The Department of Housing and Urban Development is weighing a number of options, including raising insurance premiums for the FHA Mutual Mortgage Insurance Fund as political concerns grow that the program may need a taxpayer bailout. Testifying before the House Financial Services Committee last week, HUD Secretary Shaun Donovan said he plans to include premium increases and other proposals in the department’s fiscal 2013 budget proposal to bring the FHA’s excess capital reserves back to the required level. Donovan said the FHA continues to evaluate policy options to...

Department of Housing and Urban Development Secretary Shaun Donovan this week told Congress that the FHA is considering a number of policy options, including further premium increases, to bolster the long-term health of the Mutual Mortgage Insurance Fund. Testifying before the House Financial Services Committee, Donovan said he expects to address premium increases in HUD’s FY 2013 budget proposal given the concerns raised by lawmakers regarding the impact of the reinstated maximum loan limits on the FHA’s declining capital reserves. Having higher loan limits than Fannie Mae and Freddie Mac will result in ...

Contrary to what critics claim about the recent increase in the FHA’s loan limits, high-balance mortgage loans insured by FHA have shown historically lower delinquency rates and, therefore, pose no significant risk to taxpayers or the FHA Mutual Mortgage Insurance Fund, said Department of Housing and Urban Development Secretary Shaun Donovan. Notwithstanding the agency’s opposition to legislation reinstating the pre-Oct. 1 temporary maximum loan limits for FHA, Donovan said early evidence, so far, shows that high-balance loans perform better than other FHA-insured loans. Last month, Congress enacted legislation reinstating ...

A coalition of 34 industry trade and affordable housing groups, housing and community reinvestment advocates has endorsed the nomination of Carol Galante as the Department of Housing and Urban Development’s deputy assistant secretary for housing and FHA commissioner.In a recent letter to both the chair and ranking minority member of the Senate Committee on Banking, Housing and Urban Affairs, the coalition voiced its strong support for Galante, who is currently serving in both positions on an acting basis. The coalition cited Galante’s experience as well as her previous job as HUD assistant secretary for multifamily housing. Her backers also point to her 31-year experience in private real estate as president and chief executive of BRIDGE Housing, California’s largest nonprofit housing development corporation, and its affiliate companies. In particular, the coalition underscored ...

The seasonally adjusted delinquency rates for single-family FHA and VA mortgage loans fell in the third quarter of 2011 as did those for all other first-lien residential mortgages covered by the Mortgage Bankers Association’s National Delinquency Survey. According to the survey, the third quarter saw a 45-basis point drop – from 8.44 percent to 7.99 percent – from the previous quarter in overall delinquencies on a seasonally adjusted basis. For FHA loans, the rate declined 53 bps to 12.09 percent from 12.62 percent, while VA’s rate fell 47 basis points to 6.58 percent from 7.05 percent. On a year-over-year basis, the seasonally adjusted delinquency rate decreased ...

The FHA Mutual Mortgage Insurance Fund for single-family loans again fell short of minimum capital standards, spurring renewed warnings of a taxpayer bailout if losses continue to mount. According to FHA’s annual report to Congress on its financial status and the condition of the MMI Fund, reserves dropped to 0.24 percent in 2011 from 0.50 percent last year. This means that the agency is holding only $2.6 billion of excess reserves, down from $4.7 billion the year before, against roughly $1.1 trillion of FHA-insured loans. The report also noted that unless housing prices stabilize and losses drop, the fund has a 50 percent chance of a taxpayer bailout. The negative effects in the report’s “base case” scenario were caused by ...

The Department of Housing and Urban Development will integrate risk management efforts as soon as the agency’s new Office of Risk Management (ORM) is up and running, according to a new report from the Government Accountability Office. Although the report provides no timeline, it said that HUD has indicated a willingness to adopt changes the GAO recommended to speed up the implementation of an overall risk management strategy. The FHA needs to reassure Congress that it has the proper controls in place to minimize financial risks arising from increased reliance on FHA mortgage insurance, the GAO said. Lawmakers are concerned that ...

Home Equity Conversion Mortgage claims increased by a whopping 48.3 percent in FY 2011 from last year, while the number of loans originated under the program also fell on a year-over-year basis, according to Inside FHA Lending’s analysis of FHA data. HECM claims were up to 7,951 in 2011 compared to 5,361 claims filed under the program the year before.

Home Equity Conversion Mortgage lenders may now use certain financial assessment criteria in qualifying consumers for a HECM loan prior to FHA’s publication of its own guidance. Officials from the Department of Housing and Urban Development broke the news during the recent National Reverse Mortgage Lenders Association annual conference in Boston. They said the new underwriting assessment tool would help ensure borrowers can pay required taxes and insurance on their homes. The notification followed the unveiling of the NRMLA’s recommended underwriting guidance. In a previous email notice to industry participants, Acting Assistant Secretary of Housing/FHA Commissioner Carol Galante indicated that ...

President Obama has announced Carol Galante as his pick for Assistant Secretary for Housing and FHA Commissioner at the Department of Housing and Urban Development. Galante has occupied the two posts in an acting capacity since July 12, when she replaced Robert Ryan. Ryan temporarily assumed both jobs after former HUD Assistant Secretary for Housing and FHA Commissioner David Stevens left HUD at the end of March 2011 to join the Mortgage Bankers Association as its new president and CEO. Prior to her current post, Galante served as HUD deputy assistant secretary for multifamily programs. In addition, Galante, a licensed real estate broker, has been a leader of major administration initiatives, including ...