New federal restrictions on mortgage broker compensation will likely add momentum to the shift away from wholesale mortgage production programs and ultimately dampen MBS prepayment speeds, according to an analysis by Barclays Capital. Most major primary market lenders have been moving away from the broker market since the housing sector began to crumble in 2007. According to Inside Mortgage Finance, an affiliated newslet-ter, the broker share of new mortgage originations peaked in 2005 at 31.3 percent of primary market lending. Between 2005 and 2007, brokers accounted...

The Mortgage Bankers Association has asked the FHA to clarify its view of “credit approval” for loan applications received prior to Oct. 1 in connection with the possible implementation of lower loan limits on that date. In a letter to the Department of Housing and Urban Development, the MBA made clear it continues to support the current, temporary loan limits. However, should the loan limit rollback occur as scheduled, the FHA must ensure that the change is implemented without disrupting the FHA financing process for consumers, the trade group said. In this regard, the MBA asked the FHA to explain ...

Many lenders may have to reconsider the costs and benefits of FHA lending in light of the federal government’s increasingly litigious approach to redressing FHA losses, warned industry risk experts. Not only has the government begun using the False Claims Act (FCA) with alarming frequency in alleged mortgage fraud cases involving taxpayer funds, but it also has found a companion statute in the federal Program Fraud Civil Remedies Act (PFCRA) of 1986 to increase recovery of FHA losses. In a recent client alert, Canfield & Associates, a government relations and consulting firm in Alexandria, VA, warned ...

The Department of Housing and Urban Development is in conciliation talks with 22 FHA-approved mortgage lenders about “credit overlay” practices that resulted in a denial of credit to FHA-qualified borrowers. Agreements between HUD and the lenders may be announced within the next few weeks, said a HUD spokesperson, who declined to comment further because the issue is still in mediation. Discussion between HUD and the lenders have been ongoing since the National Community Reinvestment Coalition, an association of more than 600 community-based organizations, filed individual complaints against the 22 lenders late last year for alleged ...

The Department of Housing and Urban Development has quietly announced preparations for the termination of FHA HOPE for Homeowners, a program that promised more than it could deliver. In a mortgagee letter, HUD laid out instructions on how to process cases during the program’s phase-out period. Launched in September 2008 to assist homeowners at risk of foreclosure, the H4H program will end on Sept. 30, 2011. July 29 is the last day to obtain a new H4H case number for lenders seeking to refinance borrowers into H4H loans after this date, while July 16 is the deadline ...

A proposed rule that would allow lenders in the federal Farm Credit System to participate in the FHA mortgage insurance programs is being closely scrutinized at the Department of Housing and Urban Development. The measure is one of several regulatory actions taken by HUD in response to President Obama’s directive in January calling for a government-wide review of rules and regulations. The review is aimed at weeding out rules that are outdated, unnecessary, excessively burdensome, and redundant or in conflict with other federal rules. Twenty rules, including the proposed FHA approval for FCS lenders, are now being streamlined or rewritten to ease the regulatory burdens of small businesses and spur economic growth. The proposed changes build ...

The Department of Housing and Urban Development is finalizing proposed guidelines streamlining reporting requirements for small FHA-approved lenders. Under the proposed guidelines, federally supervised, FHA-approved lenders with under $500 million in total assets would have alternative requirements for reporting their financial condition. FHA lenders are currently required to submit audited financial statements as a condition for FHA lender approval or renewal. In lieu of an audited financial statement, the proposed rule would require smaller supervised lenders to submit a copy of the unaudited regulatory report they provide ...

The Department of Housing and Urban Development is increasing its focus on tighter underwriting with actions against pregnancy discrimination in home mortgages. The department recently charged Mortgage Guaranty Insurance Corp., PNC Mortgage and others for allegedly refusing to provide mortgage insurance on a Pennsylvania loan unless the borrower returned to work from maternity leave. The FHA requires approved lenders to review a borrower’s income to determine his or her ability to repay the mortgage. However, lenders are prohibited from inquiring about future maternity leave. According to HUD’s complaint, MGIC notified ...

Mortgage compliance experts are bracing for up to 10,000 pages of new Dodd-Frank Act regulations that will make mortgage lending exponentially more difficult, according to industry officials at this week’s regulatory compliance conference sponsored by the American Bankers Association. “Dodd-Frank is going to increase the compliance burden, the risk of non-compliance and the cost of mortgage lending,” said David Kelly, executive vice president in charge of loan operations for FirstBank Data Corp. The new regulatory environment will feature...

Top servicers flagged for their faulty foreclosure practices will have an extra month to submit their mitigation plans, although federal regulators continue to bear down on the industry and are starting to withhold loss mitigation incentive payments from some companies. The Office of the Comptroller of the Currency and the Office of Thrift Supervision this week said they will give 12 servicers subject to consent orders extra time to submit “comprehensive action plans” that detail the financial resources the bank will commit to...