FHA/VA – Page 4 – Consumer Financial Services Watch

FHA Announces Upcoming Changes to Strengthen the Mutual Mortgage Insurance Fund

Dec 03 2012

The U.S. Department of Housing and Urban Development’s recently announced that an independent actuarial review of the FHA Mutual Mortgage Insurance (MMI) Fund found that the Fund’s capital reserve ratio has fallen to -1.44%, which represents a negative economic value of $16.3 billion. In the wake of this announcement, HUD unveiled a series of aggressive steps it intends to take over the next several months. According to the Annual Report provided to Congress earlier this month, FHA lenders will have to contend with several policy changes to FHA origination and servicing requirements in the coming year, as well as to the Home Equity Conversion Mortgage (HECM) program. Read More

FHA and RHS Respond to Hurricane Sandy

Nov 30 2012

By: Holly Spencer Bunting , Kathryn M. Baugher

In the wake of Hurricane Sandy, both the U.S. Department of Housing and Urban Development (“HUD”) and the Rural Housing Service (“RHS”) have issued guidance intended to help homeowners with government insured or guaranteed loans who were affected by the storm. With regard to loans insured by the Federal Housing Administration (“FHA”), the guidance is a combination of reminders about existing relief or insurance programs available to assist disaster victims and new policies designed to aid borrowers in the process of obtaining FHA financing for properties impacted by natural disasters. With regard to RHS-guaranteed loans, the guidance focuses on foreclosure and loss mitigation relief available to borrowers impacted by Hurricane Sandy. Read More

FHA Issues Annual Financial Report to Congress

Nov 27 2012

By: Phillip L. Schulman, Krista Cooley

On Friday, November 16, 2012, the U.S. Department of Housing and Urban Development released its 2012 Annual Report to Congress and announced that the FHA Mutual Mortgage Insurance (MMI) Fund suffered a $16.3 billion deficit. In addition, for the fourth year in a row, the MMI Fund has failed to meet its 2% statutory reserve amount, an amount required under the National Housing Act to be held back to cover excess loss.

Rural Housing Service Publishes Final Rule Regarding New Annual Fee

Jul 11 2012

By: Kathryn M. Baugher

The U.S. Department of Agriculture’s Rural Housing Service (RHS) today published a final rule implementing the new annual fee that will be charged on all RHS-guaranteed single family housing loans obligated on or after October 1, 2011.

The Housing Act of 1949 was amended in July 2010 to authorize RHS to charge an annual fee. The purpose of the annual fee is to make the RHS loan guarantee program “subsidy neutral,” meaning that it will not require taxpayer funding to continue operating at its current size. While RHS acknowledges that the annual fee will increase the cost of RHS-guaranteed loans for borrowers (by approximately $20 per month for the average loan), RHS believes that the annual fee is necessary to avoid a reduction in the size of the program, which would result in fewer RHS-guaranteed loans being made. Read More

Conflicted Out: When Must a Servicer Follow FHA Guidelines over the Global Foreclosure Settlement Servicing Standards?

Apr 30 2012

By: Krista Cooley, Rebecca Lobenherz

The National Servicing Standards, outlined in the March 2012 Global Foreclosure Settlement, are difficult to reconcile with the already stringent servicing requirements in place for the Federal Housing Administration’s (“FHA”) single family loan insurance program. The National Servicing Standards are expressly subject to and must be interpreted in accordance with applicable federal, state and local laws, rules and regulations, and the terms and provisions of the requirements, binding directives and investor guidelines of the mortgage insurer, including FHA. In the event of a conflict between such requirements and the National Servicing Standards such that a servicer cannot comply with the National Servicing Standards without violating these requirements or being subject to adverse action, then the servicer must document such conflicts and notify the monitoring committee that the servicer intends to comply with the FHA requirements to the extent necessary to eliminate the conflict. Read More

Refinancing Rural Housing Loans: Rural Housing Service Announces Pilot Program

Feb 23 2012

By: Kathryn M. Baugher

On the heels of President Obama’s State of the Union address, the U.S. Department of Agriculture this month announced a two-year pilot program to help borrowers with USDA-guaranteed loans refinance their mortgages at lower rates without obtaining a new credit report, appraisal, or property inspection. The program will be offered only in Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, South Carolina and Tennessee, states selected because they are among those hardest hit by the downturn in the housing market. The Department estimates that 235,000 homeowners will be eligible to refinance their loans through this program. Read More

Administration’s Proposed Refinancing Plan for Non-GSE Loans Is Illusory

Feb 02 2012

By: Laurence E. Platt

The Administration’s newly announced plan to provide low cost refinancings to underwater, current borrowers whose residential mortgage loans are not owned or securitized by the GSEs is high on hope and low on likelihood of success. The plan creates a form of a “streamlined” refinancing on a stated income basis and without an appraisal. Eligibility criteria include that the loan to be refinanced has been current for the past six months, the borrower must meet a minimum credit score of 580 and be an owner-occupant and the new loan must fall within FHA loan limits and a to-be-determined high loan to value ratio. Holders may need to write down principal of the existing loan if the LTV exceeds a certain percentage in excess of 100%, much like the wildly unsuccessful 2010 FHA Short Refinance program. Read More

No More Mister Nice Guy: Indemnification Now Required by FHA Lender Insurance Regulations

Jan 31 2012

By: Phillip L. Schulman, Krista Cooley, Holly Spencer Bunting

To view the complete alert online, click here.

FHA’s Lender Insurance Program Will Soon Cost Lenders More Money

Jan 24 2012

By: Krista Cooley, Phillip L. Schulman, Holly Spencer Bunting

FHA mortgagees participating in the Lender Insurance (“LI”) program will be required to indemnify HUD for self-endorsed loans that HUD deems ineligible for FHA insurance based on a final regulation to be published by HUD on January 25, 2012. Since January 1, 2006, FHA mortgagees, with approval from HUD, have been permitted to endorse loans themselves, without first having to send the loans to HUD. The final regulation marks the first time HUD will make significant changes to the LI program, one of which automatically increases LI lenders’ liability for the loans they close and self-endorse. These changes finalize LI regulations proposed by HUD in October 2010 and will take effect on February 24, 2012. Read More

FHA Insured Mortgages Require an Appraisal by a State Certified Appraiser

Dec 12 2011

By: Nanci L. Weissgold

Effective December 23, 2011, HUD has finally amended its rules to coincide with its existing practice of allowing only state certified appraisers to conduct appraisals of properties securing an FHA insured mortgage. This means that state licensed appraisers or those with only the certification of a “nationally recognized professional organization” are now permitted on the FHA Appraiser Roster.

Catagory:FHA/VA