Many low-income and minority borrowers are forced into FHA loans by risk-based pricing and overlays in the conventional market, only to be stymied by higher FHA premiums and non-cancellable mortgage insurance premiums, according to a new study from the Center for Responsible Lending. The study, “Repairing a Two-Tiered System: The Crucial but Complex Role of FHA,” examines FHA’s pre- and post-crisis lending to white and minority borrowers. It also evaluates the impact of risk-based and FHA pricing as well as the impact of False Claims Act enforcement, which have limited the FHA program’s effectiveness in meeting homeownership goals, said authors Peter Smith, CRL senior researcher, and Melissa Stegman, senior policy counsel. The authors used Home Mortgage Disclosure Act data from 2004 through 2016, focusing solely on single-family purchase mortgages made to ...

Actions by a number of private mortgage insurers to cut borrower-paid premium rates would enhance affordability and enable private MIs to increase their market share at FHA’s expense, according to an analysis from the Urban Institute. So far, Mortgage Guaranty Insurance Corp., Genworth Mortgage Insurance and Radian Guaranty have announced reductions in their respective monthly and single-premium borrower-paid premium rates. The premium cuts will affect more than just affordability, said UI. On March 6, the company announced that it is reducing borrower-paid single-premium rates in most FICO buckets, effective for all MI applications received on or after March 19, 2018. The Philadelphia-based MI also reminded clients that previously announced single-premium restrictions on debt-to-income ratios exceeding 45 percent and a FICO score below 700, or DTI exceeding ...

The number of FHA lenders subject to administrative actions by the Department of Housing and Urban Development in FY 2017 declined from the previous fiscal year, according to the latest report from the Mortgagee Review Board. Published in the April 25 Federal Register, the report showed the number of FHA lenders that were hammered with civil money penalties, lost FHA approval, and received suspensions, probations, and reprimands from Oct. 1, 2016, to Sept. 30, 2017, fell to 20 from 25 in FY 2016. But the biggest change was in the number of lenders cited and disciplined for violation of FHA’s annual recertification requirements. Lenders that failed to meet the recertification requirements in a timely manner but eventually came into compliance totaled 52 in FY 2017, down from 106 in fiscal 2016. On the other hand, 23 lenders agreed to settle with HUD after they failed to ...

Democrats are howling after Mick Mulvaney’s blatant “pay to play” comments at a banking industry event last week, calling for him to step down as acting director of the CFPB. Mulvaney said in a speech to the American Bankers Association that he only met with lobbyists who gave him financial donations when he served on Capitol Hill. “We had a hierarchy in my office in Congress,” said Mulvaney, former member of the House of Representatives from South Carolina. “If you’re a lobbyist who never ...

Industry trade groups suggested numerous changes to the CFPB’s civil investigation processes aimed at reducing burdens for financial institutions and ending the bureau’s “regulation by enforcement.” The civil investigative demand is a measure used by the bureau’s Office of Enforcement to gather information from entities against which the bureau may take enforcement action. Trade groups representing those regulated entities suggested changes on every single element of the ...

FHA-insured loans accounted for a modest chunk of mortgage-related consumer complaints submitted to the Consumer Financial Protection Bureau last year. According to the CFPB’s annual report on consumer disputes, the bureau received approximately 37,300 mortgage complaints in 2017, 13 percent of which were related to FHA mortgages. Loans with a VA guaranty and FHA-insured reverse mortgages accounted for 4 percent and 2 percent of the complaints, respectively. Conventional home mortgages had the biggest share of mortgage complaints – 48 percent – followed by “other type of mortgage” at 28 percent. Six percent of mortgage complaints were about home-equity loans or home-equity lines of credit. For mortgage complaints, 41 percent involved making payments (such as those involving servicing, escrow accounts and posting of payments), while 37 percent were related to borrowers’ ....

Legislation was introduced this week in the House Financial Services Committee that would strengthen oversight of FHA mortgage servicers to ensure their compliance with the agency’s loss-mitigation requirements. The FHA Foreclosure Prevention Act of 2018 (H.R. 5555) would require the Department of Housing and Urban Development to conduct servicer oversight, including sampling, compliance reviews, and direct information collection from borrowers whose files were sampled. “A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” said Rep. Maxine Waters, D-CA, ranking member on the committee and sponsor of the bill. Waters said her bill would ensure that FHA servicers help families experiencing financial hardships avoid foreclosure so that they can ...

The Community Home Lenders Association called for regulatory streamlining for smaller independent mortgage bankers in a comment letter to the CFPB in response to its request for information on enforcement and supervision. The CHLA, which claims to be the only national association that exclusively represents IMBs, said the bureau should reduce burdens and compliance risks faced by IMBs “through targeted CFPB exam and enforcement exemptions.” Under current law, every nonbank ...

The nature of the CFPB is completely in the eyes of the beholder. In hearings on Capitol Hill last week, Acting CFPB Director Mick Mulvaney was grilled by Democrats while Republicans praised his efforts to reform the bureau. Mulvaney appeared before the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee last week to testify on the CFPB’s semi-annual report. The major changes he proposed included: giving Congress authority to approve ...

The Federal Housing Finance Agency’s supervision and guidance of the GSEs lacks the rigor shown by other federal financial regulators, according to the FHFA’s inspector general, Laura Wertheimer. She testified during a House Financial Services subcommittee hearing this week focusing on the oversight of Fannie Mae and Freddie Mac. Throughout the hearing, Wertheimer and lawmakers pointed to a number of supervisory concerns and questioned the FHFA’s standards when it comes to monitoring the mortgage giants. “The flexible and less prescriptive nature of many FHFA standards and much of its guidance has resulted in inconsistent supervisory practices,” she said.