Reports that the Senate Appropriations Committee might include a proposed FHA administrative fee in the Senate’s spending bill for financial and housing agencies is causing a furor within the mortgage financing industry. Industry groups have come out in force, urging the leaders of the Senate committee to remove the provision from a continuing resolution to fund the government beyond Dec. 11. There is speculation that the House might go along with the fee. The provision, expected to raise $30 million for FHA quality assurance efforts, would allow the Department of Housing and Urban Development to charge a fee of no more than 4 basis points of the original principal balance of all FHA-insured mortgages a lender made in the previous fiscal year. HUD originally made the request in President Obama’s proposed FY 2015 budget. Over industry objections, the Senate later incorporated the ...

The FHA has announced loan limits in 2015 for high- and low-cost areas, virtually unchanged from the loan limits in effect through the end of the year. The new limits will take effect on Jan. 1, 2015. The maximum loan limits in high-cost housing areas will remain the same as the 2014 level of $625,500. The current standard loan limit in lower-cost areas will also remain unchanged at $271,050. The mortgage loan limits for Home Equity Conversion Mortgage loans will continue to have a maximum claim amount of ...

The FHA and Ginnie Mae will share in the record-setting $16.7 billion settlement between Bank of America, the Department of Justice and certain other federal agencies and six states to resolve claims related to mortgage fraud and toxic mortgage-backed securities. The FHA will receive approximately $800 million and an undisclosed amount for consumer relief from BofA. The bank was accused of falsely certifying poorly underwritten loans for FHA insurance, resulting in huge losses for the agency. It is unclear how much Ginnie Mae’s share would be from the settlement. “As a direct endorser of FHA-insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta Lynch for the Eastern District of New York during the announcement of the global settlement in August. “In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not ...

A provision on lender-placed insurance in the servicing segment of the FHA’s draft Single Family Housing Policy Handbook appears to contradict the agency’s previously stated position on LPI, according to the American Bankers Association. The ABA urged the FHA to retain the current policy regarding a lender’s discretion in requiring hazard and flood insurance for loans the agency insures. In a comment letter, the ABA expressed concern about the FHA’s new proposed standard for LPI, which could limit the amount of LPI coverage a lender or servicer could impose on a borrower to the outstanding balance of the loan. It would apply broadly to hazard insurance, including flood insurance. There are several problems with this approach, the ABA said. The group noted that Congress had established a standard which requires any home construction in a special flood hazard area (SFHA) to obtain “at least” ...

Final PMIERS Rule Expected in 1Q15. The Federal Housing Finance Agency has revised its timeline for publishing a final version of the Private Mortgage Insurance Eligibility Requirements, which Fannie Mae and Freddie Mac proposed in July at the direction of the FHFA. The PMIERS will establish capital and other requirements for private mortgage insurers. In a statement, industry trade group U.S. Mortgage Insurers said it has received word from the agency that the final PMIERS would not be published until at least late in the first quarter of 2015. The FHFA initially indicated that a final rule would be issued by yearend 2014. The USMI reiterated its support for an updated PMIERS. Mortgage Executives Concerned About G-Fee Increase. A survey of mortgage executives at this year’s Mortgage Bankers Association annual conference found 53 percent saying that ...

This week, the U.S. Supreme Court heard oral arguments in two consolidated cases on whether the overtime provisions in the Fair Labor Standards Act apply to mortgage loan officers – and the narrower question of whether federal agencies have the authority to make regulatory changes without using the “notice and comment” rulemaking process. Both cases involve the Mortgage Bankers Association as the respondent. The U.S. Department of Labor argued...

The case against the Federal Housing Finance Agency’s chief operating officer ended last week after a Washington, DC, Superior Court judge found Richard Hornsby not guilty of making violent threats against former FHFA Acting Director Edward DeMarco.Judge Juliet McKenna acquitted Hornsby of two misdemeanor charges of attempted threats to do bodily harm to DeMarco.

Two large banks got a break recently as the Securities and Exchange Commission agreed to grant penalty relief to one bank while a New York federal judge dismissed certain claims against the second bank because they were overly speculative. In the first case, the SEC cleared the way for Bank of America to close a $16.7 billion global settlement after SEC commissioners voted to waive additional sanctions that would have taken effect when the settlement is entered into court, according to a report by Bloomberg. The commission agreed...

The CFPB recently ordered Franklin Loan Corp., an independent, residential mortgage banker in Palm Desert, CA, to pay $730,000 to consumers the bureau alleges were harmed by the company’s practice of giving employees bonuses for steering consumers into loans with higher interest rates. The bureau also has asked a federal district court to approve a consent order requiring the company to end its allegedly illegal compensation system and refund the consumers it harmed. This is the second loan originator compensation settlement the CFPB has obtained, the first being the case involving Castle & Cooke Mortgage. In this case, according to the CFPB, Franklin Loan originated approximately $887 million in loans between 2011 and 2013. “From June 2011 to October 2013, ...

Last week, the CFPB initiated its first enforcement action against a “buy-here, pay-here” car dealer, DriveTime, which it accused of harming consumers by allegedly making harassing debt collection calls and providing inaccurate credit information to credit reporting agencies. DriveTime must pay $8 million as a civil money penalty, end what the bureau characterized as unfair debt collection tactics, revise its credit reporting practices, and arrange for harmed consumers to obtain free credit reports. Phoenix-based DriveTime Automotive Group Inc. and its finance company, DT Acceptance Corp., make up the largest buy-here, pay-here car dealer in the nation, according to the CFPB. “Buy-here, pay-here” means that the dealer sells the car as well as originates and services the auto loan. These kinds ...