President Obama this week signed into law a stop gap spending measure, which, among other things, reinstates temporary higher limits for loans insured by FHA. The minibus bill, which combines several appropriations bill, passed the house on a vote of 298-121. The Senate approved previously approved it 70-30. The measure raises the FHA’s maximum loan limit back up to $729,750 after it had fallen to the permanent statutory level of $625,500 on Oct. 1, and extends it through the end of 2013. The new limit is effective immediately. After being extended three times – in 2008, 2009 and 2010 – the higher loan limits finally expired on Oct. 1 this year and were ...

The FHA Mutual Mortgage Insurance Fund for single-family loans again fell short of minimum capital standards, spurring renewed warnings of a taxpayer bailout if losses continue to mount. According to FHA’s annual report to Congress on its financial status and the condition of the MMI Fund, reserves dropped to 0.24 percent in 2011 from 0.50 percent last year. This means that the agency is holding only $2.6 billion of excess reserves, down from $4.7 billion the year before, against roughly $1.1 trillion of FHA-insured loans. The report also noted that unless housing prices stabilize and losses drop, the fund has a 50 percent chance of a taxpayer bailout. The negative effects in the report’s “base case” scenario were caused by ...

The fallout from Taylor, Bean & Whitaker’s collapse in 2009 continues to haunt Ginnie Mae after a recent independent auditor’s report found a potential overstatement of the agency’s portfolio of mortgages-held-for-investment (MHFI) apparently linked to the TBW debacle.The report by Clifton Gunderson, a Fairfax, VA-based certified public accounting firm, attributes the apparent portfolio anomaly to the current document custodian’s failure to complete a review and provide a final certification on the non-performing TBW loans. Ginnie Mae repurchased the loans from the defaulted TBW mortgage-backed securities pools and reclassified them as MHFIs. Overall, independent auditors signed off on Ginnie Mae’s FY 2011 balance sheet and found no material weaknesses in internal control over financial reporting or any instance of noncompliance. Auditors, however, noted ...

The Department of Housing and Urban Development will integrate risk management efforts as soon as the agency’s new Office of Risk Management (ORM) is up and running, according to a new report from the Government Accountability Office. Although the report provides no timeline, it said that HUD has indicated a willingness to adopt changes the GAO recommended to speed up the implementation of an overall risk management strategy. The FHA needs to reassure Congress that it has the proper controls in place to minimize financial risks arising from increased reliance on FHA mortgage insurance, the GAO said. Lawmakers are concerned that ...

Legislation that would keep VA funding fees at their current levels through FY 2016 was sent this week to President Obama for signature. The House of Representatives passed the bill, H.R. 674, the 3 Percent Withholding Repeal and Job Creation Act of 2011, on Nov. 16, with amendments from the Senate. The Senate approved the bill on Nov. 10. The president is expected to sign the bill. However, if the bill is not signed by Nov. 18, funding fees will decrease as scheduled for a short period, according to the Department of Veterans Affairs in a published guidance to VA lenders. If funding fees do reset to the lower amounts ...

Finding itself in one of the largest mortgage fraud cases ever prosecuted by the federal government, the Department of Housing and Urban Development may have a hard time explaining why it failed to act earlier against a lender that scammed the FHA for nearly a decade. It appears HUD, notwithstanding its assertions of increased vigilance and aggressive enforcement against violators of department regulations, dropped the ball on Allied Home Mortgage Corp. According to a lawsuit filed by the U.S. Attorney in Manhattan district court this week, Allied, an FHA loan correspondent, and its two top executives engaged in ...

FHA originations dropped while the rest of the mortgage market, powered by a new wave of refinancing, posted gains during the third quarter, according to an Inside FHA Lending analysis of agency originations data. FHA lenders reported an estimated $145.7 billion in direct endorsements in the third quarter, down 3.7 percent from the previous quarter. This was in stark contrast to VA loan production, which was up an impressive 31.0 percent to $20.7 billion, and new single-family securitization by Fannie Mae and Freddie Mac, which rose 14.4 percent to $177.2 billion over the same period. Even the private mortgage insurance sector, FHA’s direct competitor, outdid ... [Includes one data chart]

Allowing direct lenders in the Farm Credit System to participate in FHA mortgage insurance programs as approved mortgagees and lenders may not present a true picture of credit availability in rural areas and could end up costing taxpayers, the Mortgage Bankers Association warned. In a recent letter to HUD’s Office of Lender Activities and Program Compliance, the MBA added that the proposal may be in conflict with the administration’s goal of reducing government participation in the housing finance market. Steve O’Connor, MBA senior vice president, said Farm Credit loans with their implicit government guarantee and FHA-insured loans with their explicit government warranty would ...

Home Equity Conversion Mortgage lenders may now use certain financial assessment criteria in qualifying consumers for a HECM loan prior to FHA’s publication of its own guidance. Officials from the Department of Housing and Urban Development broke the news during the recent National Reverse Mortgage Lenders Association annual conference in Boston. They said the new underwriting assessment tool would help ensure borrowers can pay required taxes and insurance on their homes. The notification followed the unveiling of the NRMLA’s recommended underwriting guidance. In a previous email notice to industry participants, Acting Assistant Secretary of Housing/FHA Commissioner Carol Galante indicated that ...

Rep. Jeff Miller, R-FL, chairman of the House Veterans’ Affairs Committee, reportedly has instructed his staff to start looking into allegations that a number of mortgage lending institutions charged illegal fees to veterans who refinanced their homes. Committee staff members reportedly met with Department of Veterans Affairs officials to discuss the allegations, which were made public earlier this month by a federal court in Atlanta. “I will reserve judgment on the appropriate next course of action, to include the potential for a full Committee hearing, after having the opportunity to review the results of the staff investigation,” Miller said in a letter to Rep. Bruce Braley of Iowa, the ranking Democrat on the committee’s subcommittee on economic opportunity.