The Department of Veterans Affairs has issued a clarification for non-borrower spouses on VA title documents, which apparently has created some confusion when lenders try to foreclose on VA-backed properties. VA is aware that lenders occasionally make loans to veterans who wish to use their home loan benefit to purchase a home and include their spouse in ownership, but the spouse does not wish to be on the mortgage loan. Including the spouse on the deed but not on the mortgage note can create a problem if the VA loan goes into foreclosure because the non-borrowing spouse’s ownership in the property could defeat the foreclosure action, the VA explained. “Delaying or preventing a foreclosure increases foreclosure claim cost to the government and the veteran,” the agency said. According to the VA guidance, when a loan is originated that includes a ...

Reading about prospective homebuyers’ experiences in trying to obtain a new FHA loan after emerging from a Chapter 7 (liquidation) bankruptcy reveals a great lack of understanding of FHA bankruptcy guidelines. Potential homebuyers apparently are concerned because they have been hearing different required waiting periods. The waiting periods in these stories vary from two to three years, and some were told to start counting from the sheriff sale date rather than from the bankruptcy discharge date. According to the FHA’s 2016 guidelines for bankruptcy, a Chapter 7 bankruptcy does not disqualify a borrower from seeking FHA financing after hardship if, at the time of case-number assignment, at least two years have elapsed since the date of the bankruptcy discharge. During the two-year period, the borrower must have re-established good credit by making ...

The Department of Veterans Affairs has posted a chart on its web site showing the revised maximum allowable foreclosure timeframes for each state in 2016. State foreclosure timeframes are used in calculating the maximum interest payable on a foreclosure of a VA loan. They are subject to annual reviews and revised as needed. The chart reflects maximum allowable foreclosure periods that include the 210 calendar days for unpaid interest as well as foreclosure periods without the 210 days. Specifically, the chart shows timeframes the VA has determined to be “reasonable and customary” for all states, following an annual review of amounts allowed by other government-related home loan programs, such as FHA, Fannie Mae and Freddie Mac. The chart also lists the maximum amounts that will be paid on a claim processed in the ...

Consumer complaints to the CFPB fell by double digits in nearly every category during the fourth quarter of 2015, with total complaints down 20.1 percent for the period, despite the one area that showed an increase – prepaid cards – skyrocketing 242.1 percent, according to the latest analysis by Inside the CFPB. However, the lending industry’s performance vis-à-vis consumers generally deteriorated in most categories on an annual basis, the latest data from the CFPB consumer complaint database show.Leading the improved performance during 4Q15 was the student loan sector, which saw gripes drop by a huge 31.7 percent, followed by declines in the debt collection space (off 27.5 percent), and in the home mortgages and credit report categories, both of which saw ...

FHA lenders funded $12.3 billion in new Home Equity Conversion Mortgage loans during the first nine months of 2015, up a hefty 22.2 percent from the same period in the prior year, according to Inside FHA/VA Lending’s analysis of agency data. Likewise, HECM endorsements increased 17.3 percent to $4.5 billion in the third quarter from $3.9 billion in the prior quarter. This was the highest HECM endorsements have been since the second quarter of 2013, when they totaled $4.1 billion. Purchase loans accounted for 85.8 percent of all HECM originations over the nine-month period. The majority of borrowers favored adjustable-rate HECMs over fixed-rate HECMs, which accounted for only 14.8 percent of HECM transactions. In addition, the initial principal amount at loan originations totaled $7.3 billion, up from $4.6 billion midway through 2015. The volume increase is attributable to program changes implemented ... [1 chart]

The share of “unacceptable” ratings for defective FHA loans following a post-endorsement technical review has dropped from double- to single-digits in FY 2015 due to lenders’ mitigation efforts, according to the FHA’s latest loan-review results. FHA’s initial unacceptable rate has remained at 45 to 47 percent over the last four quarters, but lender submission of mitigating documentation has reduced that rate to 5 percent as of Oct. 31, 2015, the FHA report said. This means an overall mitigation rate of nearly 90 percent of the FHA-insured loan sample. The number of initially unacceptable findings and those findings subsequently mitigated are based on 6,415 FHA-insured mortgages that underwent post-endorsement technical reviews between April 1 and June 30, 2015. Of the total loans reviewed, 68.6 percent were purchase loans, 17.9 percent streamline refinance and ...

Joint civil fraud initiatives have resulted in $558.5 million in recoveries and receivables to the Department of Housing and Urban Development in FY 2015, according to the HUD inspector general’s semiannual report to Congress. The amount includes civil settlements of $212.5 million from First Tennessee Bank, $29.6 million from Reverse Mortgage Solutions, and $1.8 million from three other settlements. The settlements resolved enforcement actions brought by the Department of Justice on behalf of HUD in pursuit of civil remedies under a variety of statutes, including the False Claims Act, Program Fraud Civil Remedies Act, and the Financial Institutions Reform, Recovery and Enforcement Act. Recoveries and receivables for other entities during the reporting period – April 1 to Sept. 30, 2015 – totaled $86.9 million and $268.2 million for the entire fiscal year. Some of the payments were made to the ...

VA Servicer Reminders. The new maximum allowable foreclosure timeframes published in the Federal Register on Dec. 4, 2015, will be effective for all loan terminations completed on or after Jan. 3, 2016. In addition, the new Net Value percentage (15.95 percent) took effect on Dec. 23, 2015. All Notices of Value issued on or after Dec. 23, must be calculated using the new percentage. Meanwhile, pre-approval requests to deviate from a regulation must be submitted through VALERI (VA Loan Electronic Reporting Interface), the agency’s loan administration system. VA does not grant pre-approval on claim expenses or for additional time to foreclose. These items must be appealed ...

The House Financial Services Committee held an oversight hearing last week on the Financial Stability Oversight Council, of which the CFPB is a voting member. In response to a softball question tossed in his direction by Rep. Nydia Velázquez, D-NY, CFPB Director Richard Cordray took advantage of the opportunity to tout the work the bureau does and its relation to addressing systemic risk in the U.S. economy. Velázquez stated: “The CFPB’s core mission is consumer protection, which may not seem linked to systemic risk. However, I don’t think that’s the case. Can you elaborate on what role consumer financial protection plays in the stability in the economy and how your agency’s work helps inform FSOC?” Cordray replied: “It’s worthy of ...

The more consumers complain to the CFPB about their financial services providers, the more likely those providers are to be fined, and the higher those fines are likely to be, new research suggests. For instance, lenders and other financial services providers face a 58 percent chance of being fined when complaints to the CFPB breach the 2,000 threshold for a company, according to an analysis by PerformLine, a “software-as-a-service” marketing compliance company based in Morristown, NJ. Among the other key findings were a 34 percent increase in the number of consumer complaints year-over-year since 2012, and average fines ranging from $134 million (for companies that received 2,000-10,000 complaints) to $758 million (for companies with 10,000+ complaints). Sliced another way, the ...