Reading about prospective homebuyers’ experiences in trying to obtain a new FHA loan after emerging from a Chapter 7 (liquidation) bankruptcy reveals a great lack of understanding of FHA bankruptcy guidelines. Potential homebuyers apparently are concerned because they have been hearing different required waiting periods. The waiting periods in these stories vary from two to three years, and some were told to start counting from the sheriff sale date rather than from the bankruptcy discharge date. According to the FHA’s 2016 guidelines for bankruptcy, a Chapter 7 bankruptcy does not disqualify a borrower from seeking FHA financing after hardship if, at the time of case-number assignment, at least two years have elapsed since the date of the bankruptcy discharge. During the two-year period, the borrower must have re-established good credit by making ...

The Department of Veterans Affairs has posted a chart on its web site showing the revised maximum allowable foreclosure timeframes for each state in 2016. State foreclosure timeframes are used in calculating the maximum interest payable on a foreclosure of a VA loan. They are subject to annual reviews and revised as needed. The chart reflects maximum allowable foreclosure periods that include the 210 calendar days for unpaid interest as well as foreclosure periods without the 210 days. Specifically, the chart shows timeframes the VA has determined to be “reasonable and customary” for all states, following an annual review of amounts allowed by other government-related home loan programs, such as FHA, Fannie Mae and Freddie Mac. The chart also lists the maximum amounts that will be paid on a claim processed in the ...

Radian Guaranty became the first among seven private mortgage insurers to declare compliance with the regulatory capital standards under the Private Mortgage Insurer Eligibility Requirements (PMIERs). Radian met its PMIERs goals after receiving $325 million in cash and marketable securities from its parent Radian Group in exchange for a surplus note. In addition, the parent firm contributed $50 million to an exclusive affiliated reinsurer of Radian Guaranty. Radian Group expects the capital cushion to increase based in part on expected future financial performance at its MI subsidiary. Monies from other sources, including a profit commission of about $8 million based on performance to date, and $8.5 million in prepaid supplemental ceding commission also contributed to the MI’s capital. Hence, Radian Guaranty is not expected to require any additional capital contributions in order to ...

While mortgage lenders have been using traditional forms of data, like credit reports, to make their lending decisions, the Federal Trade Commission is concerned that “big data” will make it easier for banks to unfairly discriminate against certain segments of the population. Anytime big data is used to categorize consumers in ways that can result in certain populations being put at a disadvantage for things like a mortgage, it becomes a tool for exclusion, the FTC warned ...

CFPB Director Richard Cordray issued a letter to the mortgage industry over the holidays related to the TRID integrated disclosure rule, clarifying that the new rule includes a provision to “cure” certain mistakes, even after the fact. “The Know Before You Owe mortgage disclosure rule provides for the issuance of a corrected closing disclosure, even after closing,” Cordray said in a letter to Mortgage Bankers Association President and CEO David Stevens. “This can be used, for example, to correct non-numerical clerical errors or as a component of curing any violations of the monetary tolerance limits, if they exist. “As a general matter, consistent with existing Truth in Lending Act principles, liability for statutory and class action damages would be assessed ...

Some private investors are skittish about purchasing loans in the new TRID environment because of the potentially huge, and largely unspecified, liability that purchasers face on the secondary market under the bureau’s new integrated disclosure rule, according to some top experts. “What we’re seeing now, unfortunately, is that private investors, securitizers and such, are being gun-shy,” said Richard Andreano, mortgage banking practice leader in the Washington, DC, office of the Ballard Spahr law firm, during a recent webinar sponsored by Inside Mortgage Finance, an affiliated publication. “Because what we have is the bureau made clear that there was some liability associated with the TRID rule, not only pre-existing Truth in Lending Act liability, but perhaps now some liability for Real ...

The CFPB is apparently disturbed by recent press accounts of possibly discriminatory lending practices by Vanderbilt Mortgage and Finance, a lending arm for the mobile home builder Clayton Homes, both of which are part of Warren Buffett’s Berkshire Hathaway Company. “The allegations of discrimination and predatory practices raised by the reporting are obviously very concerning to the bureau,” said Sam Gilford, a spokesman for the CFPB. Bureau officials would not comment further. In recent weeks, The Seattle Times and BuzzFeed used data from the Home Mortgage Disclosure Act to claim that Vanderbilt Mortgage, a manufactured housing lender owned by Clayton, consistently originates loans with higher interest rates for minorities compared with interest rates on loans the company originates for white ...

The Department of Justice announced in December that a structured finance supervisor at RBS Securities pleaded guilty to participating in a multi-million dollar securities fraud scheme and is cooperating with the government’s ongoing investigation. Adam Siegel was co-head of U.S. ABS, MBS and commercial MBS trading at RBS between 2008 and 2014. The U.S. Attorney’s Office in the District of Connecticut said Siegel admitted that he and others conspired to increase RBS’s profits on trades of residential MBS and collateralized loan obligations at the expense of customers. “His crime included...

A case in bankruptcy court regarding the priority of payment provisions for collateralized debt obligations could have broad ramifications for derivatives transactions at the heart of the structured finance industry, according to the Structured Finance Industry Group and other industry groups. In late December, SFIG filed an amicus brief in Lehman Brothers Special Financing v. Bank of America, which is being heard in U.S. Bankruptcy Court for the Southern District of New York. The Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association filed a separate brief, making points similar to those raised by SFIG. LBSF is suing...