The Department of Veterans Affairs is updating its residual-income tables, with an eye to publishing revised guidelines in 2016. The last time the VA calculated and published the residual-income guidelines was in the 1990s, and a lot has changed since then, according to Mike Frueh, director of the VA Home Loan Guaranty program. Residual income is the monthly household income that remains after all primary obligations – mortgage and escrows, car payments, credit card bills, student loans, among others – have been paid. VA will not back a loan to a vet or service member if they do not meet or exceed residual-income requirements. The residual-income threshold varies by family size, borrower location and other compensating factors. Calculations for residual income vary for the Northwest Region, Midwest Region, South Region and West Region of the country. Frueh said they are ...

Beginning June 27, the FHA will require electronic appraisals for single-family forward and reverse mortgages to be delivered through an online electronic submission portal prior to endorsement. The Electronic Appraisal Delivery (EAD) portal is a web-based platform that would allow paperless submissions of single-family home loan appraisals, cutting down loan processing time significantly. FHA lenders and their authorized representatives can access the EAD portal by using electronic credentials and showing they are ready to use the new technology. Only appraisals that are compliant with FHA appraisal and data delivery guidelines can be uploaded to the portal. Lenders will be notified of a successful upload or if they need to correct and resubmit an appraisal. Once an appraisal is successfully submitted to the portal, FHA Connection will pull EAD appraisal data and pre-fill certain data fields in the ...

The U.S. Department of Agriculture’s Rural Housing Program has fully automated the submission of loan-origination documents and the electronic issuance of conditional commitments. This means that RHS’s Guaranteed Underwriting System (GUS), which is used for underwriting single-family rural home loans, has gone paperless, beginning March 28, 2015. Over the past year, USDA Rural Development has implemented changes to streamline and modernize the guaranteed loan program. In December last year, the RHS modified its lender loan-closing system to allow electronic issuance of loan note guarantees. Under the streamlined document-submission process for GUS requests, lenders will upload all required origination documents into GUS following a final submission. This enables lenders to avoid encrypting and emailing docs to USDA. After receiving the docs, GUS will alert the ...

Fannie Mae Updates Reverse Mortgage Loan Servicing Manual. Fannie Mae has updated its reverse mortgage servicing manual with changes and clarifications to policies pertaining to Home Equity Conversion Mortgages. For HECMs, Fannie now requires servicers to place a real estate-owned hazard insurance policy upon completion of a foreclosure sale. It also outlined servicers’ responsibilities regarding the documentation and cancellation of REO hazard insurance claims; reimbursement of REO hazard insurance premiums; and remittance of insurance loss proceeds. The revised policy changes must be implemented no later than April 1, 2015. House Democrats Reintroduce Housing Finance Reform Bill. Democrats on the House Financial Services Committee have introduced legislation that would provide private and government risk-share coverage to all mortgages, create a ...

Nomura Holdings is unlikely to suffer a hit in ratings because of the Federal Housing Finance Agency’s mortgage-backed securities lawsuit, but the litigation may yet prove costly to the Japanese financial holding company, according to a recent report from Fitch Ratings. Nomura went to trial on March 16 to defend itself against allegations that it misrepresented the underlying asset quality of MBS it sold to Fannie Mae and Freddie Mac prior to the financial crisis ...

The CFPB put out a study earlier this month that concluded that arbitration agreements restrict consumers’ relief for disputes with financial service providers by limiting class actions. According to the study, very few consumers individually seek relief through arbitration or the federal courts, while millions of consumers are eligible for relief each year through class action settlements. The report also found that more than 75 percent of consumers surveyed did not know whether they were subject to an arbitration clause in their agreements with their financial service providers. Further, fewer than 7 percent of those covered by arbitration clauses realized that the clauses restricted their ability to sue in court.The CFPB said its review of case data from the ...

Loan Modification Trial Payment Plans for Forward Mortgages. The Department of Housing and Urban Development has announced requirements for trial plan duration, required signatures, and reporting for trial payment-plan agreements, and the conditions under which FHA deems a TPP to have failed.Lenders must implement the requirements in Mortgagee Letter 2015-07 for all TPPs offered to borrowers on or after June 1, 2015. FHA Publishes Additional Sections of HUD Single-Family Policy Handbook. The FHA has published additional sections for the SF Handbook, including the following: Doing Business with FHA – Lenders and Mortgagees Doing Business with FHA – Other participants in FHA Transactions – Appraisers; Quality Control, Oversight and Compliance – Lenders and Mortgagees; Quality Control Oversight, and Compliance – Other Participants in FHA Transactions – Appraisers ...

Security issuances backed by FHA and VA loans totaled $267.6 billion in 2014, with several large states accounting for a significant share of FHA/VA originations. An estimated $158.1 billion of FHA-insured loans, including modified loans, were securitized last year, with purchase home loans comprising most of the transactions. Approximately $30.0 billion of FHA refinance loans were securitized as well. The FHA MBS had an average loan-to-value ratio of 92.3 percent and a debt-to-income ratio of 40.1 percent. The average FICO score was 672.3, which was indicative of first-time homebuyers and borrowers with slightly tainted credit. First-ranked California, Texas (#2) and Florida (#3) combined for a total of $48.0 billion, which represented 30.3 percent of FHA loans in Ginnie Mae mortgage-backed securities in 2014. Fourth-ranked New York reported a total of $6.7 billion while ... [ 2 charts]

Half of the loans in the Distressed Asset Stabilization Program have been resolved and a significant percentage of homeowners have avoided foreclosure, according to the latest DASP progress report from the Department of Housing and Urban Development. A review of the FHA single-family loan sale (SFLS) program found that, of the 48.6 percent that have been resolved, 43.5 percent have avoided foreclosure. The anticipated alternative for these borrowers – property conveyance, where their property becomes real estate-owned – would have led to foreclosure, the report said. Specifically, short sales and deeds-in-lieu of foreclosure were the disposition methods employed in foreclosure avoidance. In addition, 16.3 percent of resolved loans were re-performing as of Feb. 6, 2015. This reflects a 49.5 percent change in the re-performing rate reported in the ...