FHA lenders have gradually stretched to originate loans for borrowers with more modest credit scores in recent quarters, although these borrowers typically are better positioned to keep up with their payments, according to an Inside FHA Lending analysis of data released by the agency. The average credit score for single-family loans endorsed in the second quarter of 2013 was 693 – the lowest such average in nearly four years. This is partly the result of a shift toward more purchase-money mortgages, which generally have ... [1 chart]

Parties to trustee lawsuits challenging a city’s use of eminent domain to deal with foreclosures are gearing up for a face-off at an injunction hearing Sept. 13 in federal district court in San Francisco. The city of Richmond, CA, the defendant in the lawsuit, has suffered setbacks in the last few days and has yet to make good on its threat to initiate eminent domain proceedings after investor trustees rejected its offer to purchase distressed mortgages for restructuring. Wells Fargo and Deutsche Bank, acting as trustees for a group of ...

Sen. Elizabeth Warren, D-MA, is asking the Department of Justice to explain why it failed to get “adequate” compensation from major mortgage servicers for fraud committed against the FHA. In an Aug. 21 letter to U.S. Attorney General Eric Holder, Warren raised concerns about the $225 million paid by five servicers last year to obtain releases from False Claims Act liability stemming from fraudulent mortgage insurance claims the servicers submitted to FHA and other agencies from 2008 to 2010. The FHA’s woeful financial condition led to legislative reform efforts, including the ...

The FHA is easing the waiting period and eligibility criteria for certain borrowers with previous bankruptcies, foreclosures, deeds-in-lieu of foreclosure and short sales who would like to purchase a home again. According to Mortgagee Letter 2013-26, borrowers who may be otherwise ineligible for an FHA-insured mortgage due to the agency’s required waiting period may now be able to apply for a new purchase mortgage loan because of the shortened waiting period and if they meet the criteria. This latest initiative to help borrowers whose credit had been impaired by the financial crisis is called ...

The reverse mortgage lending industry is working with the Department of Housing and Urban Development to implement two policy changes that would strengthen the FHA’s Home Equity Conversion Mortgage program. One policy change involves the development of a new HECM option that combines features of the fixed-rate, full-draw HECM Standard and the HECM Saver, according to Peter Bell, president and chief executive officer of the National Reverse Mortgage Lenders Association. HUD eliminated the standard 30-year, fixed-rate HECM in April because ...

Lenders must consider debt disputes, collection accounts and judgments in analyzing a borrower’s credit worthiness because they are indicators of the borrower’s ability and willingness to meet his or her credit obligations, according to the FHA. In recently issued guidance, the FHA said lenders should analyze all collections and judgments, past and present, because they may indicate a borrower’s disregard for credit obligations. Such analysis helps decide whether a loan should be approved for FHA insurance, the agency said. The FHA amended its guidance on collections and disputed accounts in Mortgagee Letter 2013-24, and further clarified ...

After more than five years of operation, Home Affordable Refinance Program activity is expected to decline. However, industry analysts suggest that if the Federal Housing Finance Agency continues to implement changes requested by lenders, HARP activity could remain strong through 2014. “This deep cooperation and aggressive policy action are key reasons why HARP burnout has been elusive so far and suggests HARP risk is likely to remain elevated despite the interest rate sell-off, in our view,” analysts at Barclays Capital said late last week. Analysts at Bank of America Merrill Lynch project...

The mortgage banking industry has commended the Senate Committee on Banking, Housing and Urban Affairs on passing the FHA Solvency Act earlier this month but raised concerns about the bill’s indemnification provision. In a letter to Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Mike Crapo, R-ID, David Stevens, president of the Mortgage Bankers Association, said some deserving borrowers are being shut out of FHA because of strict credit overlays that lenders add to avoid indemnification risks. Stevens said when the Department of Housing and Urban Development is able to require ...

Continued abuses has caused single-family loan originations to remain a top priority for reviews and targeted audits, according to the Department of Housing and Urban Development’s Office of the Inspector General. A specialized audit program has been developed to target lenders, considering a number of high-risk indicators, the OIG said. Although the agency did not elaborate, it did note Congress’ keen interest in FHA solvency and in eradicating policies and practices that contribute to the agency’s current financial woes. The OIG said it plans to ...

Ginnie Mae has changed certain office names to reflect the activities and responsibilities of the office more accurately. For example, the Office of Mortgage-Backed Securities is now known as the Office of Issuer and Portfolio Management. The Office of Program Operations name also has been discarded in favor of the Office of Securities Operations. The MBS Guide, including the summary of addresses and all forms and appendices, has been updated to reflect the office name changes. In addition, the address for overnight delivery of new MBS issuer applications ...