The Mortgage Bankers Association called upon Congress to pass legislation to restore Ginnie Mae eligibility for so-called orphaned VA loans, which have caused a temporary disruption in the government-backed secondary market. In written testimony to the Senate Committee on Veterans’ Affairs last week, the MBA urged lawmakers to make technical corrections to restore the eligibility of certain Interest Rate Reduction Refinance Loans for pooling. The MBA estimated the VA orphan loan mess at roughly $500 million. Due to new loan seasoning requirements in the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, sime IRRRLs were rendered ineligible for Ginnie MBS pools. The loans were in transit when legislation addressing the problem of VA loan churning and serial refinancing became law in May. The new law’s seasoning provisions turned out to be ...

A Treasury Department report called on the Department of Housing and Urban Development to establish clear standards for determining which mortgage-related violations and loan defects the Department of Justice should pursue under the False Claims Act. The report also recommended that DOJ ensure that materiality, for purposes of the FCA, is linked to the standards of the agency administering the program to which the claim has been filed. Furthermore, it urged both HUD and the DOJ to work together to clarify the process by which they can jointly resolve claims. The report was issued pursuant to President Trump’s February 2017 executive order establishing his administration’s policy to regulate the U.S. financial system according to a set of core principles. Both HUD and the DOJ have been successful in using the statute to prosecute FHA lenders who knowingly commit fraud or make ...

On Aug. 1, the U.S. Senate voted 92-6 to pass a four-bill appropriations package that includes FY 2019 funding for the Department of Housing and Urban Development and the U.S. Department of Agriculture housing programs. The bill passed without changes to program funding levels previously approved by Senate appropriators. The House Appropriations Committee has approved FY19 spending bills for both HUD and USDA. The full House, which is away for the summer break until Sept. 4, has not yet voted on the package. The Senate bill retains the previous fiscal year’s $400 billion in new loan commitments in the FHA Mutual Mortgage Insurance Fund and $30 billion for the general insurance and special risk insurance program, which include special purpose single- and multifamily loans, multifamily rental housing and condominiums. The bill also sets aside $550 billion for Ginnie Mae ...

Two major banks and a defunct subsidiary of Lehman Brothers have agreed to settlements with the Department of Justice to resolve legacy non-agency MBS disputes.

A legislative proposal to charge veterans, servicemembers and military spouses more for a VA home loan is getting heat from lenders and the Department of Veterans Affairs itself. Testifying before the Senate Committee on Veterans Affairs last week, Paul Lawrence, VA undersecretary for benefits, warned that increasing VA loan fees would impose additional financial burdens on veterans who are trying to buy a home, making them more vulnerable to predatory lending. Fee-related proposals are included in H.R. 299, the Blue Water Navy Vietnam Veterans Act of 2017. The House of Representatives passed the bill by a vote of 382-0 in June and it is currently under consideration in the Senate. H.R. 229 would expand disability benefits to Vietnam veterans who were exposed to Agent Orange while serving on U.S. ships offshore or on the ground in Thailand and the Korean demilitarized ...

The appraisal industry is opposed to a legislative proposal that would make changes to how appraisals are procured for the VA home loan program. The appraisal measure is one of the key provisions in H.R. 299, the Blue Water Navy Vietnam Veterans Act, which the House of Representatives passed by a vote of 382-0 in June. The bill is now pending in the Senate Committee on Veterans’ Affairs. The Blue Water Act would clarify presumptions relating to veterans’ exposure to herbicide, such as Agent Orange, during the Vietnam era and disability claims. The bill also proposes changes to the VA loan fee structure, including a proposed hike to the fees veterans, servicemembers and their spouses pay to obtain a VA-guaranteed home loan. The appraisal provision in H.R. 299 would allow VA appraisers to engage a third party to perform property inspections on their behalf. The provision addresses a problem with ...

A federal judge in Ohio recently sided with a law firm in a debt collection enforcement action taken by the CFPB. Industry attorneys said the ruling calls into question whether the bureau should bring future actions against such firms. The CFPB filed a lawsuit in April 2017 against the debt collection law firm Weltman, Weinberg & Reis for falsely representing in collection letters sent to consumers that attorneys were involved in collecting the debt. In most cases ...

A progressive group recently filed a lawsuit against the CFPB and the Office of Management and Budget for allegedly failing to provide records on Kathy Kraninger, President Trump’s nominee to become the next director of the CFPB. Allied Progress, a consumer watchdog, said in the lawsuit that it is suing to compel the agencies to respond to Freedom of Information Act requests for records associated with Kraninger. The lawsuit was filed in the U.S. District Court ...

The White House, according to industry insiders, has formed a small search team to help pick a successor to Federal Housing Finance Agency Director Mel Watt, whose tenure at the agency is imperiled because of recent sexual harassment allegations levied against him by an employee.Watt’s five-year term is scheduled to end in early January 2019, but it’s possible he might be forced from the position much sooner or decide to step down on his own. The 72-year-old regulator – a former Democratic Congressman from North Carolina – has declined to discuss the matter, but issued a statement through the FHFA’s public relations department saying he’s “confident that the investigation currently in progress will ...

Lenders will be asking the Department of Housing and Urban Development to clarify the eligibility of borrowers with deferred immigration status for an FHA-insured loan. A mortgage industry trade group is currently drafting a letter on “a series of technical FHA handbook recommendations,” including greater clarity on loan applications submitted by borrowers registered under the government’s Deferred Action for Childhood Arrivals (DACA) program. DACA status was offered to children who were brought illegally into the U.S. by their parents or guardians but have been in the country for most of their lives. The program was created by the Obama administration as a way for recipients to work legally in the country while Congress could agree on what to do with them. The program faces uncertainty after President Trump rescinded it in September last year as part of his administration’s zero-tolerance immigration ...