The Department of Housing and Urban Development is seeking comment on a revised proposal to reduce the amount of closing costs a seller may pay on behalf of a borrower purchasing a home with an FHA-insured mortgage loan. The seller-concession reduction proposal is part of a series of steps that HUD has undertaken to restore the FHA Mutual Mortgage Insurance Fund’s capital reserve account while preserving the FHA as a source of affordable mortgage credit for low and moderate income and first-time homebuyers. Current HUD policy allows up to 6-percent seller concessions. Payments under the cap are considered ...

Failure by a sponsored third-party originator or by an FHA-approved mortgagee acting as a sponsored TPO to comply with FHA requirements will result in drastic administrative action that may include loss of FHA approval and civil penalties, the Department of Housing and Urban Development warned. The warning came as HUD clarified the requirements for the origination, closing and submission of mortgage loans for FHA insurance endorsement through sponsored third-party originators. The agency is clamping down on bad business practices that lead to high delinquency and claims rates, which ultimately weaken ...

The Department of Housing and Urban Development announced it will waive for another year the requirement for small lenders to submit annual audited financial statements to the Department of Housing and Urban Development when seeking FHA approval or renewal. The waiver relates to requirements spelled out in a mortgagee letter 2010 to strengthen risk management in the FHA single-family mortgage insurance program. Issued in June 2010, Mortgagee Letter 2010-20 implemented reforms that increased the net-worth requirements for FHA-approved mortgagees, eliminated FHA approval of loan correspondents and changed ...

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...