Congress should repeal legislation raising the FHA’s maximum loan limit before the agency’s losses skyrocket, triggering a massive taxpayer bailout, warned the American Enterprise Institute. In a new research paper, Peter Wallison and Edward Pinto, resident fellows at the AEI, urged Congress to correct its mistake of restoring the pre-Oct. 1 temporary maximum loan limits of $729,750 for FHA while leaving Fannie Mae and Freddie Mac at the lower “permanent” high-cost loan limit of $625,500 set by Congress in 2008. “Congress should bite the bullet – recognize the losses that are already embedded in the FHA’s insurance fund and adopt reforms to the agency’s accounting and underwriting that will stop the bleeding,” the two public policy analysts said. Last fall, the FHA came under fire from Republicans and conservatives after an independent actuarial review of the agency’s Mutual Mortgage Insurance Fund found ...

The Department of Housing and Urban Development has proposed to eliminate an outmoded appeals process for determining the maximum FHA mortgage loan limits in certain areas. Published in the Jan. 13 Federal Register, the proposed rule specifically would do away with regulations that allow HUD to set the area-based loan limits on a yearly basis and permit appeals of these loan limits. The appeals were once an important source of data for HUD because it allows any party to submit documentation in support of alternative mortgage limits if that party believes the limit set by HUD did not reflect the median house prices in an area. The loan limit appeals process was set ...

MetLife Home Loans (MHL), one of the top FHA-approved mortgage lenders and FHA servicers, has quit the loan origination business and stopped accepting new applications for forward mortgages. A residential mortgage arm of MetLife Bank, MHL said it is shutting down its various residential and construction loan programs and continuing its reverse mortgage program. The home loan division will honor all contractual commitments for loans in process and expects the majority of loans to close in 90 days. MHL began originating traditional, jumbo and reverse mortgages in 2008. However, dwindling revenues prompted ...

FHA-approved mortgage lenders are now required to disclose whether a purchase transaction was sold previously as a real estate owned property, including home equity conversion mortgages. In a general notice to lenders, the Department of Housing and Urban Development said all previous REOs sold in a purchase transaction must show their former REO case number in FHA Connection. The notice applies to HECM loans as well because an assigned HECM loan can become an REO property, explained a HUD spokesman. It became effective on Jan. 14. Meanwhile, HUD also announced ...

The Department of Veterans Affairs has liberalized the requirements for modification of VA-guaranteed loans and has provided servicers with more options to help veterans avoid foreclosure. Final rules published recently in the Federal Register show changes to requirements related to the calculation of interest rates on modified loans as well as foreclosure costs that may be rolled into the modified loan balance. The rules also give mortgage servicers the flexibility to modify VA loans without seeking prior approval from the VA, thus speeding up assistance to veteran borrowers facing...

The number of FHA endorsements grew by a whisper in November, up 0.2 percent to 88,206 from 88,060 in October, and down a screaming 32.8 percent from last year, according to Inside FHA Lending’s analysis of agency data. Endorsements for the month totaled $14.5 billion, with purchases and first-time homebuyers leading the way. Approved lenders accounted for the bulk of originations during the month, 79.8 percent. Purchase transactions comprised 64.8 percent of total originations for the month. An estimated 96.1 percent of loans insured by FHA were fixed-rate mortgages. Purchase loans with FHA...

Congress has approved legislation mandating an FHA premium increase of 10 basis points, corresponding to an increase in fees charged by Fannie Mae and Freddie Mac for placing guarantees on cash flows to mortgage-backed securities investors. The increases were in the Temporary Payroll Tax Cut Continuation Act of 2011, which was approved by the House on Dec. 23 by unanimous consent and previously cleared by the Senate. In addition to raising guarantee fees charged by the two government-sponsored enterprises, the new law requires the Department of Housing and Urban Development to raise FHA annual...

For the past 18 years, listeners to the nationally-syndicated Dave Ramsey Show have heard the host recommend Nashville-based Churchill Mortgage. While Ramsey’s debt-free living message might seem at odds with a mortgage banking company issuing loans, Churchill Mortgage has found in Ramsey an excellent partner. “We get phone calls and hits to our website from every state in the country,” said Matt Clarke, Churchill’s CFO and COO. “The population of callers is largely high quality borrowers.” Churchill has been a sponsor of the Dave Ramsey show since it began, and continues to reap benefits. The question...

The FHA will continue to play a critical role in the nation’s housing markets in 2012 even as it tries to balance the need to extend credit while reducing its market share to open the way for private capital to return to the mortgage market, according to industry observers. That means walking a tightrope in trying to keep the Mutual Mortgage Insurance Fund actuarially sound while trying to avoid piling on more fees and additional restrictions, which could hamper housing recovery, observers said. “We can’t have an economic recovery without a housing recovery,” said Brian Chappelle, a mortgage industry consultant. “The philosophical debate about the role of government in housing should be ...

Senate Republicans have threatened to block the confirmation of Carol Galante as head of the FHA until Senate Democrats come up with a plan to deal with Fannie Mae and Freddie Mac. The Senate Committee on Banking, Housing and Urban Affairs this week voted 13 to 9 to send Galante’s nomination to the Senate floor amid Republican calls to reject the nomination. Some Republicans expressed concern over the health of the FHA Mutual Mortgage Insurance Fund, citing a recent independent actuarial study that reported a precarious drop in the fund’s excess capital reserve for unexpected losses. Sen. Jim DeMint, R-SC, said he did not think ...