The Department of Housing and Urban Development will raise the annual insurance premium on new FHA originations, reverse the agencys current policy on mortgage insurance premium cancellation and institute other policy changes to improve the health of the FHA insurance fund. The new measures aim to offset significant losses from FHAs legacy loans, which have caused significant stress to the agencys Mutual Mortgage Insurance Fund. Results of a new FHA actuarial audit showed that the stress has plunged the MMI Fund into a deep hole, revealing negative capital of $16.3 billion (negative $13.5 billion excluding Home Equity Conversion Mortgages) on a $1.13 trillion FHA portfolio. The capital reserve ratio fell ...
Mortgage lenders will be facing tougher enforcement if Congress decides to act on a series of proposals to hold lenders accountable for noncompliance with FHA policies and regulations. In the wake of an adverse actuarial report regarding the health of the FHAs Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante announced that the agency will seek new powers to recoup losses from lenders that originate bad FHA loans. The proposals are designed to provide the FHA with greater flexibility to revise policies and procedures to avoid unnecessary losses before they occur. They will also improve the agencys ...
Ocwen Financials agreement in October to purchase reverse mortgage lender Genworth Financial Home Equity Access was the latest in an effort by special servicers to diversify their portfolios with reverse mortgages. Nationstar Mortgage burst onto the scene at the beginning of the year to become the largest reverse mortgage servicer and Walter Investment Management recently purchased Reverse Mortgage Solutions. Servicing reverse mortgages is much different than dealing with the ...
Reactions were mixed in the mortgage industry and on Capitol Hill on the heels of an independent actuarial study that projected a deficit of $16.3 billion in the FHA insurance fund and a negative1.44 percent capital reserve ratio. The FY2012 annual actuarial report to Congress on the condition of the Mutual Mortgage Insurance Fund reignited the debate on whether the FHAs solvency issues may be resolved without a taxpayer bailout. The capital reserve ratio dropped from 0.24 percent at the end of FY2011, which is already way below the ...
The Department of Housing and Urban Development is taking aggressive actions to mitigate the negative impact of future Home Equity Conversion Mortgage books of business on the FHA Mutual Mortgage Insurance Fund. HUD said changes in borrower use of the HECM program, particularly among younger users, and the modeling changes in the FY2012 actuarial review of the MMI Fund show substantial stress in the HECM program. Besides softening the impact of HECM losses on the fund, the department wants to ensure that consumers are better protected and able to sustain their reverse mortgages. While the MMI Funds economic value fell to ... [1 chart]
Investors in non-agency MBS raised concerns about principal forgiveness required by the $25 billion national servicing settlement agreed to earlier this year by five banks. While most of the banks claimed they would focus the efforts on their own portfolio holdings, MBS investor concerns appeared to have been realized as Bank of America said about half of the principal it has forgiven was tied to mortgages in non-agency MBS. However, Shaun Donovan, secretary of the Department of Housing and Urban Development, noted this week that investors in Bank of Americas non-agency MBS agreed to allow principal reductions on their holdings. We knew from the beginning, that because Bank of America had...
Some real estate agents are refusing to accept offers from buyers using FHA financing prompting minority rights advocates to question whether racial discrimination is causing the problem or some other factors. While illegal flipping and steering that targeted minority communities appear to have abated, bias against borrowers using FHA financing continues in the real estate market, according to Janis Bowdler, director of the Wealth-Building Policy project of the National Council of La Raza. Bowdler expressed her concern during a recent panel discussion of an FHA Working Paper on the FHAs role in the housing finance market hosted by the Urban Institute. She said there have been reports of ...
Ginnie Mae is in sound financial health and poised to potentially absorb any FHA losses, if required, but the enduring fallout from Taylor, Bean & Whitakers collapse three years ago continues to plague the agency, according to an independent audit commissioned by the Department of Housing and Urban Development Inspector General. The report by CliftonLarsonAllen disclosed no material weaknesses in Ginnies internal controls over financial reporting and no instance of legal or regulatory noncompliance during fiscal years 2012 and 2011. Ginnies loss reserves for its MBS program declined to $357.4 million in fiscal 2012, from $395.8 million at the end of fiscal 2011. Ginnie Mae believes...
The Department of Housing and Urban Development has announced changes to existing loss mitigation options to reduce the number of claims against the FHA Mutual Mortgage Insurance Fund.The changes will benefit qualified, distressed FHA borrowers, who will be able to qualify for FHA loss mitigation interventions and get more help than what was allowed under previous guidelines. HUD has issued a mortgagee letter to amend existing FHA Home Affordable Modification Program guidelines, the definition of special forbearance, and loss mitigation-priority guidelines. Specifically, HUD eliminated the ...
Private mortgage insurers have been making a slow comeback and reclaiming market share, thanks in part to policy changes adopted by the FHA, according to MI industry executives. Executives say MI penetration of the market has grown from 2.8 percent in the first quarter of 2012 to anywhere between 8-10 percent in the third quarter, an increase they attributed in part to gaining market share from FHA. Currently, private MI companies account for approximately one-third of loans with loan-to-value ratios of 80 percent or more, which are also ...