HUD

Browse articles from all of our Newsletters related to HUD.

May 26, 2017 - Inside FHA/VA Lending

Around the Industry

Moody’s Rates Credit Suisse FHA Securitization Transaction. Moody’s assigned investment-grade ratings to Credit Suisse’s first securitization deal in 2017 backed by seasoned re-performing and performing, fully amortizing, fixed- and adjustable-rate mortgages insured by FHA. The deal is the first FHA-insured re-performing transaction since 2010, according to the rating agency. The collateral pool is comprised of 672 first-lien, fixed-rate loans and ARMs with a weighted average updated FICO score of 614 and loan-to-value ratio of 94.2 percent. Approximately 82.4 percent of the loans in the collateral pool were previously modified. Approximately 52.8 percent of the loans have been current for at least 24 months. Another 17.3 percent of the loans have been current for more than 12 months. Comments Sought on Various Information Collection Proposals. The Department of Housing and ...


May 26, 2017 - Inside FHA/VA Lending

HUD Criticized for Failing to Ensure Proper FHA Insurance Terminations

Poor agency oversight of voluntary lender terminations of FHA insurance on single-family home loans has resulted in increased risk for borrowers, premium overpayments and inaccurate records, according to the Department of Housing and Urban Development’s inspector general. The IG gave the department a poor grade for failing to ensure that lenders properly processed voluntary terminations of FHA coverage and disclosed to borrowers the implications of such termination. The audit report blamed HUD’s failure on its inability to detect and deter lender errors while processing voluntary terminations, causing borrowers to lose FHA-insurance protection and overpay FHA premiums. HUD’s records also were skewed because of the oversight, the report noted. IG auditors reviewed a statistical sample of 115 of the 3,690 loans that were terminated voluntarily by lenders during fiscal years 2015 and ...


May 26, 2017 - Inside FHA/VA Lending

FCA Action Against Lenders Slows As DOJ’s List of FHA Targets Shrinks

False Claims Act enforcement against FHA lenders appears to have slowed with no new cases being filed by the Department of Justice or referred by the Department of Housing and Urban Development’s inspector general for nearly a year. Neither agency has gone after any lender for alleged False Claims Act violations since May of last year when the Department of Justice intervened in an FCA case brought by a whistleblower against Guild Mortgage, an FHA direct endorsement lender. The complaint alleged that San Diego-based Guild Mortgage knowingly approved loans that violated FHA rules while falsely certifying compliance with those rules. The alleged violations occurred between 2006 and 2011, resulting in “tens of millions of dollars” in losses to HUD. The case is pending in federal district court in Washington, DC. Indications are the FCA cases involving FHA lenders have ...


May 26, 2017 - Inside FHA/VA Lending

Groups Oppose Proposed IT Fee, Suggest Other Funding Sources

The Mortgage Bankers Association is pushing back against a controversial budget proposal to charge FHA lenders a fee to pay for technology upgrades to help protect the Mutual Mortgage Insurance Fund. Rather than charging lenders an “administrative fee,” the MBA prefers that funding improvements to FHA’s aging information systems be done through the appropriations process. “We need to be working with [the Department of Housing and Urban Development] and Congress to find ways to fund technology upgrades and risk-management improvements,” MBA Senior Vice President Pete Mills told Inside FHA/VA Lending. The White House’s budget plan for FY 2018 incorporates verbatim a proposal by the Obama administration to charge FHA lenders an administrative fee to support the upgrades needed to reduce MMI Fund losses. According to the previous administration’s estimate, the ...


May 26, 2017 - Inside FHA/VA Lending

MBA, NAR Identify HUD Rules for Clarification, Revision, Repeal

FHA liability standards, Property Assessed Clean Energy (PACE) lien guidance, downpayment assistance and revised condominium rules are among the regulations industry groups would like the Department of Housing and Urban Development to change or clarify. HUD is putting together an internal task force to identify regulations for review and to assess their compliance costs and regulatory burden. The department also has published a notice of the undertaking in the Federal Register with a request for comment. The comment period ends on June 14, 2017. President Trump issued an executive order in January directing federal agencies to identify at least two prior regulations for elimination for every new regulation they issue. The Mortgage Bankers Association is seeking clarification of FHA liability standards to entice banks to resume their FHA lending. The group thinks HUD’s new defect taxonomy ...


