An FHA proposal to establish a deadline for filing insurance claims and revise existing policies that allow punitive penalties for missing FHA foreclosure deadlines could have a chilling effect on FHA lending and servicing, analysts warned. Housing policy analysts and industry attorneys say the two-part proposal issued on July 6 raises red flags for both borrowers and servicers and could potentially cause lenders to leave the FHA single-family mortgage insurance program. The Urban Institute describes the proposed rule as “a mixed bag, but on balance far more negative than positive.” “It represents a modest improvement to very harsh rules for missing established deadlines but imposes an unrealistic timeline for filing FHA insurance claims and an overly punitive penalty for missing that timeline,” the group said. Attorneys at K&L Gates in Washington, DC, are more ominous in their assessment of the ...

Many condominium projects in California are losing FHA and VA business because their agency approvals have lapsed or are about to expire, according to lenders. In Orange County alone, about 57 percent of condo developments have FHA or VA approvals that are near expiration, said Jon Shrum, vice president of Commerce Home Mortgage in Huntington Beach, CA. It is unclear how many developments have expired approvals but the number could be significant, Shrum said. Condos accounted for 2.9 percent of total FHA endorsements as of June 30, 2015, and that share has remained flat over the first six months of 2015 and on a year-over-year basis, according to FHA data. “We’re seeing a lot of condo complexes whose approvals are expiring, and they are not even aware of it,” he said. “As an FHA and VA lender, we try to reach out to the condo homeowners associations (HOA) to make sure they retain or renew their ...

The FHA has announced a new format for reporting results of quarterly post-endorsement technical reviews of single-family loans. Previously, the loan-level findings were grouped into five broad categories: file documentation, credit/underwriting, operation deficiencies, program eligibility and collateral/asset valuation. The top five reasons for an “unacceptable” rating were provided for each category. Loans were rated as “conforming,” “deficient,” or “unacceptable,” with the last two ratings based on the magnitude of the underwriting error. With the new format, the focus will be on the most prevalent unacceptable findings, regardless of category. The period upon which the reporting is based is also different, according to FHA.Instead of reporting the review findings on a loan sample in the most recent quarter, FHA will now wait for one quarter to pass before reporting on the sample. Emphasizing the frequency of ...

The VA Home Loan Guaranty Program has issued guidance to clarify the notification requirement applicable to all holders of VA repurchase and mobile-home mortgage loans. Under existing regulation, holders of VA repurchase and mobile-home loans are required to report to the Department of Veterans Affairs any event that leads to the full payment of a VA-backed loan. The guidance requires all holders to report the status of all VA repurchase and mobile-home mortgages upon full satisfaction of the loan. All notifications must be sent directly to the chief of contract assurance at nashpm.vbaco@va.gov. For further questions, contact Ronnie Lamb at ...

The FHA is developing standards that would allow FHA financing on homes with existing Property Assessed Clean Energy liens going forward. Specifically, the guidance would require subordination of PACE financing to first-lien FHA mortgages. The FHA is also working on a monitoring mechanism to track the number of PACE loans with FHA insurance in the future, said a HUD spokesman. Mortgage market analysts say FHA’s action could lead to broader adoption of the PACE program for FHA-insured single-family homes. The Mortgage Bankers Association, in a statement, applauded the move. “This modification should allow some homeowners to install energy improvements in their home but not impede the rights of the first lien, something the original PACE program failed to consider,” said David Stevens, MBA president and CEO. PACE programs allow local governments to raise bond-funded financing to ...

Another Cut in FHA Premiums Coming This Winter? Will the FHA take the bold step of cutting annual mortgage insurance premiums this winter? It’s an intriguing question posed by Capital Alpha Partners. The research firm, in a new report, quotes what it calls a “reliable FHA bull” who “presciently foresaw” the last premium cut. Alpha cautions that its source on the matter is not betting on such a move, but raises the possibility “that the tumblers could fall into place once again.” One possible catalyst for an MIP cut would be poor results from a forthcoming Home Mortgage Disclosure Act report that shows FHA as well as Fannie Mae and Freddie Mac are not serving low-income borrowers very well. In January 2015, FHA implemented a half-percent reduction in annual mortgage insurance premiums. At the time, the Department of Housing and Urban Development predicted that 250,000 new homeowners would ...

The Blackstone Group said it has acquired a “significant” stake in The PMI Group, a once-bankrupt mortgage insurer that is now in receivership.

One possible catalyst for a MIP cut could be poor results from a forthcoming HMDA report that shows FHA as well as Fannie Mae and Freddie Mac are not servicing low-income borrowers very well.

In a recent SEC filing Two Harbors noted that after the second quarter ended it bought $4.7 billion of Fannie Mae servicing rights from an undisclosed seller.

Lawsuits filed by the city of Miami against Bank of America, Citigroup and Wells Fargo were revived by an appeals court this week. The fair housing lawsuits allege a decade-long pattern of discriminatory lending that caused the city economic harm. The lawsuits were filed in December 2013. Miami claimed that predatory lending by the banks caused minority-owned properties in the city to fall into unnecessary or premature foreclosure, which deprived Miami of tax revenue and forced the city to spend more on municipal services to combat blight. The city made claims under the Fair Housing Act and state law. The city backed up...