Another piece of the regulatory jigsaw puzzle fell into place this week for the complex effort to create a uniform MBS for Fannie Mae and Freddie Mac to issue in the to-be-announced market.
The Mortgage Bankers Association is seeking clarification from FHA on a number of issues in the agency’s Single Family Housing Policy Handbook following Brian Montgomery’s swear-in as FHA commissioner. The MBA identified seven priority issues which lenders say need further guidance. The issues include the following: Deferred Action for Childhood Arrivals and employment authorization documents; Third-party underwriting and vendor verification of borrower income, employment, and assets; Student loan debt calculation; Rent below fair market; Minimum decision credit scores; Contract for deed; and Community transfer fees. In September 2017, President Trump rescinded DACA, a special program created by the Obama administration to provide temporary legal status and work permits to underage persons who entered the U.S. illegally until the government decides ...
It has been more than three years since FHA introduced a new streamlined process of identifying loan defects and their severity to minimize or avoid enforcement action and hefty penalties under the False Claims Act. Despite calls by the mortgage industry to improve and clarify the process – the Single-Family Loan Quality Assessment methodology or “defect taxonomy” – the FHA has yet to make a move to meet industry demands for more detailed defect taxonomy. Contacted for an update on the defect taxonomy, a Housing and Urban Development spokesperson said simply, “Nothing to report on this.” An outgrowth of lender concern over the government’s indiscriminate use of the FCA to prosecute mortgage fraud and recover FHA losses, the defect taxonomy establishes nine categories of loan defects in loans it endorses. The nine defect categories replaced the 99 loan defect codes that were ...
Approximately 11.5 percent of FHA single-family mortgages were in some stages of delinquency in July, 26 basis points down from the previous month, according to an Inside FHA/VA Lending analysis of FHA delinquency rates. At the end of July, FHA servicers were servicing 7,901,090 FHA loans, with top servicer Wells Fargo accounting for 19.2 percent. The share of FHA mortgages that were 30-59 days past due, which is considered early-stage delinquency, was 4.8 percent at the end of July. The share of FHA loans 60-89 days delinquent was 1.6 percent while the share of seriously delinquent loans in July was 4.02 percent. ... [Chart]
The FHA has revised the order of loss-mitigation options for FHA borrowers whose properties or jobs are located in hurricane-ravaged areas in Puerto Rico and the U.S. Virgin Islands. Under the revised policy, FHA is allowing lenders to evaluate borrowers in the affected areas first for the “disaster stand-alone partial claim” before the disaster loan modification. The agency believes this change will enable more affected borrowers to get into a permanent loss-mitigation solution and keep their mortgage in good standing. The policy specifically allows borrowers to maintain their pre-disaster monthly principal and interest payment and retain their current interest rate and term of the FHA-insured mortgage. In addition, the policy provides for the repayment of arrearages with a subordinate mortgage lien that is not repaid until the maturity of the FHA loan, the sale of the property, or the payoff of the loan, or non-FHA refinancing ...
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