Regulatory burden will be the biggest issue for mortgage originators in 2012, according to recruiting firm Hammerhouse’s second annual survey of originator opinions. of the 400 active mortgage loan originators surveyed, 51 percent cited further oversight and regulation as a top concern for originators in 2012. Twenty-nine percent said that finding a committed and stable mortgage lender to work with is still one of the areas of utmost concern. Product flexibility and raising interest rates were identified as top concerns by 12 percent and 8 percent, respectively ...

The Supreme Court of the United States plans to hear oral arguments late next month in Freeman v. Quicken Loans, a case that could have wide-ranging implications for lenders subject to the Real Estate Settlement Procedures Act. The issue before the high court is whether RESPA Section 8(b) 12 USC 2607(b) prohibits a real estate settlement services provider from charging an unearned fee only if the fee is split between two or more parties.The language of that provision of the statute states that no person “shall give and no person shall accept any portion, split or ...

FHA-approved mortgage lenders are now required to disclose whether a purchase transaction was sold previously as a real estate owned property, including home equity conversion mortgages. In a general notice to lenders, the Department of Housing and Urban Development said all previous REOs sold in a purchase transaction must show their former REO case number in FHA Connection. The notice applies to HECM loans as well because an assigned HECM loan can become an REO property, explained a HUD spokesman. It became effective on Jan. 14. Meanwhile, HUD also announced ...

The Department of Housing and Urban Development has proposed to eliminate an outmoded appeals process for determining the maximum FHA mortgage loan limits in certain areas. Published in the Jan. 13 Federal Register, the proposed rule specifically would do away with regulations that allow HUD to set the area-based loan limits on a yearly basis and permit appeals of these loan limits. The appeals were once an important source of data for HUD because it allows any party to submit documentation in support of alternative mortgage limits if that party believes the limit set by HUD did not reflect the median house prices in an area. The loan limit appeals process was set ...

Fewer mortgage lenders were terminated in 2011 through the FHA Credit Watch Termination Initiative than in the preceding three years. According to the Department of Housing and Urban Development’s 2011 Credit Watch termination list, only 20 approved lenders lost their authority to originate and underwrite FHA loans. The number was way down from 2010, when a record 122 mortgagees had their origination approval agreements with HUD and the FHA ended. Poor performance of FHA-insured loans originated by the mortgagee results in a termination. Specifically, an agreement with a lender may be terminated if ... (includes one chart)

Congress should repeal legislation raising the FHA’s maximum loan limit before the agency’s losses skyrocket, triggering a massive taxpayer bailout, warned the American Enterprise Institute. In a new research paper, Peter Wallison and Edward Pinto, resident fellows at the AEI, urged Congress to correct its mistake of restoring the pre-Oct. 1 temporary maximum loan limits of $729,750 for FHA while leaving Fannie Mae and Freddie Mac at the lower “permanent” high-cost loan limit of $625,500 set by Congress in 2008. “Congress should bite the bullet – recognize the losses that are already embedded in the FHA’s insurance fund and adopt reforms to the agency’s accounting and underwriting that will stop the bleeding,” the two public policy analysts said. Last fall, the FHA came under fire from Republicans and conservatives after an independent actuarial review of the agency’s Mutual Mortgage Insurance Fund found ...

The Department of Housing and Urban Development this week announced new regulations strengthening the process by which it requires errant lenders to indemnify the agency for insurance claims paid on ineligible mortgages. The final rule is the latest in a series of steps HUD says it has undertaken to protect and strengthen the FHA’s Mutual Mortgage Insurance Fund while providing qualified borrowers access to government-backed mortgage financing. The health of the MMI fund has come under scrutiny after a recent independent audit reported further decline in the FHA’s capital reserves for unexpected losses. Testifying before Congress in December, HUD Secretary Shaun Donovan discussed ...

The Consumer Financial Protection Bureau will place an emphasis on nontraditional and subprime mortgages, according to origination exam procedures released last week for both banks and nonbanks. The new areas of emphasis largely fall under the CFPB’s recently gained authority to prohibit unfair, deceptive, or abusive acts or practices by lenders. The CFPB received the UDAP authority under the Dodd-Frank Act. In the CFPB’s originator exam procedures, the UDAP concerns are listed as ...

Insurance companies will likely increase their investment in non-agency residential MBS, with market and regulatory influences encouraging movement toward hybrid and floating-rate securities as opposed to fixed-rate bonds, according to some top securities industry analysts. The primary driver on the regulatory level is the anticipated slight rise in capital requirements expected to result from a recent action by the National Association of Insurance Commissioners, the association of state insurance regulators. On Dec. 27, 2011, the NAIC released updated pricing designations that...

There has been little progress in the development of new ways to pay for credit ratings even though researchers have seven proposed systems designed to address the conflicts of interest that have plagued the non-agency MBS market, according to a new Government Accountability Office report. The GAO noted that there were five significant ratings compensation models when it last reported on the subject in 2010, and two more have since been proposed. But the authors of these models have done little additional work to flesh them out, and none has been adopted in the marketplace, the GAO said. “Given that the [rating...