Reverse mortgage lenders chalked up a win in Florida’s Third District Court of Appeal on the question of whether surviving spouses of borrowers who had taken out a Home Equity Conversion Mortgage loan also qualified as “borrowers” and, therefore, cannot be evicted from the property after the death of the borrower. The appellate court’s ruling contradicted two previous court rulings in Smith v. Reverse Mortgage Solutions, Inc. and Edwards v. Reverse Mortgage Solutions, Inc. Both rulings held that surviving spouses of deceased HECM borrowers also qualified as “borrowers” under the terms of the mortgage and, therefore, entitled to protection from eviction. However, in One West Bank, FSB v. Palmero, the appellate court changed course and outlined the conditions under which a lender could prove that “borrower” meant only the person who actually had taken out the reverse ...

The number of FHA lenders subject to administrative actions by the Department of Housing and Urban Development in FY 2017 declined from the previous fiscal year, according to the latest report from the Mortgagee Review Board. Published in the April 25 Federal Register, the report showed the number of FHA lenders that were hammered with civil money penalties, lost FHA approval, and received suspensions, probations, and reprimands from Oct. 1, 2016, to Sept. 30, 2017, fell to 20 from 25 in FY 2016. But the biggest change was in the number of lenders cited and disciplined for violation of FHA’s annual recertification requirements. Lenders that failed to meet the recertification requirements in a timely manner but eventually came into compliance totaled 52 in FY 2017, down from 106 in fiscal 2016. On the other hand, 23 lenders agreed to settle with HUD after they failed to ...

Guild Mortgage has announced an FHA-backed financing program that would allow homebuyers to finance solar panels through a mortgage when purchasing a house. It is not Property Assessed Clean Energy financing, which has similar goals but is prohibited by FHA because it asserts lien superiority over all other liens, including a residential mortgage. Guild developed the program, FHA Solar, with FHA to ensure adherence to all agency loan requirements, according to a company representative. “It sounds like Guild slapped their own brand on a loan product that appears to fit among FHA’s various energy-efficient programs, not to be confused with PACE obligations, which are no longer a part of our single-family insurance program,” said a Department of Housing and Urban Development spokesman. FHA Solar is available to residents in California. It provides homebuyers the ...

Excessive risk-based pricing, high private mortgage insurance premiums and lender credit overlays are locking out low-income borrowers and families of color from the conventional mortgage market, pushing them towards FHA as their only option, concludes a new study from the Center for Responsible Lending.

The Department of Veterans Affairs home-loan guaranty program continued to account for most of the growth in the Ginnie Mae servicing business during the first quarter of 2018, a new Inside FHA/VA Lending analysis reveals. Total Ginnie mortgage-backed securities outstanding rose to $1.940 trillion as of the end of March, including multifamily MBS and securities backed by FHA reverse mortgages. Some $1.795 trillion of that amount was traditional single-family mortgages, a 1.1 percent increase from the end of last year. The forward-mortgage Ginnie market grew by 7.3 percent over the past 12 months. The amount of VA loans in Ginnie pools was up 13.1 percent from March 2017, nearing the $600.0 billion mark. By comparison, the FHA segment of the Ginnie market was up 4.7 percent from a year ago, hitting $1.085 trillion. Loan performance generally improved in both the ... [Charts]

The Department of Veterans Affairs has drafted a proposed rule to curb predatory loan churning. The draft rule is “well on its way through concurrence with VA and the Office of Management and Budget,” said Jeff London, director of the VA Loan Guaranty Service, during an interview at the agency’s 19t Annual Lender Conference in Miami recently. He did not specify a publication date but said the proposed rule will be published “fairly soon.” Churning, or serial refinancing, involves multiple refinances of the same loan within short periods with no clear benefit to the borrower. In addition, churning triggers rapid prepayments in Ginnie Mae mortgage-backed securities to the detriment of investors and makes it difficult to price MBS appropriately. London declined to provide details about the rule’s content but said veterans and taxpayers would be protected. VA looked at a range of things that were common in the ...

A general overhaul of the Department of Veterans Affairs’ Loan Electronic Reporting Interface is underway to convert it into a full service, end-to-end system capable of handling every phase of the loan process. Work on VALERI began in 2017, with the aim of integrating all business lines – loan origination, property valuations, and mortgage servicing – into what VA officials view as an automated underwriting system. “We are potentially looking at the redesigned VALERI as an automated underwriting system, an end-to-end system designed to better serve veterans and their families, lenders, servicers and appraisers,” said Jeff London, director of the VA Loan Guaranty Service (LGS), during an interview at the recent VA lender conference in Miami. The VALERI application has been used solely for servicing for the last 10 years. Since 2008, on a monthly basis, servicers have been uploading electronic data ...

The Department of Veterans Affairs recently withdrew a directive that was part of an early disclosure requirement for Interest Rate Reduction Refinance Loans just days after the measure took effect. Although the early disclosure measure became effective for IRRRLs closed on or after April 1, 2018, VA’ “Frequently Asked Questions” guidance issued on April 5 clarified some of the earlier provisions and removed a new disclosure to address lender concerns. The current VA Lenders Handbook requires a veteran to sign a statement showing he or she understands the effects of the IRRRL and how long it would take to recoup all closing costs. If the veteran’s monthly payment increases by 20 percent or more, the lender must certify that the borrower qualifies for the new monthly payment. The handbook, however, is unclear as to when the statement and lender certification must be delivered. Consequently, some ...

FHA-insured loans accounted for a modest chunk of mortgage-related consumer complaints submitted to the Consumer Financial Protection Bureau last year. According to the CFPB’s annual report on consumer disputes, the bureau received approximately 37,300 mortgage complaints in 2017, 13 percent of which were related to FHA mortgages. Loans with a VA guaranty and FHA-insured reverse mortgages accounted for 4 percent and 2 percent of the complaints, respectively. Conventional home mortgages had the biggest share of mortgage complaints – 48 percent – followed by “other type of mortgage” at 28 percent. Six percent of mortgage complaints were about home-equity loans or home-equity lines of credit. For mortgage complaints, 41 percent involved making payments (such as those involving servicing, escrow accounts and posting of payments), while 37 percent were related to borrowers’ ....

Legislation was introduced this week in the House Financial Services Committee that would strengthen oversight of FHA mortgage servicers to ensure their compliance with the agency’s loss-mitigation requirements. The FHA Foreclosure Prevention Act of 2018 (H.R. 5555) would require the Department of Housing and Urban Development to conduct servicer oversight, including sampling, compliance reviews, and direct information collection from borrowers whose files were sampled. “A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” said Rep. Maxine Waters, D-CA, ranking member on the committee and sponsor of the bill. Waters said her bill would ensure that FHA servicers help families experiencing financial hardships avoid foreclosure so that they can ...