The Department of Housing and Urban Development is phasing out the Saver and Standard loan products under the Home Equity Conversion Mortgage program in favor of a new reverse mortgage that limits the amount of money a borrower can draw at closing to 60 percent of the value of the home. The fixed and adjustable HECM Standard and Saver options will still be available until Sept. 29, said HUD. The revised principal limit, pricing and disbursement policies for the new HECM product will become effective on Sept. 30. The revised HECM guidance also ...

The Department of Housing and Urban Development has issued guidance establishing general procedures for mortgages and foreclosures on tribal lands. The Model Tribal Mortgage Lending Code is designed to meet the needs of mortgage loan guaranty, insurance and direct loan programs of the FHA, the Home Loan Guaranty program of the Department of Veterans Affairs, and the Rural Housing Program of the Department of Agriculture. Each of the federal agencies offers various mortgage-loan programs for Native Americans who wish to live on tribal trust lands or within a tribal area. The Housing and Community Development Act of 1992 created ...

The Department of Housing and Urban Development has charged Fifth Third Bank and a mortgage broker with discrimination for allegedly requiring medical proof from a couple with disabilities who were seeking FHA refinancing. Fifth Third Bank, Fifth Third Mortgage Co. and Cranbrook Mortgage Corp. were accused of violating the Fair Housing Act, which makes it illegal for creditors to deny or discriminate against borrowers based on disability, race, color, religion, national origin, gender or family status, including imposing different application or criteria on protected classes. The married couple, whose names HUD withheld, receive ...

Many of the lenders with high default rates are smaller companies while those with larger portfolios tend to perform better than the national average, according to Inside FHA Lending’s analysis of compare ratios on two-year FHA loan portfolios. The compare ratio is the percentage of a lender’s default and claim rate compared to the national average. It is shown as a numerical value, which HUD uses to determine lender performance. A compare ratio of over 150 percent will land a lender on HUD’s watch list and a ratio greater than 200 percent could result ... [1 chart]

FHA lenders have gradually stretched to originate loans for borrowers with more modest credit scores in recent quarters, although these borrowers typically are better positioned to keep up with their payments, according to an Inside FHA Lending analysis of data released by the agency. The average credit score for single-family loans endorsed in the second quarter of 2013 was 693 – the lowest such average in nearly four years. This is partly the result of a shift toward more purchase-money mortgages, which generally have ... [1 chart]

Parties to trustee lawsuits challenging a city’s use of eminent domain to deal with foreclosures are gearing up for a face-off at an injunction hearing Sept. 13 in federal district court in San Francisco. The city of Richmond, CA, the defendant in the lawsuit, has suffered setbacks in the last few days and has yet to make good on its threat to initiate eminent domain proceedings after investor trustees rejected its offer to purchase distressed mortgages for restructuring. Wells Fargo and Deutsche Bank, acting as trustees for a group of ...

Sen. Elizabeth Warren, D-MA, is asking the Department of Justice to explain why it failed to get “adequate” compensation from major mortgage servicers for fraud committed against the FHA. In an Aug. 21 letter to U.S. Attorney General Eric Holder, Warren raised concerns about the $225 million paid by five servicers last year to obtain releases from False Claims Act liability stemming from fraudulent mortgage insurance claims the servicers submitted to FHA and other agencies from 2008 to 2010. The FHA’s woeful financial condition led to legislative reform efforts, including the ...

The FHA is easing the waiting period and eligibility criteria for certain borrowers with previous bankruptcies, foreclosures, deeds-in-lieu of foreclosure and short sales who would like to purchase a home again. According to Mortgagee Letter 2013-26, borrowers who may be otherwise ineligible for an FHA-insured mortgage due to the agency’s required waiting period may now be able to apply for a new purchase mortgage loan because of the shortened waiting period and if they meet the criteria. This latest initiative to help borrowers whose credit had been impaired by the financial crisis is called ...

The reverse mortgage lending industry is working with the Department of Housing and Urban Development to implement two policy changes that would strengthen the FHA’s Home Equity Conversion Mortgage program. One policy change involves the development of a new HECM option that combines features of the fixed-rate, full-draw HECM Standard and the HECM Saver, according to Peter Bell, president and chief executive officer of the National Reverse Mortgage Lenders Association. HUD eliminated the standard 30-year, fixed-rate HECM in April because ...

Lenders must consider debt disputes, collection accounts and judgments in analyzing a borrower’s credit worthiness because they are indicators of the borrower’s ability and willingness to meet his or her credit obligations, according to the FHA. In recently issued guidance, the FHA said lenders should analyze all collections and judgments, past and present, because they may indicate a borrower’s disregard for credit obligations. Such analysis helps decide whether a loan should be approved for FHA insurance, the agency said. The FHA amended its guidance on collections and disputed accounts in Mortgagee Letter 2013-24, and further clarified ...