May 25, 2017 - Inside Mortgage Finance

Trump Budget Preserves FHA, Ginnie Mae Funding Levels, Eliminates Key HUD Programs, Calls for CFPB Restructuring

The Trump administration has revived a controversial proposal to tap FHA lenders to help pay for technology upgrades at the Department of Housing and Urban Development. HUD is among nine federal agencies facing significant cuts in their discretionary budgets, al-though guarantee commitments for FHA’s single-family mortgage insurance program and Ginnie Mae mortgage-backed securities programs were kept at their previous fiscal levels, $400 billion and $500 billion, respectively. The White House budget plan incorporates...


May 22, 2017 - Inside the CFPB

Other Compliance News: HUD Wants Industry Input on Regulatory Burden

In response to President Trump’s recent executive orders on regulatory reform, the Department of Housing and Urban Development announced it is looking for industry feedback on any of its existing regulations that might be outdated, ineffective or excessively burdensome. As required by Executive Order 13777, “Reducing Regulation and Controlling Regulatory Costs,” HUD said it is in the process of establishing a regulatory task force charged with identifying agency regulations that should be repealed, replaced or modified. As part of that review, the agency is inviting the public to weigh in on the adequacy and relevancy of its current regulatory framework. “HUD’s goal in conducting the review is to make the department’s regulations more effective and less burdensome in achieving HUD’s ...


May 12, 2017 - Inside FHA/VA Lending

Around the Industry

New USDA Chief. Former Georgia Governor Sonny Perdue was sworn in as Secretary of Agriculture on April 25, shortly after the Senate confirmed him. At the same time, President Trump signed an executive order creating a task force on growing housing, among other things, as an economic driver in rural communities. Improved Lender Search List Launched. The FHA last week announced an improved lender list-search capability to help the public search for FHA-approved single-family and multifamily lenders. The search engine allows search on a variety of criteria, including lender name, city, state, servicer-originator type, and recent Home Equity Conversion Mortgage or 203(k) rehabilitation mortgage experience. The Department of Housing and Urban Development’s new Lender List Search web page replaces the previous Lender List lookup page on HUD.gov. While search criteria have not ...


May 12, 2017 - Inside FHA/VA Lending

HUD Names Industry Veteran as Senior Advisor to Secretary Carson

The Department of Housing and Urban Development this week announced the appointment of industry executive Adolfo Marzol as senior advisor to HUD Secretary Ben Carson. Prior to his appointment, Marzol was a member of the board of directors of Essent Group, a private mortgage insurance company based in Radnor, PA. He resigned from the board on May 6, 2017. Marzol retired as executive vice president of Essent in 2015. During his long career, he held senior posts at Fannie Mae, including executive vice president and chief credit officer. He left the government-sponsored enterprise in 2004. Prior to his stint with Fannie, Marzol worked at Chase Manhattan Mortgage, which is now a part of JPMorgan Chase. HUD noted that Marzol will advise Carson “on matters related to mortgage finance.” An experienced professional, his expertise lies in housing finance reform. “His knowledge of ...


May 12, 2017 - Inside FHA/VA Lending

Preparations for LRS Intensifies as May 15 Effective Date Approaches

With only days to go before the implementation of its new Loan Review System, the FHA is encouraging lenders to take a few more steps to ensure smooth transition to the new system. The LRS will go live on May 15, 2017, as the new electronic platform for FHA’s Title II single-family, quality-control processes. Lenders will use the LRS to interact with FHA during post-endorsement loan reviews, direct endorsement authority test cases, lender monitoring reviews and lender self-reporting of fraud and other material findings. Findings will be communicated through the system’s defect taxonomy, which provides a streamlined method of identifying and capturing information about defects uncovered during individual loan reviews. In its latest guidance, the FHA instructs lenders to check access to FHA Connection for any potential glitches. All users access the LRS through FHA Connection via the ...


May 12, 2017 - Inside FHA/VA Lending

FY 17 Spending Bill Passed, FHA, Ginnie Mae Budgets Unchanged

Appropriation levels for FHA and Ginnie Mae from the previous fiscal year were unchanged in the FY 2017 omnibus spending bill, which President Trump signed into law on May 5. The bill, which passed the House by a 309-118 vote and the Senate by a 79-18 vote on May 4, will fund the federal government through the rest of the fiscal year ending Sept. 30, 2017. Among other things, the bill allocates $400 billion to single-family guarantee commitments under the FHA Mutual Mortgage Insurance Fund, and provides $130 million for administrative contract expenses. In addition, the budget provides an additional $30 million if guaranteed loan commitments exceed $200 billion. The agreement also sets aside up to $30 billion for FHA multifamily and specialized loan guarantees during FY 2017. A total of $55 million was set aside for housing counseling programs, $65.3 million for fair housing activities, and $4 million to ...


