The FHA warned it would soon be sending notices to lenders who are overdue in completing their annual recertification packages, a rule violation that could land them before the Mortgagee Review Board for disciplinary action. Lenders who were unable to submit their recertification packages containing the required financial reports, annual recertification statements and the renewal fee payment will be receiving notices of deficiency from the FHA. FHA extended the filing deadline to June 27, 30 days after the deployment of the new Lender Electronic Assessment Portal (LEAP) system used in the lender recertification process. Traditionally, lenders were required to access both FHA Connection and Lender Assessment Sub-System (LASS) to complete the annual recertification process. LEAP will now enable lenders to complete all ...

Total originations of FHA forward and home-equity conversion mortgages across the U.S. and in the territories increased from the first to the second quarter, with California accounting for the lion’s share of all FHA loans produced by state. Production of FHA-insured forwards, including jumbo loans, and HECM loans during the first half of 2014 totaled $68.3 billion, a whopping 49.0 percent drop from volume reported over the same period last year. On the other hand, total originations in the 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands rose 11.5 percent quarter-over-quarter. Originations totaled $36.1 billion in the second quarter. Forward mortgages accounted for $61.1 billion of new FHA-insured loans originated during the first six months while HECMs comprised $7.2 billion of loans produced over ... [ 1 Chart ]

The FHA has announced plans to modify the Computerized Homes Underwriting Management System (CHUMS) while work continues on a new, improved replacement system. CHUMS provides support for automated processing, analysis and screening of appraisal documents. Specifically, it is used on first-time homebuyer loan applications, Home Equity Conversion Mortgages, Section 203(k) property rehabilitation loans, VA-certified FHA loans and other FHA-approved programs. The system is also used to assist in evaluations of borrowers’ mortgage credit and as a complement to FHA’s credit assessment tool, TOTAL Scorecard. A new Loan Application Management System (LAMS) is in development to replace CHUMS completely in about five years. In its initial release, LAMS will enable the Department of Housing and Urban Development to start collecting and incorporating ...

Missing or incorrect files was the most common defect found in 49 percent of the loans, of which 29 percent were deemed initially unacceptable. Flawed credit or underwriting came in second at 26 percent, of which 67 percent were rated unacceptable. Program eligibility and operational deficiencies each had a 9 percent share while defective appraisals were common in 7 percent of all reviewed loans. Properly mitigated, the percentage of initially unacceptable loans usually drops to about 7 percent. The FHA tends to blames lenders for the defects but the bottom line is mistakes cut both ways, according to compliance experts. “Lenders make mistakes that can easily be corrected,” said one compliance consultant. “FHA also can be guilty of causing a mistake.” For example, poor communication and lack of clarity caused lenders to check a yes/no box to confirm whether or not they ...

The Department of Housing and Urban Development’s Office of the Inspector General has announced a total of $581.8 million in recoveries in September to strengthen and stabilize the ailing Mutual Mortgage Insurance Fund. The recovered amounts are part of larger settlements between the federal government, U.S. Bank and Bank of America to resolve allegations of false claims and mortgage fraud in relation to FHA-insured mortgages. Both banks were investigated separately by the HUD-OIG, Department of Justice and U.S. attorneys’ offices in Michigan, Ohio and New York in connection with their lending and underwriting practices and quality-control programs for FHA-insured loans. On June 30, U.S. Bank entered into a settlement agreement to pay $200 million, of which nearly $144.2 million went to the MMI Fund. The bank admitted to poor underwriting, flawed quality control and ...

The Department of Housing and Urban Development’s Inspector General has recommended that HUD require an approved FHA lender to reimburse the FHA $1.6 million for improper claims on 11 preforeclosure sales, including lender and borrower incentives. An IG audit of EverBank of Jacksonville, FL, attributed FHA’s losses to the bank’s failure to determine whether or not defaulted borrowers qualified for the agency’s preforeclosure sale program. The IG looked into the bank’s short sale activities because it had the highest preforeclosure sale claims in Florida. More than 50 percent of EverBank’s FHA claims were from short sales, with more than $12.9 million paid from 2011 through 2013, the audit found. In response, EverBank questioned the accuracy of the IG report. The bank maintained that certain allegations do not constitute violations of ...

FHA reverse mortgage volume fell in the second quarter as well as during the first six months of 2014 as regulatory changes reduced profitability and increased the cost of originating the government-backed product, according to Inside FHA Lending’s analysis of agency data. Home equity conversion mortgage volume declined 19.9 percent quarter-over-quarter and dropped 9.0 percent during the first half of the year compared to the same period last year. HECM lenders reported $7.2 billion in total originations in the first half, with purchase loans accounting for 93.6 percent. Fixed-rate HECMs comprised only 22.2 percent of total volume as most borrowers turned to adjustable-rate HECMs for their reverse-mortgage needs. The top five HECM lenders – American Advisors Group, Reverse Mortgage Solutions, One Reverse Mortgage, Liberty Home Equity Solutions and Proficio Mortgage Ventures – accounted for ... [1 chart ]

Like all new automated systems, FHA’s Lender Electronic Assessment Portal (LEAP 3.0) was not without technical glitches when the agency rolled it out back in May. Users immediately reported difficulties in certain functions, such as adding new branches, making changes to existing branches and changing cash flow accounts. The FHA ever since has been working to iron out the kinks to allow lenders to submit their annual recertification packages with ease. So far, certain fixes have been implemented allowing lenders to add, edit and delete branch and regional managers, delete attachments uploaded to LEAP and properly update cash flow accounts in the database. The FHA also changed the way lenders edit their principal affiliations in LEAP. In addition, newly approved lenders now have access to the new system. Furthermore, the FHA expanded to 250 the maximum allowable characters lenders may use when ...

President Obama this week released his agenda for creating economic opportunity for millennials, including greater access to mortgage credit through FHA. While the economy has recovered and there has been some improvement in the housing market, millennials are on a much slower pace toward homeownership than previous generations, the president said. Many are in rental housing, ready to become homeowners but are locked out by the tough, restrictive lending environment, he added. Millennials – identified as those born between 1982 and 2004, also known as Generation Y – are finding it harder to purchase homes because of lender overlays, high mortgage insurance premiums and high downpayment requirements. It also has been difficult for anyone with a credit score below 680 to obtain a purchase-mortgage loan. In his agenda, Obama expressed concern over the ...

Ginnie Mae issuance for the first nine months of 2014 totaled $207.5 billion as government-backed purchase-mortgage activity picked up in the third quarter, according to an analysis of agency data. New issuances rose 19.8 percent from the second quarter. FHA loans accounted for $116.9 billion of new Ginnie Mae issuances while VA and the Rural Housing Development funneled $75.9 billion and $14.2 billion, respectively, of new loans into Ginnie Mae pools. Mortgage securities backed by home-equity conversion mortgages are not included. Purchase mortgages totaling $140.6 billion comprised the bulk of new issuances over the nine-month period while the share of refinances totaled $49.8 billion. Modified loans accounted for $17.1 billion. Most of the FHA and VA loans originated during the first nine months came through the ... [ 2 charts ]