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 ...

Ginnie Mae will publish, in advance, the CUSIP and pool information for multiple issuer pools (MIP) on its website for the current month, plus the upcoming three months of issuance. The information will be published by pool term, pool type and security interest rate. This enhancement applies to all securities with an April 1, 2012, issue date and thereafter. According to Ginnie Mae, publishing the CUSIP and pool numbers will improve issuers’ ability to manage their loan pipelines and MIP loan package submissions before the pool is finalized. Both the finalized CUSIP and pool numbers as well as the future CUSIP and pool numbers for MIPs will be ...

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 Department of Housing and Urban Development this week announced FHA insurance premium increases that will add an estimated $1 billion to the agency’s Mutual Mortgage Insurance Fund, which may be enough – along with hefty penalties on lenders – to stave off a government bailout. The annual and upfront premium increases for all forward mortgages are part of an effort to bolster the FHA’s capital reserves for unexpected losses and ease Congress’ fear of a taxpayer bailout of the FHA. The Obama administration’s proposed fiscal 2013 budget suggested that the MMI Fund could need a $668 million infusion this...

The Department of Housing and Urban Development and Flagstar Bank have agreed on a structured payment scheme to ease the financial impact of a $133 million settlement of a lawsuit alleging fraudulent mortgage lending practices and improper approval of FHA home loans. The settlement occurred on the same day the civil fraud lawsuit was filed under the False Claims Act by the U.S. Attorney for the Southern District of New York. The suit alleged that Flagstar, the ninth largest lender in 2011, issued false certifications that the loans met all FHA requirements for insurance even though the due diligence...

There was agreement this week during a hearing of the Senate Banking, Housing and Urban Affairs Committee that recent efforts to expand the government’s refinance program are slowly having the desired effect, but the direction of refi policy to come remains an open dispute among officials. Department of Housing and Urban Development Secretary Shaun Donovan said the Obama administration is “encouraged thus far” by the 50,000 homeowners who have already refinanced their mortgages under HARP 2.0, the revamped Home Affordable Refinance Program. “These changes have met with a very positive response from homeowners....

Bank of America is challenging new federal charges that it discriminated against loan applicants with disabilities, arguing that it applied conservative FHA underwriting standards in three cases covered by a lawsuit brought by the Department of Housing and Urban Development. HUD accused BofA of imposing unnecessary and burdensome requirements on borrowers who depended on disability income to qualify for their mortgages. The bank also allegedly required some disabled borrowers to provide physician statements to qualify for their mortgage financing. The charges are based on a HUD-initiated...

The U.S. Court of Appeals for the Second Circuit is apparently on the verge of deciding in which jurisdiction the pending $8.5 billion Bank of America/Countrywide residential MBS representations and warranties settlement with Bank of New York Mellon and investors will be finalized. The final outcome is expected to influence similar disputes involving other large mortgage originators, but probably on a smaller scale. Last week, the appeals court held a hearing to determine if the case should be moved back to New York state court, which would accelerate a conclusion of the settlement. “A final decision from...

Some 42 months into the government conservatorship of Fannie Mae and Freddie Mac “with no end in sight,” the GSEs’ regulator has planned out the two companies’ next steps but it says Congress needs to have the last word as to the final fate of Fannie and Freddie. Federal Housing Finance Agency Acting Director Edward DeMarco this week dispatched his “strategic plan” to House and Senate leaders in which the Finance Agency outlines the next phase of conservatorship for the GSEs while issuing a call to action to lawmakers.

The Federal Housing Finance Agency needs to do more to oversee the legal expenses of Fannie Mae and Freddie Mac, though it has limited tools at its disposal to curtail GSE litigation, according to the FHFA’s Office of Inspector General. The OIG’s report, issued this week, noted that the two GSEs have racked up a significant number of billable hours, both before and after being placed in government conservatorship in September 2008, for their defense in lawsuits, investigations and administrative actions.