The FHA this week has proposed to set a 95 percent maximum loan-to-value ratio for FHA-insured loans over $625,500, effectively raising the minimum downpayment for jumbo loans from 3.5 percent to 5 percent. In a Feb. 6 Federal Register notice, the FHA said the proposed change is aimed at improving the health of the Mutual Mortgage Insurance Fund, whose statutory capital reserve ratio has fallen to a precarious level, raising the specter of a taxpayer bailout. Despite steps taken since 2009 to strengthen the MMIF, actuarial reviews of the fund have projected rising levels ...

Although unhappy about the demise of the popular, fixed-rate, standard Home Equity Conversion Mortgage, loan officers are not worried about any long-term adverse effect on their FHA businesses. In fact, members of the National Reverse Mortgage Lenders Association, support the FHA’s decision, which is a part of a broad effort to strengthen and better manage the risk of the agency’s Mutual Mortgage Insurance Fund. They said they have other HECM products to offer in lieu of the standard HECM loan. Beginning April 1, borrowers who choose a fixed interest rate will be limited to ...

FHA-approved lenders that engage in aggressive marketing to borrowers with a history of foreclosure, particularly advertisements about the ease of obtaining an FHA-insured mortgage after foreclosure, could face potential sanctions and severe penalties, the FHA warned. In a letter to lenders, FHA Commissioner Carol Galante said there has been a proliferation of web-based and print ads conveying the message that almost any borrower can get a new FHA loan three years after ...

The FHA will begin monitoring state housing finance agencies (HFAs) to ensure that the cash assistance they provide borrowers for closing costs, downpayment or rehabilitation costs are not coming from illegal sources. FHA Commissioner Carol Galante said there have been concerns about whether some HFA homeownership program funding models are in compliance with the Department of Housing and Urban Development’s current interpretive rule clarifying its prohibition on seller-funded downpayment assistance. Published in the Federal Register, the interpretive rule clarified that ...

A recent revision to the Department of Housing and Urban Development’s Office of the Inspector General Audit Guide has lifted a reporting burden for FHA investing mortgagees who are involved in servicing, according to Phillip Schulman, a top compliance expert and a partner at K&L Gates. Under the revised guide, an investing mortgagee or lender that purchases, sells or holds FHA-insured mortgages but cannot originate or fund FHA loans no longer needs to submit reports on internal controls and compliance, Schulman reported in a client alert. The new rule states that investing mortgagees are now required to ...

Responding to industry concerns over the impact of the new loan officer compensation final rule on reverse mortgages, the Consumer Financial Protection Bureau has clarified the phrase “amount of credit extended” for closed-end Home Equity Conversion Mortgage loans. For closed-end reverse mortgages, a loan originator’s compensation may be based on either (a) the maximum proceeds available to the consumer under the loan; (b) the maximum claim amount (if the loan is subject to the Department of Housing and Urban Development’s HECM rules); or (c) the appraised value of the property, as determined by ...

California and Texas took the honors for top FHA producers among states and other U.S. jurisdictions in 2012, with a combined $59.2 billion in new mortgage loans insured by the FHA. The combined output of the two states represented 25.5 percent of the $232.1 billion in new FHA originations reported by all 50 states, Puerto Rico, Guam, the U.S. Virgin Islands and the District of Columbia for the entire year. Total FHA production by state was up a modest 5.2 percent in the fourth quarter from the previous quarter and a hefty 21.9 percent from the prior year. California, which accounts for 25 percent of the U.S. housing market, reported ...

Fannie Mae and Freddie Mac lenders will be allowed to offer certain additional incentives to encourage more borrowers, particularly those underwater, to refinance under the Home Affordable Refinance Program, according to guidance issued by the two government-sponsored enterprises. The GSEs announced last week that lenders will be allowed to offer a “refinancing incentive” to underwater borrowers so they may obtain a lower payment or move to a more stable product or a shorter term. “As a result of lender inquiries, the Federal Housing Finance Agency has led...

HARP 3.0 Status Update: Democrats in both the Senate and the White House are warming up efforts to expand government-backed refinance programs in order to assist underwater homeowners whose mortgages are packaged into non-agency securities. Repurposed refi proposals from last year are poised to be re-introduced in the 113th Congress with the active and vocal support of the Treasury Department, which may enact its own initiative if lawmakers can’t or won’t pass a measure. “We must expand...

Fannie Mae and Freddie Mac saw a noticeable decline in Home Affordable Refinance Program activity during the final months of 2012, according to a new Inside MBS & ABS analysis. At a time when overall refinance business rose 11.0 percent at the two government-sponsored enterprises, deliveries of HARP loans fell 6.9 percent. The biggest decline was in issuance of MBS specifically geared for underwater mortgages. A total of $62.28 billion of high loan-to-value ratio mortgages were securitized...[Includes two data charts]