job, according to FHA Commissioner Carol Galante. Discussing housing finance reform at this week’s Mortgage Bankers Association’s annual convention in Washington, DC, Galante said reform is absolutely essential and that the system of privatized gains and socialized losses should be eliminated. Reform must start “now,” she said. The challenge for FHA and the mortgage industry is to ...
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