Flagstar Bank’s recent $133 million settlement with the Department of Justice to resolve fraudulent FHA lending practices could increase lender overlays on the FHA product, resulting in fewer borrowers being able to qualify for an FHA-insured loan, according to analysts. The Flagstar settlement, which came in the wake of the $25 billion national settlement between servicers and state and federal agencies, exacerbates the situation for lenders that already have previous concerns about the severity of FHA fines, including treble damages, for violations of FHA’s highly complex and technical rules, analysts said. Whatever relief FHA lenders may have drawn from the robo-signing settlement was ...

Significant price cuts to the FHA’s Streamline Refinance Program will not hurt the Mortgage Mutual Insurance Fund but will, in fact, benefit from the lower pricing in the long term, said Acting FHA Commissioner Carol Galante.Testifying last week before the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies, Galante said the pricing cuts to encourage streamline refinancing as well as upfront and annual mortgage insurance premium increases for forward and jumbo mortgages will generate an additional $1 billion this fiscal year and next, in addition to projections in the president’s FY2013 budget. According to Galante, the FY2013 budget proposal ...

The Department of Housing and Urban Development has issued new guidance allowing non-FHA mortgage loans to qualify for an FHA refinance loan if the lender or investor agrees to write off the unpaid principal balance of the original first-lien mortgage by at least 10 percent. The guidance expands last year’s enhancements to the FHA Short Refinance program, which allowed responsible homeowners with negative equity to refinance into a 30-year, fixed-rate FHA loan. It also extends the program until Dec. 31, 2014. Under the latest changes, underwater borrowers who may have been delinquent ...

Ginnie Mae will question certain mortgage-backed securities issuers about reporting inconsistencies in pool data submissions over the last couple of months and try to resolve those issues to avoid delay in MBS pool processing. In an audio conference with issuers last week, Ginnie Mae officials said agency staff discovered the flawed data submissions while poring over several months’ worth of pool data submitted by issuers. While most of the information fell within theVargas said the discrepancies were attributed to a small group of issuers, who will be contacted soon to work on corrections before Ginnie Mae puts stronger edits up front. She said the agency wants to ...

Origination of FHA-insured mortgage loans exceeding $417,000 were concentrated mostly in five states in 2011 even as jumbo loan production dropped further on both monthly and year-to-year bases, according to Inside FHA Lending’s analysis of the latest FHA data. California, New York, Virginia, New Jersey and Maryland accounted for 85.7 percent of the FHA jumbo market in 2011, with lenders reporting $18.2 billion in total originations, down 34.9 percent from 2010 and 2.5 percent from the third to the fourth quarter. California led all states in 2011 in FHA jumbo origination ($8.73 billion) and market share (48.0 percent). Production on a quarterly basis was ... [Two charts]

Increased mortgage insurance premiums combined with hefty penalties assessed on lenders will generate additional revenue that may keep the FHA mortgage insurance program afloat. Nevertheless, the price for keeping the fund solvent will make fewer borrowers qualified for an FHA loan, according to lenders. Lenders say the upfront mortgage insurance premium increase will have little effect on borrowers because the charge can be rolled into the loan amount. Changes to the annual MIP, however, will decrease FHA business in general because the cost of the annual MIP will have to be included in the ...

The Department of Housing and Urban Development is seeking comment on a revised proposal to reduce the amount of closing costs a seller may pay on behalf of a borrower purchasing a home with an FHA-insured mortgage loan. The seller-concession reduction proposal is part of a series of steps that HUD has undertaken to restore the FHA Mutual Mortgage Insurance Fund’s capital reserve account while preserving the FHA as a source of affordable mortgage credit for low and moderate income and first-time homebuyers. Current HUD policy allows up to 6-percent seller concessions. Payments under the cap are considered ...

Failure by a sponsored third-party originator or by an FHA-approved mortgagee acting as a sponsored TPO to comply with FHA requirements will result in drastic administrative action that may include loss of FHA approval and civil penalties, the Department of Housing and Urban Development warned. The warning came as HUD clarified the requirements for the origination, closing and submission of mortgage loans for FHA insurance endorsement through sponsored third-party originators. The agency is clamping down on bad business practices that lead to high delinquency and claims rates, which ultimately weaken ...

The Department of Housing and Urban Development announced it will waive for another year the requirement for small lenders to submit annual audited financial statements to the Department of Housing and Urban Development when seeking FHA approval or renewal. The waiver relates to requirements spelled out in a mortgagee letter 2010 to strengthen risk management in the FHA single-family mortgage insurance program. Issued in June 2010, Mortgagee Letter 2010-20 implemented reforms that increased the net-worth requirements for FHA-approved mortgagees, eliminated FHA approval of loan correspondents and changed ...

The Department of Housing and Urban Development has updated the FHA TOTAL Mortgage Scorecard User Guide to reflect current FHA guidance on derogatory or delinquent credit and on borrower employment history. A lender is required to downgrade a mortgage loan application to “refer” and manually underwrite the loan for cash-out refinance transactions if any mortgage trade line, including mortgage line-of-credit payments, show any mortgage delinquencies within the most recent 12 months or if it shows less than six months of payments on the existing mortgage. The same guidance applies if the loan is ...