The Department of Housing and Urban Development is seeking comment on a proposed rule that would expand FHA-insured lending in rural areas. Published in the Aug. 26 Federal Register, the proposed rule would allow direct lenders in the Farm Credit System to participate in the FHA mortgage insurance programs as approved mortgagees or lenders. Although participation in the mortgage insurance programs is voluntary, Farm Credit System financial institutions must comply with FHA approval requirements. The comment period ends Oct. 25. Recent difficulties in mortgage finance markets have reduced the availability of housing credit in rural areas, where the FHA currently does very limited business. Consequently, HUD proposes ...

The Department of Housing and Urban Development recently provided guidance to housing counselors and lenders regarding changes made to the layout and administration of HUD’s Certificate of Home Equity Conversion Mortgage Counseling. HUD’s Certificate of HECM Counseling, identified as Form HUD 92902, is provided by housing counselor as proof that a homeowner interested in pursuing a HECM product has received information about the implications of and alternatives to a reverse mortgage. The HECM counselor must adhere to all of FHA’s guidelines regarding information that must be provided to the HECM borrower. With respect to the form’s layout under Mortgagee Letter 2011-31, HUD has inserted ...

Senate Republicans’ commitment to block the confirmation of any nominee to the Consumer Financial Protection Bureau will prevent the agency from deploying all of its supervisory and enforcement powers – at least as far as nonbanks are concerned – and that’s infuriating Senate Democrats. Partisan squabbling was on full display this week as the Senate Banking, Housing and Urban Affairs Committee considered President Obama’s nomination of Richard Cordray, currently chief of enforcement for the CFPB, to be the first director for the fledgling agency. “The purpose of today’s hearing should be to consider whether Mr. Cordray is qualified for that job. Instead...

Iowa Attorney General Tom Miller this week sought to allay concerns of the New York congressional delegation, denying that Empire State’s attorney general was ousted from an executive committee negotiating a nationwide foreclosure settlement with major banks to silence legitimate opposition. Responding to a letter from NY House Democrats, Miller said New York AG Eric Schneiderman was invited to join the core negotiating team of state AGs in June but refused. Miller, who is leading the negotiations, said Schneiderman “voluntarily” walked away from the negotiating table to “pursue another path.” Miller said Schneiderman was asked to...

The Federal Housing Finance Agency this week defended its massive legal action against many of the nation’s largest financial institutions on behalf of Fannie Mae and Freddie Mac over the government-sponsored enterprises’ losses on non-agency mortgage backed security purchases. The Finance Agency contends that 17 financial institutions sold Fannie and Freddie some $196 billion of MBS, mostly between 2005 and 2008, that caused losses to the GSEs for which there should be compensation. Filed late last week in federal and state courts in New York and in federal court in Connecticut, the lawsuits seek damages and civil penalties under... [Includes one data chart]

Experts agree that the federal government plays too big a role in the housing market, but panelists at a Federal Reserve conference last week said there is little consensus on how to fix it. FHA is “not our silver bullet,” observed Janis Bowdler, a director at the National Council of La Raza. “Surely, it’s stepping in while we are in a tight credit market. But it’s no long-term solution.” One problem with FHA is that lenders aren’t required to offer it, which means entire communities are left “credit-starved,” Bowdler said. “This leaves them in the same vulnerable position to predatory lenders that they were in five or six or 10 years ago,” she...

The Securities and Exchange Commission is weighing possible changes to a key rule that allows MBS and ABS issuers to avoid being classified as investment companies. Although the agency’s primary focus is on whether it should ditch existing references in the exemption to credit ratings, officials are also looking at other potential changes. Rule 3a-7 was promulgated nearly 20 years ago so that asset-backed securities issuers would not be classified...

The Securities and Exchange Commission this week asked for public comment as it begins to reconsider whether mortgage real estate investment trusts and other mortgage-related pools that acquire mortgages and mortgage-related instruments should remain exempt from the requirements of the Investment Company Act. The SEC said it is concerned that some mortgage-related pools, as pooled investment vehicles, may raise...

The American Securitization Forum this week announced a credit risk-retention model which, it claims, imposes requirements more powerful than those proposed by federal regulators. The “ASF Model Residential Mortgage-Backed Securities Principles” spell out steps for investigating, resolving and enforcing remedies in connection with representations and warranties in non-agency MBS transactions involving newly originated mortgages. Essentially, the ASF model requires...

The financial crisis and the housing meltdown have cast unprecedented doubt about the virtue of homeownership, and many experts at a conference sponsored this week by the Federal Reserve acknowledged that homeownership has lost its universal appeal. “For low-income households I do think it’s more risky because it’s such a large share of their assets, such a large share of the wealth, so a price decline has a disproportionate effect,” explained Karen Pence, assistant director of the division of research and statistics for the Fed. “I think it’s more risky for low-income households just because it’s such a big part of their portfolio. I think it’s...