The Department of Housing and Urban Development is seeking comment on a revised proposal to reduce the amount of closing costs a seller may pay on behalf of a borrower purchasing a home with an FHA-insured mortgage loan. The seller-concession reduction proposal is part of a series of steps that HUD has undertaken to restore the FHA Mutual Mortgage Insurance Fund’s capital reserve account while preserving the FHA as a source of affordable mortgage credit for low and moderate income and first-time homebuyers. Current HUD policy allows up to 6-percent seller concessions. Payments under the cap are considered ...

Failure by a sponsored third-party originator or by an FHA-approved mortgagee acting as a sponsored TPO to comply with FHA requirements will result in drastic administrative action that may include loss of FHA approval and civil penalties, the Department of Housing and Urban Development warned. The warning came as HUD clarified the requirements for the origination, closing and submission of mortgage loans for FHA insurance endorsement through sponsored third-party originators. The agency is clamping down on bad business practices that lead to high delinquency and claims rates, which ultimately weaken ...

The Department of Housing and Urban Development announced it will waive for another year the requirement for small lenders to submit annual audited financial statements to the Department of Housing and Urban Development when seeking FHA approval or renewal. The waiver relates to requirements spelled out in a mortgagee letter 2010 to strengthen risk management in the FHA single-family mortgage insurance program. Issued in June 2010, Mortgagee Letter 2010-20 implemented reforms that increased the net-worth requirements for FHA-approved mortgagees, eliminated FHA approval of loan correspondents and changed ...

The Department of Housing and Urban Development has updated the FHA TOTAL Mortgage Scorecard User Guide to reflect current FHA guidance on derogatory or delinquent credit and on borrower employment history. A lender is required to downgrade a mortgage loan application to “refer” and manually underwrite the loan for cash-out refinance transactions if any mortgage trade line, including mortgage line-of-credit payments, show any mortgage delinquencies within the most recent 12 months or if it shows less than six months of payments on the existing mortgage. The same guidance applies if the loan is ...

The federal rulemaking process can be confusing at times. Currently, the Department of Housing and Urban Development sets the area-based mortgage loan limits annually and allows local interested parties and housing industry groups to appeal for increases in the FHA’s maximum mortgage limits for specific counties or metropolitan statistical areas. Any interested party may submit a request for an increase in the mortgage limits of a particular area if the party believes that the present limit does not accurately reflect the higher home sales prices in that area. Requests must be adequately supported by ...

The volume of Home Equity Conversion Mortgage loans continued to drop both on quarterly and yearly bases while the overall FHA market ended January 2012 on a weaker note compared to the same month last year. HECM production fell 11.0 percent in 2011 from the previous year to $16.9 billion and off 20.6 percent from the third to the fourth quarter. Sponsors as a share of lender originations accounted for 40.7 percent of new HECM loans originated over the 12-month period. Initial principal amount at origination totaled $10.9 billion. Wells Fargo Bank ended the year as ... (with 2 charts)

Citigroup, Inc. this week agreed to settle a civil fraud lawsuit with the Manhattan U.S. Attorney’s Office and the Department of Housing and Urban Development alleging reckless mortgage lending practices. The $158.3 million settlement was reached on Feb. 15, hours after Preet Bharara, the U.S. Attorney for the Southern District of New York, filed a civil fraud lawsuit against CitiMortgage, a subsidiary of Citibank. The suit sought treble damages and civil penalties under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the False Claims Act, a federal Civil War-era statute Congress passed to ...

Excluding streamlined FHA refinancing from the “Compare Ratio” loan review process to facilitate refinancing of underwater non-agency mortgages, as proposed by the Obama administration, would make sense. At the margin, however, the proposal would increase Ginnie Mae prepayment speeds on higher-coupon borrowers, analysts cautioned. The proposal is part of a broader administration plan for housing recovery, which calls on Congress to provide non-agency borrowers with access to low-cost refinancing through FHA, and fully streamlined refinancing for borrowers with Fannie Mae or Freddie Mac loans. Underwater borrowers who opt for streamlined refinancing in either agency or non-agency programs would have ... [one data chart]

The Department of Housing and Urban Development is going all out to bolster FHA’s capital reserves with budgetary proposals to increase annual premiums beyond the 10-basis points hike authorized by Congress late last year. The proposed premium increases are expected to complement the $1 billion that Bank of America has agreed to pay to resolve claims against the bank and its subsidiary, Countrywide Financial Corp., for alleged underwriting and mortgage origination fraud. The BofA settlement, half of which is a penalty paid directly to the FHA, is part of a $25 billion agreement among 49 state...

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...