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Inside FHA/VA Lending

October 9, 2009

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FHA Stability Debate Rages in Congress

Skeptics still doubt that the FHA’s capital reserve funds are at sufficient levels despite the Department of Housing and Urban Development’s repeated assurance that the booming program won’t need a federal bailout. The House Financial Services Subcommittee on Housing and Opportunity held a hearing Thursday with the FHA’s annual financial audit expected later this month, and opinions of the agency... Read More

Bill Would Increase FHA Minimum Downpayment

A bill introduced in the House of Representatives last week would increase the minimum downpayment requirement on FHA loans from 3.5 percent to 5.0 percent in an effort to raise additional money to ensure that the FHA maintains its financial soundness. The “FHA Taxpayer Protection Act of 2009,” introduced by Rep. Scott Garrett, R-NJ, comes as the most extreme proposal to date to deal with the... Read More

Shortcomings Exist in FHA Lender Approval

The FHA needs to speed up its implementation of recent legislation that would bolster the lender approval process, as the agency still hasn’t shored up its system or prevented lenders with previous violations from getting re-certified to make government-insured mortgages, according to the Department of Housing and Urban Development Office of the Inspector General. The OIG exposed a... Read More

FHA Loan Mods Must Lower Rate

The FHA will now only pay loss mitigation claims and incentives for loan modifications that reduce a borrower’s interest rate down to the current market rate, a move the agency said will ensure that mods help borrowers by actually lowering their payments. The change will affect how servicers modify FHA loans under the Obama administration’s Home Affordable Modification Program, which can pay... Read More

Push for Higher Loan Limit Extension Intensifies

Industry groups made a case for Congress to extend the higher conforming loan limits for FHA, Fannie Mae and Freddie Mac loans last week, but the busy legislative schedule may prevent the measure from being extended before the Dec. 31 sunset date.The final months of 2008 saw the same debate arise; many mortgage industry participants pushed for FHA and government-sponsored loan limits up to $729,750 to... Read More

FHA Loans Exempt from New TILA Rule, Fed Says

The Federal Reserve told lenders last week that new Truth in Lending Act rules governing “higher-priced” mortgages and prepayment penalties will exempt FHA loans as long as lenders follow standard procedures. But the American Securitization Forum threw a new wrinkle into the equation this week by sending a letter to housing officials warning that a change to interest prepayment rules on FHA loans would... Read More

HECM Underwriting ‘Adequate,’ Problems Persist

The Department of Housing and Urban Development’s oversight of FHA reverse mortgage lenders is up to snuff, according to a recent report from the Office of the Inspector General, but other industry groups are still calling for increased protection for seniors who take out Home Equity Conversion Mortgages. The OIG reviewed 38 HECM loans, and only on four did HUD not fully address underwriting deficiencies or... Read More

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