May 12, 2017 - Inside FHA/VA Lending

PennyMac Now Allows Equifax’s VOE in Lieu of Tax Transcripts

PennyMac has announced that, effective immediately, for FHA, VA, Fannie Mae and Freddie Mac transactions, lenders may provide Equifax’s The Work Number verification of employment, or a written VOE from an equivalent income-verification company in lieu of tax transcripts for salaried borrowers. The Work Number is a user-paid VOE database acquired by Equifax in February 2007. The written VOE must have full income figures supporting the qualifying income, said PennyMac. For all loans closed on or after June 15, 2017, the 2016 tax transcript will be required, unless the file contains evidence an extension was filed along with a copy of the Internal Revenue Service notice for 2016 showing “no record of return filed.” For all loans closed on or after Dec. 15, 2017, 2016 tax returns and tax transcripts will be required. PennyMac reminded lenders that its underwriting system cannot respond to ...


May 12, 2017 - Inside FHA/VA Lending

Nonbanks Dominate FHA Primary Market; Volume Slowed in 1Q17

Nonbank lenders far out-produced depository institutions in originating FHA mortgages during the first quarter of 2017. A new Inside FHA/VA Lending analysis reveals that nonbank lenders produced over 83 percent of FHA forward loans endorsed during the first quarter. With over 8,000 entities listed as originators and sponsors in FHA loan-level data, the overwhelming majority of them were independent mortgage banks, mortgage brokers and other nonbank lenders. The 14 largest FHA originators were all nonbanks, led by Quicken Loans, Freedom Mortgage and loanDepot. One sign of the overwhelming fragmentation in the FHA primary market is the fact that these three lenders accounted for just 11.3 percent of first-quarter endorsements. The largest depository originator of FHA loans was PrimeLending, an affiliate of PlainsCapital Bank. It ranked 15th in production with a ... [charts ]


April 28, 2017 - Inside FHA/VA Lending

Trump Nominates Former Housing Official Patenaude as HUD DepSec

President Trump Friday morning signaled his intent to nominate former regulator Pamela Patenaude to be the next deputy secretary of the Department of Housing and Urban Development. According to a bio listed on the White House website, Patenaude is president of the J. Ronald Terwilliger Foundation for Housing America’s Families. She also served as HUD assistant secretary for community, planning and development during the George W. Bush administration. Patenaude’ s nomination had been expected for some time. She is expected to play a key role in shaping housing policy in the new administration and brings to the table a depth of knowledge about the industry. HUD Secretary Ben Carson was a career brain surgeon with little in the way of housing and mortgage experience. Meanwhile, industry lobbyists contend the White House continues to vet candidates for two other ...


April 28, 2017 - Inside FHA/VA Lending

Federal Shutdown or Not, No Major Disruption Anticipated for FHA

As of press time, Congress passed a one-week stopgap spending measure to keep the government open through May 5, averting a looming government shutdown. The House passed H.J. Res. 99 by a vote of 373 to 30. The continuing resolution has been sent to President Trump. The continuing resolution provides lawmakers sufficient time to negotiate an omnibus spending bill. The previous spending bill was scheduled to expire at midnight, April 28, which would have resulted in a government shutdown similar to the one that paralyzed the federal government in 2013. A shutdown can cause grief for sellers and homebuyers and severely delay processing of mortgage loans if lenders cannot verify a borrower’s tax data or Social Security number. This time, however, the FHA and VA are prepared for such an eventuality, said industry observers. A 16-day government shutdown in October 2013 sent millions of ...


April 28, 2017 - Inside FHA/VA Lending

VA Issues New Loss-Mitigation Option to Help Vets Retain Homes

The Department of Veterans Affairs has issued new guidelines and instructions for modifying VA-guaranteed mortgages in lieu of previous guidance regarding the agency’s Home Affordable Modification Program (HAMP). VA has a long-standing policy of encouraging servicers to work with borrowers to explore all reasonable options to help them keep their home or reduce losses through loss mitigation. The agency requires lenders to consider VA-guaranteed loans for a VA Affordable modification (VAAM) when traditional home-retention options are not feasible. A VAAM allows a new monthly, fixed-rate mortgage payment no greater than 31 percent of the borrower’s monthly gross income. It can cover principal, interest, property taxes, insurance and condominium or homeowner association fees The rate must not exceed the most recent Freddie Mac benchmark rate for ...


