While the FHA’s share of the primary insurance market has dropped significantly since premiums were hiked in early 2013, the VA program and the rural housing loan program run by the Department of Agriculture are going strong, according to agency officials. During a panel discussion at the Mortgage Bankers Association annual convention this week, VA and Rural Development executives said that both agencies have been quietly building mortgage market share. Jeffrey London, deputy director of the VA’s loan guaranty service, reported that purchase-mortgage VA loan originations were up 11 percent in fiscal 2014, with 40 percent of the business being first-time homebuyers. Of that group, 80 percent took no-downpayment VA loans, the biggest selling point in the program, along with its relatively low costs. In earlier remarks, Housing and Urban Development Secretary Julian Castro revealed that ...
Buyers, sellers and real estate agents have until the end of 2014 to take advantage of the property-flipping waiver that the FHA had put in place in 2010 to increase the availability of affordable homes for first-time homebuyers and other purchasers. After Dec. 31, the Department of Housing and Urban Development will let the waiver lapse subjecting investors again to property-flipping prohibitions. Lenders say the waiver program worked well in underserved and hard-hit areas but HUD believes the program’s initial objectives have been attained and that prudence and vigilance are again called for to prevent abuses and potential losses. As a rule, the FHA prohibits “property flipping” in which a recently acquired property undergoes a minor makeover, is appraised with an artificially high value and is resold for a considerable profit. Most property flipping occurs within a matter of days, which prompted HUD to ...
The FHA warned it would soon be sending notices to lenders who are overdue in completing their annual recertification packages, a rule violation that could land them before the Mortgagee Review Board for disciplinary action. Lenders who were unable to submit their recertification packages containing the required financial reports, annual recertification statements and the renewal fee payment will be receiving notices of deficiency from the FHA. FHA extended the filing deadline to June 27, 30 days after the deployment of the new Lender Electronic Assessment Portal (LEAP) system used in the lender recertification process. Traditionally, lenders were required to access both FHA Connection and Lender Assessment Sub-System (LASS) to complete the annual recertification process. LEAP will now enable lenders to complete all ...
Total originations of FHA forward and home-equity conversion mortgages across the U.S. and in the territories increased from the first to the second quarter, with California accounting for the lion’s share of all FHA loans produced by state. Production of FHA-insured forwards, including jumbo loans, and HECM loans during the first half of 2014 totaled $68.3 billion, a whopping 49.0 percent drop from volume reported over the same period last year. On the other hand, total originations in the 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands rose 11.5 percent quarter-over-quarter. Originations totaled $36.1 billion in the second quarter. Forward mortgages accounted for $61.1 billion of new FHA-insured loans originated during the first six months while HECMs comprised $7.2 billion of loans produced over ... [ 1 Chart ]
The CFPB is proposing to implement a limited “no-action letter” policy to reduce the regulatory uncertainty that may exist for certain emerging products or services which stand to benefit consumers. This proposed policy is suited for new financial products or services where there may be uncertainty about how they fit in the existing statutes and regulations – assuming such products or services hold the promise for significant consumer benefit, according to CFPB Financial Analyst Dan Quan. The proposed policy would allow bureau staff to send a no-action letter to a company informing it that the CFPB isn’t planning to recommend initiation of supervisory or enforcement action in connection with a firm’s offering or provision of a new product. Also, an NAL ...
A routine supervisory examination ultimately led the CFPB to bring a $3.1 million enforcement action against M&T Bank because of its allegedly deceptive advertising practices for checking accounts. The bureau accused M&T Bank, based in Buffalo, NY, of luring in consumers with promises of “no strings attached” free checking, without disclosing key eligibility requirements. When consumers failed to meet the requirements, M&T automatically switched them to checking accounts with fees, the CFPB alleged. Under the terms of the consent order, announced last week, the bank will provide $2.9 million in refunds to approximately 59,000 consumers (roughly $49.15 each), and will pay a $200,000 penalty for the alleged violations. According to the consent order, during the period between Jan. 1, 2009, ...
The CFPB’s recent, high-profile $35 million enforcement action against Flagstar Bank over its mortgage servicing practices got the attention not only of the industry but also many legal professionals serving it. One industry legal expert, speaking off the record, said it was heavy handed, at best, for the CFPB to use its authority over unfair, deceptive or abusive acts or practices (UDAAP) to assert legal claims over activities that took place prior to its servicing rule. “It somewhat makes a mockery of the whole rulemaking process by effectively implementing regulations before the regulations were even proposed, much less finalized,” he said. “It also reinforces the fear of making loans to any borrower who presents any risk of default because there ...
Missing or incorrect files was the most common defect found in 49 percent of the loans, of which 29 percent were deemed initially unacceptable. Flawed credit or underwriting came in second at 26 percent, of which 67 percent were rated unacceptable. Program eligibility and operational deficiencies each had a 9 percent share while defective appraisals were common in 7 percent of all reviewed loans. Properly mitigated, the percentage of initially unacceptable loans usually drops to about 7 percent. The FHA tends to blames lenders for the defects but the bottom line is mistakes cut both ways, according to compliance experts. “Lenders make mistakes that can easily be corrected,” said one compliance consultant. “FHA also can be guilty of causing a mistake.” For example, poor communication and lack of clarity caused lenders to check a yes/no box to confirm whether or not they ...
The Department of Housing and Urban Development’s Office of the Inspector General has announced a total of $581.8 million in recoveries in September to strengthen and stabilize the ailing Mutual Mortgage Insurance Fund. The recovered amounts are part of larger settlements between the federal government, U.S. Bank and Bank of America to resolve allegations of false claims and mortgage fraud in relation to FHA-insured mortgages. Both banks were investigated separately by the HUD-OIG, Department of Justice and U.S. attorneys’ offices in Michigan, Ohio and New York in connection with their lending and underwriting practices and quality-control programs for FHA-insured loans. On June 30, U.S. Bank entered into a settlement agreement to pay $200 million, of which nearly $144.2 million went to the MMI Fund. The bank admitted to poor underwriting, flawed quality control and ...
The Department of Housing and Urban Development’s Inspector General has recommended that HUD require an approved FHA lender to reimburse the FHA $1.6 million for improper claims on 11 preforeclosure sales, including lender and borrower incentives. An IG audit of EverBank of Jacksonville, FL, attributed FHA’s losses to the bank’s failure to determine whether or not defaulted borrowers qualified for the agency’s preforeclosure sale program. The IG looked into the bank’s short sale activities because it had the highest preforeclosure sale claims in Florida. More than 50 percent of EverBank’s FHA claims were from short sales, with more than $12.9 million paid from 2011 through 2013, the audit found. In response, EverBank questioned the accuracy of the IG report. The bank maintained that certain allegations do not constitute violations of ...