The Department of Housing and Urban Development’s inspector general has recommended a recall of several major policy changes HUD has made over the last two years for review and clearance, including the agency’s defect taxonomy. The HUD IG said an audit found that the department had failed to review, approve and document FHA program directives as required when implementing changes to its programs, policies and operations from July 2014 through December 2015. The findings come just as President Trump ordered a freeze on new rules, policies, directives and notices pending a review by the incoming administration. Specifically, HUD distributed at least 15 documents and implemented significant policy changes without first completing departmental clearance, the IG said. At least three draft documents were posted for public comment without obtaining full departmental clearance, the ...

Housing and Urban Secretary-Designate Ben Carson said he would want an expert in housing finance to lead the FHA and help draw disillusioned lenders back into the FHA single-family mortgage program. In a written response to questions from Sen. Sherrod Brown, D-OH, ranking minority member of the Senate Committee on Banking, Housing and Urban Affairs, Carson provided no detail on how he would entice previous lenders to return to the FHA. Carson made clear, however, that if confirmed he would seek a “strong housing finance practitioner who believes in the mission of the FHA” for the job of FHA commissioner. “We will work hard to balance mission and risk to preserve and sustain FHA now and into the future,” he wrote. “We will also use existing authorities to increase the certainty of loan eligibility in an effort to attract back many of the lenders who are no longer ...

The Mortgage Bankers Association has asked the Trump administration to help close a loophole in the Property Assessed Clean Energy (PACE) program that could put consumers at risk. In a recent public service video, Pete Mills, MBA senior vice president for residential policy and member engagement, said the MBA has been in contact with the president’s transition team to see if there is a way to incorporate consumer protections into the program. Mills noted a “significant void in consumer protection” due to the structure of PACE programs. The PACE program allows local or state governments, when authorized by state law, to finance the upfront cost of energy upgrades on commercial, residential or industrial properties. A PACE loan is repaid over a set period – typically 10 to 20 years – through a special assessment on the property on top of the owner’s annual property tax bills. It has seniority over all ...

The Department of Housing and Urban Development has issued guidance for servicing FHA-insured mortgages on properties encumbered with a Property Assessed Clean Energy (PACE) obligation. The PACE guidance establishes servicing policies and procedures that went into effect on Jan. 19, 2017. It applies to all FHA Title II forward mortgages. A PACE loan is a way to finance clean-energy improvements in residential and commercial properties to reduce energy bills and facilitate water and energy conservation. The terms and conditions of a PACE loan may vary among state, local government and programs. Generally, a PACE loan is secured and collected in the same manner as a special tax assessment on the owner’s property. Payments are not made directly to the ...

Setting aside the 25-basis-point FHA premium reduction is a good idea because it would not have done much to expand access to credit anyway, according to researchers at the Urban Institute. In a recent analysis, Laurie Goodman, co-director of UI’s Housing Finance Policy Center, and research associate Bing Bai took a closer look at the FHA pricing adjustment and found that the impact on the market would have been small.The researchers concluded that retaining the current pricing for FHA-insured mortgages would help strengthen the FHA’s financial situation and allow the Mutual Mortgage Insurance Fund to build its buffer. As one of his final official acts as secretary of the Department of Housing and Urban Development, Julian Castro announced a 25-basis-point MIP reduction for most FHA single-family mortgages. The fee change was to take effect on Jan. 27, 2017. Just hours after ...

The Department of Veterans Administration has issued guidance to clarify its new policy regarding student loans in underwriting VA guaranteed home loans. Specifically, the guidance shows lenders how to calculate a student-loan monthly payment when figuring out a VA borrower’s ability to repay. The clarification in the guidance applies to deferred student loans and the new policy will provide guidance for student loans currently in repayment or about to begin repayment within 12 months of a VA loan closing. How should a lender calculate a student loan monthly payment for loan underwriting purposes? A monthly payment need not be considered if the borrower provides written proof that the student loan will be deferred at least 12 months beyond the closing date, the guidance said. If a student loan is under a repayment plan or is about to begin repayment, the lender must consider the anticipated monthly payment in the ...

Final Civil Action: Primary Residential Mortgage. The Department of Housing and Urban Development’s Office of the Inspector General has recommended that the department’s Office of Legal Counsel acknowledged $3.13 million of a $5 million settlement agreed to by Primary Residential Mortgage is due HUD. Primary agreed last September to a $5 million settlement with the Department of Justice to resolve allegations of failing to comply with FHA requirements in connection with its origination, underwriting and endorsement of 100 FHA-insured loans. Primary’s settlement is neither an admission of guilt nor assumption of any liability that may arise from the flawed transactions, the IG said. As of Oct. 4, 2016, the settlement amount due HUD had been paid in full. Moody’s Downgrades $243 Million of FHA/VA Residential MBS. Moody’s Investors Service has downgraded the ...

The "Lost Sales Analysis" product – licensed from its developer, Equifax – helps originators determine if applicants closed a mortgage with a competitor.

The Consumer Financial Protection Bureau this week announced a Real Estate Settlement Procedures Act enforcement action against a nonbank lender that appears to reflect a traditional interpretation of the law’s anti-kickback provisions, while a flurry of new paperwork fell on its controversial legal battle with PHH Mortgage. The bureau this week brought a $3.5 million enforcement action against Prospect Mortgage, accusing the firm of illegal kickbacks for mortgage business referrals from real estate brokers, and in an unusual twist, a mortgage servicing operation. The CFPB said...

Real estate investment trust New Residential Investment Corp. has been quietly trolling for mortgage servicing assets the past year and snagged a big one this week when it agreed to buy $97 billion in agency rights from Citigroup. Now comes the hard part: incorporating the receivables into an already fast-growing portfolio and convincing regulators at the Federal Housing Finance Agency and Ginnie Mae officials that it has both the management structure and the financial wherewithal to handle so much product. According to a tally from Inside Mortgage Finance, since early December New Residential has acquired...