Department of Housing and Urban Development program staff and the agency’s inspector general are reportedly at loggerheads over an IG recommendation to deny FHA insurance to loans that receive downpayment assistance from programs funded through premium-pricing mechanisms. Responding to critics, the HUD OIG is standing by its audit findings, which could force the HUD deputy secretary to intervene in order to resolve the issues raised by the audit report and restore lender confidence. The report’s recommendation has alarmed lenders that participate in downpayment assistance “gift” programs run by housing finance agencies (HFAs). This prompted Ed Golding, HUD’s principal deputy assistant secretary for housing and head of the FHA, to issue a clarification of the FHA’s position on the issue. Golding’s note reaffirmed FHA’s support for certain downpayment assistance programs (DAPs), “like those run by ...
The Department of Housing and Urban Development’s proposal to remove a key disclosure in a standard HUD/VA form that comes with a residential mortgage closing document is getting flak from the mortgage industry and from some members of Congress. Leading Democrats on the Senate Banking and House Financial Services committees are pushing HUD to reconsider the proposal. They fear the proposed change would make it easier for lenders that have engaged in criminal behavior to re-enter the FHA and VA markets and continue their illegal lending practices. Among other things, HUD’s proposal would eliminate the requirement that FHA lenders certify on each loan application that they are not, or have not recently been, subject to certain charges or penalties. In their letter, Senators Sherrod Brown, D-OH, and Elizabeth Warren, D-MA, and Rep. Maxine Waters, D-CA, urged HUD to ...
A multi-million dollar false claim lawsuit filed by the Department of Justice against Wells Fargo in 2012 appears headed to trial unless both sides agree to renegotiate a settlement. Brought under the federal False Claims Act, the lawsuit has moved on to the discovery phase of the litigation following a failed attempt by the parties to reach a settlement. The DOJ has wielded the FCA effectively in the past couple of years in efforts to recover losses from lenders that allegedly committed loan fraud against the FHA. A string of FCA lawsuits against FHA lenders has resulted in approximately $4.5 billion in recoveries for the government. The 2012 lawsuit alleged that Wells Fargo misled the FHA as to the quality of underwriting on 6,320 FHA-insured loans, which later caused approximately $190 million in losses to the agency’s mortgage insurance fund. Wells Fargo has denied the allegations and maintains that, as a ...
The Federal Home Loan Bank Mortgage Partnership Finance program has announced its first security issuance with a Ginnie Mae guarantee. The $5 million security is backed by home loans originated by community banks and credit unions through the MPF Government MBS product. The Mortgage Bankers Association welcomed the new MBS, seeing it as another opportunity for all lenders to access the capital markets directly, reducing costs and increasing originations. “Many community banks use the FHLB MPF program to sell conventional mortgages into the secondary market,” observed Ron Haynie, senior vice president at the Independent Community Bankers of America. “This expansion in aggregating and securitizing government loans provides community banks with the opportunity to reach more borrowers, especially in rural and small-town markets, and to safely sell those loans to ...
The Federal Home Loan Bank’s Mortgage Partnership Finance (MPF) Program has removed certain barriers to streamline refinancing of government-backed mortgages. Effective on July 6, 2015, the MPF no longer requires minimum FICO score, maximum loan-to-value ratios or appraisals for FHA streamlined refis, VA Interest Rate Reduction Refinance loans and rural housing home loans with a U.S. Department of Agriculture guarantee. The MPF program’s participating financial institutions (PFIs) may now originate and underwrite streamline refis based solely on the requirements of the FHA, VA or the USDA’s Rural Housing Service. The program currently requires borrower and co-borrower income for government loan streamline refis for the purpose of loan presentment. “Presentment” refers to the right to require a lender to demand payment of amounts ...
HUD Re-Offers Single-Family Loans to Investors. Due to the required release of a Bidder Supplement for Single-Family Loan Sale 2015-1, the Department of Housing and Urban Development re-offered all pools in SFLS 2015-1 on July 16. The offering included National Pools and Neighborhood Stabilization Outcome Pools (NSOs). The NSOs include one pool for which only nonprofit bidders or local-government agencies were allowed to bid. Such pools consist of loans in areas that have been hard hit with foreclosures or that have experienced an economic downturn. The final NSO pool areas include Chicago; Newark, NJ; Camden, NJ; Nassau and Suffolk Counties, NY; Baltimore; and Philadelphia. The NSO pool for Detroit was earmarked for nonprofit and local-government bidders. Sellers Bring $1.53 Billion Servicing Offering to Market. Denver-based Phoenix Capital is in the market with a ...
A handful of nonbank lenders are stepping up to the plate, offering mortgages to borrowers who are just one day removed from a foreclosure or short sale. But there’s a catch: many of the lenders willing to extend such credit want at least 20 percent down. Also, as it turns out, the trend is being funded by commercial banks that are serving as the end investors in the product. Two banks – one in California and one in New York – were identified...
Originations of purchase mortgages were strong in the second quarter of 2015 and through the start of summer, according to industry participants. In recent months, demand for home purchases has been driven by current homeowners and first-time homebuyers, two groups that are particularly reliant on mortgage financing. “The purchase market has been stronger than people expected in the second quarter,” said Paul Miller, a managing director at FBR Capital Markets. Kevin Hester, chief lending officer at Home BancShares, said...
Republican congressional leadership commemorated the fifth anniversary of the Dodd-Frank Act this week by bashing the massive legislation. But there was not a single mention of making any changes to the mortgage-related provisions in the law. However, Republican leaders of the House Financial Services Committee and the Senate Banking, Housing and Urban Affairs Committee demonstrated varying degrees of optimism about enacting broader changes to the controversial law. During a Dodd-Frank discussion forum early this week at the American Enterprise Institute, HFSC Chairman Jeb Hensarling, R-TX, in response to a question about the political prospects for reform, said...
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