The initial material defect rate of FHA loans has increased to 50 percent in the third quarter of 2016 from the previous quarter, according to the latest FHA Lender Insight report on quality control. A good portion of the defective mortgage loans, however, has been mitigated during the post-endorsement technical review process, the report indicated. In the second quarter, the initial material defect rate had been flat, averaging 47.4 percent over the last eight quarters. The latest report show the top five mitigated findings, which reflect the number of initially unacceptable ratings and the number of findings mitigated for loans between April and June, 2016. Some 6,312 FHA loans comprised the sample, and they consisted of purchase loans (71.0 percent), streamline refinance (13.5 percent), rate and term refis (9.0 percent), and Home Equity Conversion Mortgages (6.7 percent). In addition, ...

The Department of Veterans Affairs is urging VA lenders, borrowers and other participants in its loan guaranty program to adopt recommended standards, equipment and activities to reduce water and energy usage and to ease the impact of natural disasters. The VA has recommended wind-hazard standards, resilient building and retrofitting standards, a water- and energy-saving program, and property-and-energy conservation strategies to help VA borrowers protect their homes against storms, flooding, earthquakes and other calamities. VA made clear it allows, but does not require, any of the recommended standards, strategies or equipment. The programs are strictly voluntary, it said. The agency noted the increasing incidence of extreme weather events, earthquakes and flooding, which makes planning and building in the most resilient and economically feasible ways all the ...

The Department of Veterans Affairs adopted without change its interim final rule increasing the maximum amount of civil fines it can assess on lenders and other offenders for violations of agency loan-guaranty rules and regulations. Under the interim final rule VA issued for comment back in June, maximum civil monetary penalties would increase from $10,000 to $21,563 for false loan-guaranty certifications. Civil fines for fraudulent claims or statements in any VA program would increase from $5,500 to $10,781. The VA published the interim final rule on June 22, 2016, to implement the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and to improve the effectiveness of civil fines and maintain their deterrent effect. The new penalty amounts became ...

Wells Fargo – no doubt – is taking it on the chin for its “account fabrication” scandal tied to credit cards and deposits, but so far the damage has yet to seep into its mortgage business in a major way, but reports suggest certain correspondents are balking at doing business with the megabank. Dave Akre, managing director of Five Oaks Investment Corp., said he knows some loan officers working for Wells correspondents who are no longer offering the megabank’s jumbo products “due to recent issues.” Those “issues,” he pointed out in an interview with Inside Mortgage Finance, involve...

The CFPB has formally authorized the collection of expanded Home Mortgage Disclosure Act information on race and ethnicity, as per the Equal Credit Opportunity Act and Regulation B, in 2017. “At any time from Jan. 1, 2017, through Dec. 31, 2017, a creditor may, at its option, permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in appendix B to Regulation C, as amended by the 2015 HMDA final rule,” the bureau said in a Sept. 29, 2016, notice in the Federal Register. During this period, a lender permitting applicants to self-identify using these categories shall not be deemed to violate Regulation B Section 1002.5(b). Further, the lender shall also be deemed to be in compliance with ...

Last week, the CFPB brought a $9 million enforcement action against Savannah, GA-based TMX Finance, the parent company of TitleMax, accusing the company of luring consumers into costly loan renewals by presenting them with misleading information about the deals’ terms and costs. The CFPB said that employees of the auto title lender, as part of their sales pitch for the company’s 30-day loans, offered consumers a monthly option for making loan payments. They then offered consumers a “Voluntary Payback Guide” that showed how to repay the loan with smaller payments over a longer time period....

The CFPB filed a lawsuit in federal district court last month against Prime Marketing Holdings, a credit repair company based in Van Nuys, CA, for allegedly charging consumers a series of illegal advance fees as well as for misrepresenting the cost and effectiveness of its services. According to the bureau’s complaint, Prime Marketing Holdings lured consumers with misleading, unsubstantiated claims ...

The CFPB last month sued five auto title lenders doing business in Arizona – Auto Cash Leasing, Interstate Lending, Oasis Title Loans, Phoenix Title Loans and Presto Auto Loans – for allegedly failing to disclose the annual percentage rate in online advertisements about title loans, in violation of the Truth in Lending Act. “For example, one lender advertised on its website a monthly interest rate but failed to include the legally required annual percentage rate for the loan,” the bureau said....

Last week, the CFPB brought a $3.6 million enforcement action against San Francisco-based online lender Flurish, doing business as LendUp, for allegedly failing to deliver the promised benefits of its products. The bureau said it found that the company did not give consumers the opportunity to build credit or provide access to cheaper loans, as it claimed to consumers it would....

Fannie Mae Names Small Pool Winning Bidder. The Community Loan Fund of New Jersey, Inc., an affiliate of New Jersey Community Capital, a non-profit community development financial institution, is the winning bidder of Fannie Mae’s fifth Community Impact Pool of non-performing loans. The transaction is expected to close on Nov. 22, 2016, and includes 120 loans secured by properties located in the Miami area with an unpaid principal balance of approximately $20.3 million. In collaboration with Wells Fargo Securities, LLC and The Williams Capital Group, L.P., Fannie Mae began marketing this Community Impact Pool to potential bidders on Aug. 10, 2016.