April 28, 2017 - Inside FHA/VA Lending

Extra Income, Loan Payoff Leading Reasons for Taking Out HECM Loan

The most common motivation for borrowers (and nonborrowers) in opting for a reverse mortgage was “to gain extra income for everyday expenses” and “paying off mortgage debt,” according to an Ohio State University study on reverse mortgage motivations and outcomes. Published in the latest issue of the Department of Housing and Urban Development’s Cityscape: A Journal of Policy Development and Research, the study said both motivations reflect previous findings that reverse mortgage borrowers are likely to be “house rich” and cash poor.” The study used survey information collected as part of the Aging in Place (AIP) study, which looked at borrower motivations for seeking a Home Equity Conversion Mortgage as well as reasons for not getting one. The primary data set consisted of 1,761 senior households that received counseling for a HECM loan between 2006 and 2011 and responded to the ...


April 21, 2017 - Inside The GSEs

Freddie Looks to Increase Mortgage-Ready MH Buyers

Freddie Mac introduced a curriculum to help potential manufactured homebuyers in Kentucky get a mortgage and is now looking to increase lender participation in the program. The GSE partnered with Next Step Network, a housing intermediary based in Louisville, and three nonprofit housing counseling agencies to create the online education curriculum aimed at better preparing Kentucky homebuyers with blemished credit histories. Since the initiative was rolled out...


April 14, 2017 - Inside FHA/VA Lending

Around the Industry

Judgment Imposed on Former President and Founder of Loan Correspondent Firm. A federal court in Chicago ordered the former president and founder of MDR Mortgage of Palatine, IL, to pay more than $10 million to the Department of Housing and Urban Development for submitting false certifications on FHA loans. The HUD Inspector General Office and the Department of Justice withheld the identity of the former bank official, who was found liable under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act. The violations allegedly involved loans the FHA insured from 2006 through August 7, 2008, the period during which MDR submitted the allegedly false certifications. The DOJ identified 237 loans that MDR processed during the period in question. The loans defaulted and resulted in $3.4 million in claims paid by the FHA. In addition, MDR provided annual verifications to ...


April 14, 2017 - Inside FHA/VA Lending

Patenaude for DepHUDSEC? Bright To Replace Tozer at Ginnie Mae?

The Trump White House has yet to fill key positions at the Department of Housing and Urban Development and agencies that fall under the HUD umbrella, including the FHA and Ginnie Mae. According to industry officials who claim to have some knowledge of the process, the administration is seriously considering Pam Patenaude to be the deputy HUD secretary. Patenaude is president of the J. Ronald Terwilliger Foundation for Housing America’s Families. She served as HUD assistant secretary for community, planning and development during the George W. Bush administration. Meanwhile, Michael Bright has been mentioned as a candidate to be the next president of Ginnie Mae. Bright currently serves as director, Center for Financial Markets at the Milken Institute. During his career he has worked for mortgage lender/servicer PennyMac, investment banking firm BlackRock and ...


April 14, 2017 - Inside FHA/VA Lending

Initial Loan Defect Rate Drops in 4Q16, Missing Docs Leading Cause

The initial material defect rate on sampled FHA loans targeted for a post-endorsement technical review was down in the fourth quarter of 2016 from the previous quarter, according to the FHA’s latest quarterly loan review update. FHA’s Lending Insight reports the material defect rate prior to curing fell to 49 percent in 4Q16 from 53 percent in the previous quarter, based on an analysis of 5,267 sampled FHA loans endorsed between Oct. 1, 2016, and Dec. 31, 2016. Of the loans sampled, 75 percent were purchase-money mortgages; 10 percent were streamlined refinances; 7 percent rate and term refinances, and 8 percent, Home Equity Conversion Mortgage loans. Twenty percent of the sample, 1,081 loans, were conforming while 25 percent, or 1,313 loans, were found to be defective. About 13 percent of the loans were denied endorsement. On the other hand, approximately 41 percent of loans ...


