The FHA rarely talks about its lender and loan review process in detail but in the latest issue of Lender Insight the agency discusses how it is done and how it selects targets for each review. FHA’s overall counterparty quality-control efforts are divided into lender-monitoring reviews, nonperforming loan reviews, post-endorsement technical reviews of performing loans, post-endorsement technical reviews of early payment defaults (EPD), early cohort claim reviews and lender self-reports. For lender-monitoring reviews, the FHA uses a targeting methodology that takes into account loan volume, default/claim rates, participation in specific FHA loan programs, servicer loss-mitigation performance and certain other factors. Loans are selected to determine compliance with FHA requirements. The Quality Assurance Division (QAD) in the Department of Housing and Urban Development’s Single-Family ...

The FHA has temporarily suspended publication of its Quarterly Loan Review Findings Report, which contains the results of all post-endorsement technical reviews (PETRs) conducted by the FHA during a particular quarter. The suspension will give the FHA sufficient time to “recalibrate how the report is run” as well as improve the report, the agency explained. The report is currently published in Lender Insight, a quarterly publication that contains information from the FHA’s Office of Lender Activities and Program Compliance. Specifically, the report contains charts that divide PETRs findings into five main categories. Each chart lists the top five underwriting errors in each category for each review period. The FHA said it is working to display the results in a more user-friendly, actionable manner. It did not say when the quarterly report will be ...

Two FHA lenders have agreed to separate settlements with the Department of Justice and the Department of Housing and Urban Development to resolve allegations of mortgage fraud that resulted in huge losses for HUD. Golden First Mortgage Corp. and its owner/president, David Movtady, have agreed to a $36.3 million settlement with the DOJ to resolve allegations they had lied to the FHA about the quality of loans they had certified for FHA insurance since July 2007. Consequently, the agency incurred more than $12 million in losses since that time, according to court documents. Filed in April 2013 in Manhattan federal court and amended in August 2013, the government complaint sought damages and penalties under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act against Golden First for years of misconduct as an FHA direct-endorsement lender. Golden First was a ...

FHA borrowers who refinance through the agency’s Home Affordable Modification Program will also be eligible to earn $5,000 in the sixth year of their performing, modified loan, subject to the Department of the Treasury’s guidelines, the FHA has announced. The incentive to FHA-HAMP borrowers is one of several enhancements to the Making Home Affordable program that the Department of Housing and Urban Development and the Treasury Department unveiled in December last year. The enhancements were designed to motivate homeowners in MHA to continue making timely mortgage payments, strengthen the safety net for those still facing financial hardships, and help them build equity in their homes. Under the revised HAMP guidelines, all homeowners in the program become eligible to earn $5,000 in the sixth year of their loan modification. This means a borrower’s outstanding principal balance could ...

FHA reverse mortgage production fell during the first nine months of 2014 compared to same period in the prior year due to changes made by the agency to the Home Equity Conversion Mortgage program. The nine-month HECM volume stood at $10.1 billion as of Sept. 30, down 14.8 percent from the previous nine-month period in 2013, according to an Inside FHA Lending analysis of agency data. Volume also fell 9.8 percent on a quarter-to-quarter basis. HECM purchase loans accounted for 93.5 percent of the market while a large majority, 77.0 percent, appeared to favor adjustable-rate reverse mortgages over fixed-rate reverse mortgages. Limited maximum draws in the first year and reduction of principal limit factors – actions taken by HUD to improve the HECM program – significantly decreased the demand for HECM products compared with ... [ 1 chart ]

Ginnie Mae issuance fell 2.2 percent in the fourth quarter of 2014 as the agency closed a busy year with more than $288.1 billion in total business, according to analysis of agency data. Home-purchase loans, at $192.6 billion, comprised the bulk of new government-loan securitizations, while refinances accounted for $73.0 billion. Loan modifications represented $22.6 billion in total issuances. FHA funneled $158.1 billion in loans to Ginnie Mae while VA and Rural Housing Development loans accounted for $109.5 billion and $19.9 billion, respectively. Wells Fargo led all Ginnie MBS issuers with $57.6 billion followed by PennyMac in distant second with $16.7 billion. Chase Home Finance landed in third place with $15.0 billion while Freedom Mortgage closed the year in fourth place with $14.8 billion. Rounding out the top five Ginnie Mae issuers, Quicken Loans ended 2014 with ... [ 1 chart ]

Fannie Mae and Freddie Mac saw a modest decline in production of new single-family mortgage-backed securities at the end of 2014, but a rally in refinance lending softened the thud. The two government-sponsored enterprises securitized $179.38 billion of single-family MBS during the fourth quarter of last year, according to a new Inside Mortgage Finance analysis of loan-level data. That was down 2.1 percent from the third quarter of 2014. But the GSEs securitized...[Includes three data charts]

FHA originations are expected to decline modestly in 2015 unless the agency gives in to industry pressure to lower mortgage insurance premiums and lenders ease up on their overlays, according to analysts. Analysts anticipate no meaningful decline in FHA market share next year but do expect some drop as private mortgage insurance become more competitive, especially among borrowers with 720+ FICO scores. Overall, analysts expect 2015 to be slightly better than 2014 because of increased purchase-mortgage lending, which is partly offset by lower refinance activity. Mortgage volumes should climb to $1.18 trillion in 2015, some say. At Keefe, Bruyette & Woods, analysts Bose George and Chas Tyson predict private MIs will take more market share from the FHA in 2015. They do not expect meaningful policy changes from the FHA this year. For example, FHA has given ...

Congress denied funding for an enhanced FHA housing counseling initiative for first-time homebuyers and rejected a request for authority to collect a new FHA fee to enhance quality-assurance reviews. President Obama this week signed the FY 2015 Consolidated and Further Continuing Appropriations Act, a comprehensive package of 11 funding bills for federal agencies. The bill does not include the provisions the FHA had sought to toughen enforcement and help lower costs for first-home purchases. The House passed the $1.1 trillion omnibus spending bill, H.R. 83, by a vote of 219-to-206 on Dec. 11, narrowly avoiding a government shutdown. The Senate approved the bill on Dec. 13. The bill allocates $47 million to the Department of Housing and Urban Development’s housing counseling program and $50 million for foreclosure mitigation counseling. It also provides $400 billion in ...

The Inspector General of the Department of Housing and Urban Development has announced a $300 million recovery from an earlier settlement between SunTrust Mortgage and the Department of Justice, Consumer Financial Protection Bureau, the HUD Office of the Inspector General, and 50 state attorneys general. The settlement resolved allegations of violations of FHA requirements in a joint complaint filed on June 14, 2014, by federal and state enforcement agencies. The suit against SunTrust alleged misconduct related to the origination and servicing of single-family residential mortgages. The problem loans were uncovered during a routine OIG review of targeted FHA-insured loans. According to the suit, as an FHA direct endorsement lender, SunTrust certified poorly underwritten loans for FHA insurance from January 2006 through March 2012, despite its knowledge of ...