Federal prosecutors this week sued an FHA lender to recover hundreds of millions of dollars in paid claims in connection with mortgage loans originated through branches that were not approved by the Department of Housing and Urban Development. A lawsuit filed by the U.S. Attorney in Manhattan district court this week alleged that Allied Home Mortgage Corp., President and CEO Jim Hodge and Executive Vice President Jeanne Stell engaged in reckless mortgage lending, flouted FHA mortgage insurance requirements and repeatedly lied about compliance. Such actions, the suit alleged, subsequently led to...

Old Republic International Corp. intends to re-enter the mortgage insurance business with a revamped business risk model, fresh capital and a new subsidiary if it obtains approval from state regulators and its two major policyholders, Fannie Mae and Freddie Mac. The Chicago-based company, which also operates general and title insurance segments, still maintains a long-term strategic interest in mortgage insurance despite the negative trends in the sector, according to company executives during a recent conference call with analysts and investors. “But at this point, we have little, if any, idea as to the...

Raj Date, special adviser to the Treasury and the acting head of the Consumer Financial Protection Bureau, ran headlong into considerable resistance from Republicans on a House subcommittee this week over the scope of the bureau’s authority and its effectiveness, especially in relation to the mortgage lending activities of community banks. Date was the sole witness to appear before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit this week as it reviewed the first 100 days of the CFPB. Rep. Donald Manzullo, R-IL, put it most forcefully for the GOP opposition when he...

A niche FHA mortgage insurance program could become a significant tool to help address the massive inventory of real estate owned, and soon-to-be REO, that continues to weigh on the housing market, some industry observers say. The FHA 203k program was designed to help borrowers who want to purchase a “fixer-upper” home. Started back in 1978, the program insures long-term loans that include both the purchase and rehabilitation of the property. But in 1996, the Department of Housing and Urban Development put a moratorium on issuing 203k loans to private investor-owners, citing instances of fraud and abuse and the inability to...

Under fire by its official watchdog, as well as by a senior House Democrat, the Federal Housing Finance Agency last week announced it has directed Fannie Mae and Freddie Mac to transition away from the GSEs’ current foreclosure attorney network programs. FHFA’s directive – which it says is in synch with the Finance Agency’s Servicing Alignment Initiative to produce uniform foreclosure processing standards – will move toward a system where mortgage servicers select qualified law firms that meet certain minimum, uniform criteria. Under current practice in certain states, each GSE designates law firms eligible to undertake foreclosure work, and mortgage servicers then select and work with these firms, according to the FHFA.

Long awaited alterations to the Home Affordable Refinance Program announced by the Federal Housing Finance Agency this week are expected to be of some relief to underwater homeowners but it will do little to endear the Finance Agency to its critics, particularly among House Democrats, who think the FHFA should do more.Among the new HARP enhancements is the elimination of certain risk-based fees for borrowers who refinance into shorter-term mortgages and lower fees for other borrowers. Also removed is the current 125 percent loan-to-value ceiling for fixed rate mortgages backed by the government-sponsored enterprises.

In a major shakeup of its executive suite, Freddie Mac’s chief executive will step down next year while three members of the GSE’s board of directors are also headed for the exits, the Federal Housing Finance Agency announced this week.Freddie CEO Charles Haldeman Jr. informed the board of his desire “to step down sometime in the coming year,” according to the FHFA announcement. Freddie did not comment on Haldeman’s resignation, nor did it make the announcement itself, referring to the Finance Agency’s official press release in its Securities and Exchange Commission 8K filing this week.

New regulatory requirements – including a controversial plan to assign ratings on a rotating basis – are encouraging firms to test the traditional approaches to rating MBS and ABS, but some observers say the reliance on an issuer-pay business model will be tough to change. New rating services are coming up with new ways to assess risk with more dynamic, ongoing reviews and more sources of information, and they’re less reliant on being fed information, said Stephen Kudenholdt, co-chair of the capital markets practice at SNR Denton. But the expectation that the market would shift to an investor-paid model clearly hasn’t...

President Obama nominated Carol Galante to become the next Commissioner of the FHA, an agency that continues to adjust to a bigger role in the mortgage market. Galante has served as deputy assistant secretary for multifamily housing at the Department of Housing and Urban Development since 2009 and has filled in as acting FHA commissioner since the departure of David Stevens. She worked for nearly a quarter of a century at BRIDGE Housing, a company that specializes in affordable housing development. Galante definitely has the management and leadership experience for the post, said Brian Chappelle, co-founder of Potomac Partners LLC. “If...

Private mortgage insurer PMI Group Inc. is assessing its options, including a possible restructuring, after state regulators seized its main unit, PMI Mortgage Insurance Co., last week. Headquartered in Walnut Creek, CA, but incorporated in Arizona, the company was seized by Christina Urias, director of the Arizona Department of Insurance, two months after it was placed under regulatory supervision following a recent “rapid increase in losses that has adversely affected its solvency and that of its affiliates.” On its website, PMI Group informed its clients that Urias has obtained an order “directing full and exclusive...