The reverse mortgage industry is supporting an FHA move to require a second appraisal for certain Home Equity Conversion Mortgage loans. FHA did not seek public comment on the interim policy change, which subjects all HECM loans, effective Oct. 1, to a collateral risk assessment to ensure the appraisal of the property is not inflated. The new policy has wide support in the reverse mortgage industry. A study conducted by the Department of Housing and Urban Development last year found that 37 percent of appraisals on approximately 134,000 HECMs tested positive for over-valuation. The inflated HECM appraisals were at least 3 percent higher than estimates by FHA’s proprietary automated valuation model, according to FHA Commissioner Brian Montgomery. The same study also found that higher-than-expected losses in the HECM program could be attributed in part to ...
Non-agency mortgages underwritten with just one monthly bank statement from the borrower might not meet standards set by the ability-to-repay rule, according to Eric Kaplan, director of the housing finance program at the Milken Institute’s Center for Financial Markets. Speaking at the ABS East conference produced by Information Management Network last week in Miami Beach, Kaplan was among the industry participants that raised concerns about how quickly underwriting has loosened ...
Fannie Mae and Freddie Mac shareholders received a bit of good news late last week when a judge sided with them on one of their arguments against the government.
Observers say the Consumer Financial Protection Bureau has changed its approach in fighting against lending discrimination under a new fair lending chief who has recently drawn heavy criticism for his controversial comments. “In the recent past, [the CFPB is] probably more supervision-oriented than enforcement action-oriented,” said Marshall Bell, a partner at Buckley Sandler, who advises companies on fair lending enforcement actions by the CFPB. “There has been a greater ...
With just three months left in Federal Housing Finance Agency Director Mel Watt’s term, it’s still uncertain whether he will ride out his appointment until January 6 as planned or resign because of sexual harassment allegations. Last week during a House Financial Services Committee hearing, lawmakers heard from both Watt and his accuser, Simone Grimes, about harassment that she said began in 2015. At the hearing, Watt fought back against the allegations and questioned the committee’s ...
The industry is still waiting for guidance on how mortgage-related rules were changed by the Dodd-Frank regulatory relief bill, even though most provisions took effect immediately when the bill was signed into law in May. A number of requirements were changed in regard to smaller financial institutions by the Economic Growth, Regulatory Relief, and Consumer Protection Act, including the qualified-mortgage standard. However, the industry is still awaiting guidance from the Consumer Financial ...
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