A proposed rule that would require a flat fee for originating a mortgage loan with a Department of Veterans Affairs guaranty could do borrowers and lenders more harm than good, warned a coalition of financial services providers. The proposal is part of an upcoming Consumer Financial Protection Bureau rulemaking to implement certain provisions under the Dodd-Frank Act relating to loan originator compensation. The rulemaking raises a number of technical drafting issues that could have unintended consequences, cautioned ...

The rising delinquency rates for FHA-insured mortgage loans could spell trouble down the road for the FHA as it struggles to shore up its dwindling loss reserves, according to a new Fitch Ratings analysis. But the chief economist for the Mortgage Bankers Association has a slightly different take on that issue. Fitch analyst Brian Bertsch said a growing gap between seriously delinquent (90-day past due) guaranteed and non-guaranteed loans could presage future losses that could prompt the FHA to restrict loss claims and force banks to buy back defaulted loans. This could be the scenario ...

Ocwen Financial Corp. and joint venture partner Altisource will soon be buying FHA-insured loans from lenders through a special vehicle, Correspondent One, for future securitization. In its second quarter filing with the Securities and Exchange Commission, Ocwen said it expects Correspondent One will be able to use its relationship with Lenders One to grow its volume substantially. “Correspondent One has seen significant, positive environmental changes in the correspondent lending market, [and] there has been a contraction in correspondent lending,” Ocwen said, alluding to ...

VA Flunks ‘Plain Writing’ Test. The Department of Veterans Affairs got an “F” for not following the requirements of the Plain Writing Act, which directs federal agencies to take steps to ensure they are communicating clearly with businesses, consumers and stakeholders. The statute went into effect July 2011 and the Center for Plain Language, a nonprofit organization that grades government agencies on their efforts to comply with the Act, evaluated and graded 12 agencies for compliance. The center gave two grades – the first grade represents how well the agency followed the requirements of the act, and the second grade reflects ...

Refinancing borrowers with negative equity through the FHA Short Refinance Program would result in $24,000 in net benefits per refinanced loan, according to the Department of Housing and Urban Development. In its economic impact analysis, HUD said it expects the program to generate $24.5 billion of aggregate net benefits, assuming one million homeowners with underwater mortgages participated in 2011 through 2013. However, the benefits come with a cost and the process is not that easy. The enhanced FHA refinance program is intended to maintain affordable homeownership, prevent foreclosures and mitigate the potential for strategic defaults. The program drew attention in recent weeks ...

The FHA could be the vehicle of a new refinancing plan offered by Sen. Jeff Merkley, D-OR, to help homeowners who owe more on their mortgage than their homes are now worth. In a proposal called “The 4 Percent Mortgage: Rebuilding American Homeownership,” Merkley explained that his plan will not require taxpayer dollars but would rely on proceeds from the sale of government bonds to investors for funding. The aim, Merkley said, is give underwater homeowners the chance to ...

Total FHA delinquency rates as of June 30 were up for 30-, 60- and 90-day delinquencies as was the foreclosure rate for loans with FHA insurance, an Inside FHA Lending analysis of FHA servicing data found. The latest FHA servicers’ data showed an overall 16.75 percent delinquency rate, up from 16.10 percent as of April 30, the last time we reported FHA delinquency and foreclosure rate trends. Fueling this increase is an uptick in 30-60 days delinquencies, which rose to 7.20 percent from 6.61 percent over the two-month period. At the end of June, serviced FHA-insured loans totaled 7,636,852 loans, of which ... (1 chart)

As the Department of Housing and Urban Development prepares for a planned single-family loan sale in September, questions remain as to how successful the Distressed Asset Stabilization Program will be, given its restrictions and additional certification requirements. Legal experts say that the servicer and investor participation requirements are so onerous that the DASP would seem a little more than a sound bite. The DASP expands an earlier pilot program that allows private investors to purchase pools of nonperforming mortgages at a discount before ...

A much-anticipated Senate vote on the nomination of Carol Galante as FHA commissioner and assistant secretary of housing with the Department of Housing and Urban Development failed to materialize this week, reportedly due to the continuing Republican efforts to block her appointment. Word spread that a vote would take place after Senate Majority Leader Harry Reid, D-NV, and Senate Minority Leader Mitch McConnell, R-KY, last week tentatively agreed to vote on the nomination sometime this week. But that has not happened. Both positions have been vacant since ...

Revised VA HAMP. The Department of Veterans Affairs has updated the instructions for modifying mortgage loans with a VA guarantee. Changes include clarification concerning occupancy status, an updated reference to another VA guidance on prior approval procedures and extension of the applicability of the said guidance. The changes were announced in Circular 26-10-6. New VA REO Management and Servicing Contractor. The Department of Veterans Affairs has provided details for transferring VA property management (real estate-owned) and portfolio loan servicing contracts for the VA home loan guaranty program from ...