The House Financial Services Subcommittee on Insurance, Housing and Community Opportunity this week approved legislation calling for an emergency capital plan and an independent GAAP-based audit of the FHA insurance funds and programs. The FHA Emergency Fiscal Solvency Act would set minimum annual mortgage insurance premiums for the FHA and is aimed at shoring up the Mutual Mortgage Insurance Fund. Introduced by Subcommittee Chair Judy Biggert, R-IL, the bill was approved by voice vote. An amendment introduced by Rep. Scott Garrett, R-NJ, sparked a heated partisan debate, which will likely continue when...

Most observers don’t think the Obama administration’s proposal to use the FHA program to refinance underwater non-agency mortgage borrowers stands much of a chance on Capitol Hill, but the Department of Housing and Urban Development is moving ahead with a change it can make on its own that’s designed to spur FHA refinance activity. Acting FHA Commissioner Carol Galante announced that the agency is changing its Neighborhood Watch system to exclude streamlined FHA refinance loans from lender performance scoring. A key feature of the online system is a comparison of each lender’s early default rate to the...

State attorneys general and federal officials this week announced a massive legal settlement with five major mortgage servicers, finally concluding a torturous 16-month-long negotiation. Some 49 states – including New York, California and Florida – agreed to the $25 billion settlement with JPMorgan Chase, Bank of America, Wells Fargo, Ally Bank and Citigroup. The agreement does not provide blanket immunity for the lenders, which can still face criminal charges and are subject to claims over securitization practices and claims brought by individual borrowers. The agreement is based on investigations by...

Both the Federal Housing Finance Agency and Freddie Mac are refuting a published report suggesting that a mortgage finance vehicle at one time employed by the government-sponsored enterprise was designed to profit the company by preventing homeowners from refinancing. An article published this week by ProPublica and National Public Radio contended that Freddie stood to profit from hedging investments known as inverse floaters that would pay higher returns if interest rates rose and more homeowners remained in mortgages with high interest rates. According to ProPublica, Freddie purchased inverse floaters...

A new proposal by the Obama administration to refinance non-agency mortgages with negative equity could have a major impact on the non-agency market, though approval by Congress appears unlikely. “Borrowers with standard non-GSE loans will have access to refinancing through a new program run through the FHA,” the Obama administration said in a fact sheet released this week. “For responsible borrowers, there will be no more barriers and no more excuses.” The program would require that borrowers ...

The mortgage industry is skeptical about President Obama’s proposal for low-cost, non-agency loan refinancing program, administered by the FHA for current, underwater borrowers. Some industry participants called the plan nothing but smoke and mirrors that would likely create unrealistic expectations. But deceptive or not, the proposal first announced by the president in his State of the Union address promises to be different from the earlier, huge unsuccessful FHA experiments in foreclosure prevention – Hope for Homeowners and FHA Short Refinance programs. The proposed refi plan is a combination of ...

The Department of Housing and Urban Development has announced a new regulation prohibiting lenders from using sexual orientation or gender identity as a basis for determining borrower eligibility for FHA-insured mortgage financing. The regulation specifically extends federal anti-discrimination protections to lesbians, gays, bisexuals, transgender persons and their families when applying for HUD-assisted or HUD-financed rental housing or an FHA-insured mortgage loan. The regulations will become effective 30 days after their publication in the Federal Register. HUD Secretary Shaun Donovan said the policy will ...

The National Association of Realtors recently asked the Department of Housing and Urban Development to allow investors to participate in the FHA’s property rehabilitation program. The FHA’s 203(k) Rehabilitation Mortgage Insurance Program allows homebuyers to take out a mortgage to purchase a house, including the cost of its rehabilitation. The program also allows the current owners to finance the rehabilitation of their own homes. Currently, investors and cooperative units are barred from using the 203(k) programs. Individual condominium units may be insured if ...

December was a productive month for FHA as the percentage of endorsements, fueled by strong refinance activity, rose 6.3 percent from the previous month, according to Inside FHA Lending’s analysis of agency data. However, 2011 overall was not as generous. Refinance transactions totaled 30,515 for the month, up 15.1 percent from November, with borrowers’ FICO scores averaging in the 703-706 range. Streamline refis were up 20.2 percent and conventional-to-FHA refis also increased 11.5 percent over the same period. Total cash-out refis, likewise, bumped up 7.7 percent on a monthly basis. In the advent of President Obama’s latest refinancing proposal ...

Veterans took advantage of their home loan benefit in record numbers, as loans originated under the Department of Veterans Affairs’ home loan guaranty program reached their highest total in eight years, according to the agency. The VA reported 357,594 mortgage loans with an agency guarantee in 2011, an increase of nearly 14.0 percent over last year. There are currently more than 1.5 million active VA home loans, the agency said. VA-backed home loans also showed the lowest serious delinquency and foreclosure rates in the mortgage industry, the agency noted. It cited the Mortgage Bankers Association’s National Delinquency Survey for 3Q11 showing ... [including one chart]