April 14, 2017 - Inside FHA/VA Lending

MBA Remarks on Defect Taxonomy, LRS, Changes to Data Collection

The Mortgage Bankers Association is calling for improvements and clarifications of the new Loan Review System and the Defect Taxonomy to provide FHA lenders greater certainty as to the type of errors that can expose them to False Claims Act risk. The LRS unifies FHA quality control processes into a single system, including test cases from post-closing lenders, post-endorsement loan reviews, lender monitoring reviews and lender self-reporting. It streamlines all the review processes and analysis of results. The new system includes the defect taxonomy, a streamlined rating system for documenting loan-review results and finding the root cause of defects. In MBA’s view, the defect taxonomy shows how far FHA has advanced to ensure lender accountability for the quality of their loans, protecting borrowers and managing its financial risks. However, the Department of Housing and Urban Development needs to ...


April 14, 2017 - Inside FHA/VA Lending

MRB Reports Settlements, Fines From Administrative Actions

The Mortgage Review Board reported approximately $454.4 million in settlements against 25 FHA lenders for various violations of agency lending requirements and imposed more than $1.8 million fines and other penalties against 253 lenders for annual recertification violations. The settlements and penalties resulted from administrative actions taken by the board against FHA lenders from Oct. 1, 2015, through Sept. 30, 2016. The settlements did not constitute an admission of liability or fault. The largest settlement amount, $113 million, was between Freedom Mortgage of Mount Laurel, NJ, and the Department of Justice to resolve alleged violations of FHA requirements and the False Claims Act. In August last year, the MRB voted to release Freedom from any civil money penalties or administrative actions as part of the lender’s settlement with the DOJ. The largest civil money penalty imposed by the ...


April 14, 2017 - Inside FHA/VA Lending

Perceived Shortage of Appraisers Delays VA Closings, Raises Costs

The VA mortgage market is experiencing a shortage of qualified appraisers willing to accept VA loan assignments, causing longer wait times, delayed closings and higher appraisal costs. Testifying during a hearing called by the House Veterans Affairs’ Subcommittee on Economic Opportunity, top VA officials complained of difficulty in obtaining appraisals, particularly in rural and remote areas of the country. Jeffrey London, director of the VA Loan Guaranty Service, said the apparent shortage has resulted in turn times for appraisals that can take up to nine weeks. The VA maintains a seven-day timeliness requirement for appraisals for the VA Fee Panel. The problem was more acute last year when loan volumes were strong in many markets, including VA. Turnaround times for appraisals may have exceeded more than 30 days in some rural areas, according to the Appraisal Institute. The markets have ...


April 14, 2017 - Inside FHA/VA Lending

GNMA Officials Attribute Decline in VA Refis to Anti-Churning Policy

A steep drop in VA-backed securities issuance in the first quarter of 2017 suggests that Ginnie Mae’s efforts to curb serial refinancing of VA loans are working, according to agency officials. Speaking on a panel at the annual VA Lenders Conference in Kansas City, MO, this week, Ginnie executives said that a change in pooling requirements for streamlined refinance mortgages appears to have curbed a destructive appetite for refinancing new VA loans within six months of closing. The practice has caused faster prepayments in Ginnie mortgage-backed securities pools and smaller payouts to investors. VA refi volume fell 42.7 percent from the previous quarter (see chart on page 2), contributing significantly to the 32.2 percent decline in total VA loan securitization during the period. John Getchis, senior vice president at Ginnie Mae, said he does not think the churning trend will continue because the ...


April 14, 2017 - Inside FHA/VA Lending

PennyMac Claims Top Rank in Ginnie MBS Production in 1Q17

There is a new boss in the Ginnie Mae mortgage-backed securities market. PennyMac Financial rose to the top of the issuer ranking in the first quarter of 2017 despite a sharp decline in volume, according to a new analysis and ranking by Inside FHA/VA Lending. PennyMac issued $10.78 billion of single-family Ginnie securities during the first three months of the year. The figures in this analysis are based on Ginnie loan-level disclosures, which truncate loan amounts to $1,000 increments. PennyMac’s first-quarter production was off 27.9 percent from the fourth quarter of 2016, a slightly bigger decline than the 24.8 percent drop in overall Ginnie issuance. Even though the firm fared slightly worse than the total market, its first-quarter downturn was less severe than Wells Fargo’s. Wells has been the top Ginnie producer for a long time, as well as the top player in most segments of the ... [ Charts ]


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