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Inside FHA/VA Lending

March 19, 2010

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HUD Indemnity Power Causes Concern

Legislation being circulated on Capitol Hill would expand the Department of Housing and Urban Development’s authority to require all lenders to indemnify the FHA for all poorly underwritten loans, but some mortgage industry experts are warning that the changes would cause FHA lenders to overly restrict their originations. Other changes to HUD authority and the FHA premium structure were included... Read More

Risk of Higher Downpayment Debate Continues

While some experts and lawmakers are lobbying for higher minimum downpayments on FHA loans to protect the program from sustaining further losses, other industry participants continue to warn of possible adverse effects of such a change. The Department of Housing and Urban Development proposed a number of regulatory changes in January including one requiring borrowers with a FICO score below 580... Read More

FHA Provides First Update on FHA-HAMP Performance

As of Jan. 31, lenders have sent some 15,000 trial modification offers under the FHA’s version of the Home Affordable Modification Program, and more than 10,000 borrowers had made at least one payment on their trial, according to FHA Commissioner David Stevens. “FHA-HAMP loan volume is currently above projections for the three-year milestone and all but one major lender have borrowers... Read More

Broker Deadline Extended as Rule Lingers

The Department of Housing and Urban Development extended the deadline for mortgage brokers seeking renewal of their FHA lender approval to submit audited financial statements by 30 days, from March 31 to April 30. This may be the last time brokers have to do so, as HUD proposed in November 2009 to eliminate FHA approval for loan correspondents. This rulemaking is still in process and a final rule... Read More

Streamline Refis May Present Risk to FHA

Economists from the New York Federal Reserve and New York University warned that the FHA may be underestimating the risk it’s taking on in the current market, especially when it comes to streamline refinances, in which a current FHA borrower refis to lower his monthly payment. Andrew Caplin, an economics professor who co-authored a study released last week, said that a streamline... Read More

FHA Briefs

Ocwen Financial Corp, a servicer of subprime mortgages based in Florida, announced on a recent conference call that it is in the process of developing an FHA “flow servicing” platform. Company officials said the goal is to broker FHA-insured mortgages, securitize them into Ginnie Mae mortgage-backed securities and retain the servicing. They are currently “beta testing” the program... Read More

FHA Jumbo Lending Doubles in 2009

Last year saw a 101.9 percent jump in origination of FHA loans over the traditional conforming loan limit of $417,000, but the high-balance loans still make up a very small portion of the overall FHA portfolio. Lenders made $20.87 billion in so-called jumbo loans insured by the FHA in 2009, up from $10.34 billion in 2008, led by the top dogs in the traditional FHA lending market, Bank of America... Read More

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