M&T Bank is in talks with the federal government to resolve an investigation of a pre-crisis sale of FHA-insured and conforming mortgages to Fannie Mae and Freddie Mac that resulted in losses for the government-sponsored enterprises. The New York-based bank disclosed the settlement discussion in a second-quarter filing with the Securities and Exchange Commission and is cooperating with the investigation. The Department of Justice and the Department of Housing and Urban Development’s Inspector General are investigating whether M&T Bank complied with FHA’s underwriting guidelines as well as with guidelines for selling loans to Fannie and Freddie. It is unclear how much the FHA paid out in loss claims in this case but investigators said that, based upon their review of a sample of FHA loans for which a claim was paid, “some of the loans do not meet underwriting guidelines.” M&T Bank could be ...

A growing number of issuers are engaging in servicing transfers prematurely or making changes to their servicing platforms, causing problems for Ginnie Mae’s monthly pool-level and loan-level reporting. A Ginnie Mae issuer “transfers servicing” when it shifts in-house servicing to a subservicer, moves servicing from one subservicer to another, or relocates servicing in-house. Effective servicing as well as accurate and timely reporting are critical to Ginnie’s mortgage-backed securities program, the company said in recently issued guidance on servicing transfers. The new policy guidance would ensure that issuers have the capacity and oversight controls at all times to meet their obligations under the Ginnie Mae MBS program. Currently, issuers are required to obtain Ginnie’s approval before engaging in any servicing transfer with a subservicer or from one subservicer to another. Effective immediately, any issuer that wishes to ...

A California federal district court’s recent decision to reject fair housing claims related to FHA loans brought by the City of Los Angeles against Wells Fargo relied heavily on the U.S. Supreme Court’s recent decision on disparate impact, according to legal experts. Specifically, the U.S. District Court for the Central District of California granted summary judgment for Wells Fargo in a Fair Housing Act case brought by the City of L.A. The suit alleged that the bank’s mortgage lending practices had a disparate impact on minority borrowers, which resulted in a disparate number of foreclosures in minority areas. Wells Fargo was accused of reverse redlining since at least 2004 by imposing different terms or conditions on minority borrowers. The suit further alleged that Wells Fargo originated eight types of “predatory” home loans targeted to minorities. These loans include “high-cost” loans, subprime loans, interest-only loans, ...

Starting in June 2016, FHA lenders will find delivering origination appraisals will be faster when the agency’s Electronic Appraisal Delivery (EAD) portal becomes fully operational. The FHA will soon begin registration of EAD portal users so that lenders can select their implementation schedule. By using the portal, FHA lenders will find it less cumbersome to do business with the FHA, minimize appraisal errors and reduce post-endorsement corrections of appraisals, the agency said. The EAD portal is a web-based platform that will allow FHA lenders and their third-party service providers to transmit single-family appraisal data and deliver appraisal reports prior to endorsement of a loan for mortgage insurance. Delivery of appraisals via the EAD portal becomes mandatory for all case numbers assigned on or after June 27, 2016. Lenders may use the phase-in implementation period to familiarize themselves and train in the ...

A Miami FHA lender and two of his associates plead guilty to a mortgage fraud scheme that cost the FHA approximately $64 million in losses. Hector Hernandez, owner of Great Country Mortgage Bankers and a real estate developer, and his business partner Aleida Fontao each pleaded guilty to conspiracy to commit wire fraud. Olga Hernandez, an underwriter for Great Country, confessed to falsifying information in borrowers’ loan applications to make them appear qualified. According to the DOJ, Great Country was a direct endorsement lender that made loans to first-time homebuyers and borrowers with imperfect credit and low credit cores. Hernandez and Fontao admitted to pressuring their loan officers to approve and close loans based on fraudulent income and employment information. Borrower credit histories were altered to make them look good. The senior underwriter admitted to providing false information to her co-workers and endorsing borrowers’ applications despite knowing that they did not qualify for the loans.

HUD Proposes to Clarify Participation of Religious Organizations in Agency Programs. The Department of Housing and Urban Development has proposed a rule that would amend current rules regarding equal participation of faith-based organizations in HUD programs. The amendments implement a 2010 presidential directive, which clarified that religious providers may compete for federal funding without losing their religious identity. The directive also provided protections for program beneficiaries, including a referral process for those opposed to religious groups that operate federally funded programs. The public has 60 days from the date of publication in the Federal Register to comment on the proposed changes. NMI Holdings Turn Profitable. NMI Holdings, parent company of National Mortgage Insurance, appears to be turning the corner toward profitability as the changes implemented by ...

Is now a time to buy into PHH?

The fastest-growing sectors of the mortgage market during the second quarter of 2015 were jumbo loans and government-insured production, according to a new Inside Mortgage Finance ranking and analysis. The conventional-conforming segment remains the biggest piece of the mortgage market, accounting for 52.8 percent of originations during the second quarter. Back in early 2013, when refinance activity accounted for three of every four new home loans, the conventional-conforming share was 68.1 percent. Lenders generated...[Includes two data charts]

The Consumer Financial Protection Bureau appears to have declared war on several decades’ worth of business practices as it encourages lenders and real estate service providers to end their “marketing service agreements” with each other. Moreover, according to industry officials, the CFPB is just getting started on its crackdown as it tries to eliminate both legal and under-the-table business arrangements where a lender – in theory – provides something of value to vendors that it’s conducting business with. The first sign that the mortgage industry is concerned...

A highway funding bill signed by President Obama late last week included a provision aimed at collecting more taxes related to interest payments on mortgages. The mortgage industry noted that it won concessions on the provision, delaying the implementation date and limiting the amount of data to be collected. The brunt of the new revenue also looks as though it will be collected from borrowers. H.R. 3236, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, included a seemingly simple provision regarding the reporting of mortgage interest on IRS Form 1098. Servicers use the form to report mortgage interest of $600 or more received during a year. The highway funding bill will require...