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Inside FHA/VA Lending

November 20, 2009

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FHA Fund Will Recover Losses, Audit Says

The FHA’s reserve fund sustained heavy losses this year due to deteriorating loan quality in its older vintages, but the third-party audit of the program’s financial condition said the capital levels should return to sufficient levels in a few years. Obama administration officials used the audit as support for staying the course, but some industry participants are pointing to holes in the... Read More

2009 FHA Business Shows Marked Improvement

Early indicators show that the 2009 book of FHA-insured business is performing significantly better than older vintages, a trend that Department of Housing and Urban Development officials are leaning on to show the strength of the program. According to HUD’s report to Congress on the FHA financial audit for fiscal 2009, the withdrawal of capital in the conventional mortgage market in 2008 and the large... Read More

HECM Lending Projected to Reach All-Time High

The number of FHA home equity conversion mortgages set a single-year record in fiscal 2009, and the result will be a continuing increase in the value of the HECM portfolio, according to an audit of the HECMs on the book done by IBM Global Business Services. HECM originations increased 24.2 percent from fiscal 2008, and the $8.42 billion in HECM loans made in the final three months of the fiscal... Read More

FHA Eases Up on New Condo Rules

After twice delaying new rules governing FHA mortgage loans for condominiums, the FHA pulled back on several of the proposed regulations and announced the new guidelines via mortgagee letter last week. The new rules will be in effect from Dec. 7, 2009, until Dec. 31, 2010. Lenders have been imposing their own stricter standards for more than a year after suffering major losses on... Read More

FHA Endorsements Fall Again in September

The number of loans insured by the FHA and the total dollar volume of FHA mortgages both decreased for the second consecutive month in September, but the third quarter also saw the FHA’s market share of total originations increase to 25.4 percent, according to an Inside FHA Lending analysis of the latest government data. The FHA endorsed 176,753 mortgages for insurance in September, down from... Read More

FHA Accounts for 37% of Purchases in October

Buoyed by a rise in first-time homebuyer activity, FHA is playing a major role in fueling home purchase activity these days. And any move to tighten FHA’s underwriting requirements or raise its fees could have major repercussions for a recovery of the fragile U.S. housing market. According to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, FHA financing... Read More

HUD Grants Grace Period for RESPA Compliance

The Department of Housing and Urban Development’s Mortgagee Review Board will exercise “restraint” in enforcing new regulatory requirements under the Real Estate Settlement Procedures Act, which will take effect Jan. 1. HUD instructed the MRB staff to be flexible toward FHA-approved lenders who show a good-faith effort to comply with the new rule for the first four months of the regulation being... Read More

HUD Withdraws ‘Two-Appraisal’ Rule

The FHA will no longer require two separate appraisals on high-cost loans for properties in declining markets, the Department of Housing and Urban Development announced this week. The new rule went into effect Nov. 18. The two-appraisal rule was instated during the middle of the housing crisis in April 2008, but FHA Commissioner Stevens said “we did not find our previous policy to be particularly helpful... Read More

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