Although the outlines of an expanded Home Affordable Refinance Program are far from clear, MBS analysts say the most likely changes designed to help more borrowers take advantage of record low mortgage rates will not have a disastrous impact on the MBS market. Observers note that there are two ways to expand the potential HARP population: remove the existing chronological restriction (loans made prior to June 2009) or lift the current loan-to-value restriction of 125 percent. The chronological restriction is relevant because a lot of borrowers who have used HARP already could benefit from refinancing again because...

The FHA is urging Congress to restore the authority of community banks to close FHA loans in their own names without having to maintain an FHA lender approval to do so. While it took a regulation by the Department of Housing and Urban Development to take away small banks’ FHA correspondent status, federal law requires lenders to have FHA approval before they can close an FHA-insured loan. Only Congress can make the changes necessary for non-direct endorsement lenders to return to the business of originating and closing FHA loans in their name, according to a former HUD official. Assistant Secretary for Housing and...

FHA lenders that fail to report mortgage record changes for mortgage sales, transfers and termination of mortgage insurance will be referred to the Mortgage Review Board for disciplinary action, including civil fines, the agency warned. In Mortgagee Letter 2011-33, the FHA reminded lenders of their responsibility to reconcile their portfolios and ensure all accounts are properly identified. When the FHA’s records do not match lenders’ records, the latter are required to take corrective action. The Department of Housing and Urban Development will not pay any claims if the name and identification number of the holder or the...

The Department of Housing and Urban Development said it would work with Congress to strengthen the FHA and Ginnie Mae in a way that protects taxpayers and facilitates the return of private capital despite its mixed views of a Republican draft bill to reform the two programs. Assistant Secretary for Housing and FHA Commissioner Carol Galante told members of the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity last week that HUD is willing to work with lawmakers to increase access to credit and strengthen risk management and lender enforcement. But while the GOP draft bill contained elements similar to...

Ginnie Mae in a conference call with its MBS issuers said it is going to be focusing its attention on new definitions related to data collection, and urged industry participants to provide feedback. Currently, the loan-to-value ratio definition stands as the ratio of the current unpaid principal balance amount to the appraised value, estimated value or purchase price of the property, and that value must include the upfront mortgage insurance premium. Under the new definition, however, the LTV ratio would be based on the original principal balance, said Ginnie officials. This includes any mortgage insurance premium to lower the sale price or...

The Department of Housing and Urban Development is urging Congress not to raise the minimum downpayment on FHA mortgage loans, saying that downpayments are not the best indicator of loan defaults. Testifying before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, Acting Assistant Secretary for Housing/FHA Commissioner Carol Galante warned that a legislative proposal to raise FHA’s minimum downpayment requirement to 5 percent would forestall recovery in the housing market and restrict access to credit for worthy borrowers. Galante said HUD has not made any determination as to ...

The Department of Housing and Urban Development is pondering its next move after discussing with mortgage industry representatives their concerns about extending the current forbearance period for unemployed homeowners to a maximum of 12 months. HUD and FHA officials met recently with the Mortgage Bankers Association and several small mortgage servicers, which took issue with FHA’s recently revised forbearance policy. HUD declined to discuss the outcome of the meeting, saying it was more about understanding the industry’s concerns and discussing solutions. “No decision has been made as to whether we can or will make any changes, but we are looking into the issues they have raised,” said a HUD spokesman. On July 7, the FHA announced ...

Losses on re-performing FHA/VA mortgage pools are expected to rise as servicers cut back on the claims they submit to the Department of Housing and Urban Development and pass on to mortgage securitization trusts instead, according to a recent analysis by Moody’s Investors Service. With FHA experiencing increasing losses in its portfolio, HUD is scrutinizing claims more vigorously for servicing or underwriting defects, which may serve as a basis for denying claims on re-performing FHA/VA pools. Servicers are also required to bring the property to an acceptable conveyance condition. Furthermore, HUD imposes very strict timeline guidelines that FHA servicers must follow. Given the recent servicing irregularities and staffing constraints due to rising defaults, servicers may not always ...

A coalition of industry and advocacy groups is flexing its collective muscle as it prepares to push Senate legislation extending the current maximum mortgage loan limits. The group, comprised of 14 financial and real estate trade and advocacy associations, are lining up behind S. 1508, the Homeownership Affordability Act of 2011, which would extend the temporary high-cost area loan limit through the end of 2013. Introduced by Sens. Robert Menendez, D-NJ, and Johnny Isakson, R-GA, the bill complements a similar bipartisan effort by Reps. John Campbell, R-CA, and Gary Ackerman, D-NY, in the House Financial Services Committee to keep ...

The Department of Housing and Urban Development is seeking comment on a proposed rule that would expand FHA-insured lending in rural areas. Published in the Aug. 26 Federal Register, the proposed rule would allow direct lenders in the Farm Credit System to participate in the FHA mortgage insurance programs as approved mortgagees or lenders. Although participation in the mortgage insurance programs is voluntary, Farm Credit System financial institutions must comply with FHA approval requirements. The comment period ends Oct. 25. Recent difficulties in mortgage finance markets have reduced the availability of housing credit in rural areas, where the FHA currently does very limited business. Consequently, HUD proposes ...