Department of Housing and Urban Development Secretary Ben Carson is getting good reviews from mortgage industry participants regarding his congressional testimony late last week on program reforms, particularly his strategy for dealing with FHA exposure under the False Claims Act. Industry observers noted an improvement in Carson’s knowledge and understanding of HUD programs since taking office in March. His nomination by President Trump was controversial because ...

Department of Housing and Urban Development Secretary Ben Carson indicated he is open to the idea of moving the Home Equity Conversion Mortgage program out of the FHA Mutual Mortgage Insurance Fund to stem future losses. Testifying before the House Financial Services Committee this week, Carson said the changes the department has made recently, as well as those currently under consideration, will eliminate most of the program’s problems although residual issues may still linger. Carson acknowledged that the HECM program’s default rate has been a drain on the MMI Fund even though it is much smaller than the FHA’s forward loan portfolio. The recently revised HECM rules issued on Sept. 19 have “stopped the bleeding” in terms of new reverse mortgages, he added. However, separating the HECM portfolio from the FHA insurance fund and making it a stand-alone program is ...

Ginnie Mae and the VA this week officially announced a joint-agency task force to deal with the loan-churning problem that is triggering faster prepayments in Ginnie mortgage-backed securities pools. Specifically, the task force will scrutinize aggressive and misleading refinancing offers and address loan churning and repeated refinancings. It will also examine critical issues, data and lender behaviors related to refinancing loans, as well as determine the kind of policy and program changes agencies should make to ensure VA refi loans do not pose an undue risk or burden to vets and taxpayers. Both the VA and Ginnie Mae programs work best when market participants use them to provide a benefit to VA borrowers and, ultimately, lower vet’s costs, officials said. The task force has begun examining data and information to ensure refi loans provide net tangible benefits to veteran-borrowers. In addition, the ...

An estimated 9.8 percent of Ginnie Mae’s business may be potentially at risk due to hurricanes Harvey, Irma and Maria, according to data released recently by the agency. The data represent the number of Ginnie loans and their unpaid principal balance amounts in presidentially declared disaster areas in Texas, Florida, Georgia, Puerto Rico and the U.S. Virgin Islands. A total of 1.07 million mortgage loans with an unpaid principal balance of $184.5 billion have been affected. Ginnie Mae’s current mortgage-backed securities portfolio totals $1.9 trillion. The data only refer to the geographic locations of all affected properties underlying loans in Ginnie MBS pools and do not indicate the percentage of those that may have sustained damage during a storm. Hurricane Irma had the highest share of affected loans, 6 percent, while Harvey and Maria accounted for 3 percent and 1 percent, respectively. Irma caused the ...

The FHA has updated its guidelines for Home Equity Conversion Mortgage for Purchase (H4P) loans to allow lenders to accept loan applications from borrowers without requiring a certificate of occupancy, as well as prior to completion of HECM counseling. The change follows the Sept. 19 effective date of the HECM final rule, which the Department of Housing and Urban Development released earlier this year. The final rule codifies the many policies that are now in place for originating and servicing reverse mortgages, including H4P requirements. According to the revised guideline, an FHA lender may take an initial HECM loan application either prior to or after the completion of HECM counseling. Also, previously, H4P properties were eligible for FHA insurance only when construction was completed and when the local jurisdiction issued a certificate of occupancy or its equivalent, confirming the ...

The Department of Housing and Urban Development is discontinuing its quarterly newsletter, Lender Insight, with the implementation of FHA’s Loan Review System. The change is aimed at improving both FHA’s and lenders’ quality-control and risk-management operations. HUD will be publishing a quarterly Loan Review Summary Report to provide a snapshot of the results of FHA’s quality-control review of mortgage originations over the preceding 12 months. According to HUD, the report will include only underwritten loans that were subject to a post-endorsement technical review. It does not include the results of lenders’ self-reports or any other loans that were reviewed as part of a lender examination, the agency said. The report will show the initial rating of all loans, the updated rating six months from the end of the review period, and a final rating. The “final” rating is subject to change as long as ...

As Fannie Mae and Freddie Mac shareholders inch closer to having hundreds of government documents released in pending shareholder lawsuits surrounding the conservatorship and preferred stock purchase agreement, they are more confident the court will rule in their favor. In the latest development in Fairholme Funds v. the United States, Federal Claims Court Judge Margaret Sweeney last week granted a motion to compel the disclosure of documents filed over the summer by ...

The CFPB last week issued an interim final rule to give mortgage servicers more flexibility to communicate with homeowners at risk of foreclosure. “Today’s action should make it easier for mortgage borrowers to receive timely information from their mortgage servicers about available options for saving their home, even if they have submitted a request to cease communication,” said CFPB Director Richard Cordray. In 2016, the bureau made changes to its rules to require servicers to send modified early intervention notices to certain borrowers at risk of foreclosure who asked for an end to communication under the Fair Debt Collection Practices Act. Under the FDCPA, borrowers can tell their servicers to stop contacting them, with some limited exceptions. Once such borrowers ...

The CFPB issued a proposed rule last week to provide more certainty for mortgage servicers about when to provide periodic statements to consumers in connection with their bankruptcy cases. The consumer bureau said it is proposing amendments to certain mortgage servicing rules issued in 2016 under Regulation Z (which implements the Real Estate Settlement Procedures Act) relating to the timing for servicers to transition to providing modified or unmodified periodic statements and coupon books in connection with a borrower’s bankruptcy case. Among other things, the 2016 mortgage servicing final rule addresses Reg Z’s periodic statement and coupon book requirements when a person is a debtor in bankruptcy. It includes a single-billing-cycle exemption from the requirement to provide a periodic statement ...

Ocwen Financial, the once high-flying non-bank mortgage servicer, has brought to 15 the number of states it has reached settlements with to resolve allegations its compliance with laws and regulations related to its mortgage servicing and lending activities was deficient. Last week, Ocwen settled with New Mexico, Virginia and West Virginia. Late last month, it entered into agreements with 10 other states: Georgia, Idaho, Illinois, Maine, Michigan, Mississippi, Montana, Rhode Island, South Carolina and Wisconsin. Nevada and Indiana previously either withdrew or allowed their respective cease-and-desist orders to expire. Per the settlements, Ocwen will not acquire any new residential mortgage servicing rights until April 30, 2018. Also, the nonbank will develop a plan of action and milestones regarding its transition ...