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FHA News | Government Resources | M o r t g a g e e Letters | FHA Statistics
FHA, VA and HECM mortgage news. HUD and G i n n i e news also. Originations, servicing and FHA approval.

The FHA Report

Recent FHA program activity

March 19, 2013

By AIMEE BROWN Mortgage Daily

Vested parties have recently swarmed interested entities with opinions related to recent Federal Housing Administration activity. FHA policies and updates centered around its financial health and boundaries of its protective borrower reach, while a handful of new private mortgage industry services have been unveiled.

The Department of Housing and Urban Development extended its FHA Home Energy Retrofit Loan Pilot Program, or FHA PowerSaver program, through May 4, 2015.

"An extension will enable more lenders and homeowners to participate in the Retrofit Pilot Program, thereby providing additional data for HUD's use in assessing the program's success," the agency's Feb. 12 Federal Register notice said.

Commentary for HUD's proposed changes to the maximum loan-to-value ratio on financing for qualified FHA borrowers ended March 8. To strengthen the Mutual Mortgage Insurance Fund, the agency wanted a maximum 95 percent LTV ratio set for most loans over $625,500.

Mortgagee letter 2013-04 outlined additional FHA actions for improving the fund. For most case numbers assigned on April 1 or later loans, the annual insurance premiums will increase. Most FHA loans with case numbers assigned on June 3 or later will see a revised annual insurance assessment period. These same loans will have the annual insurance exemption removed from mortgages with 15-year or less terms and loans with 78 percent or less LTV. As well, annual insurance rates will increase for loans with the aforementioned conditions.

An earlier letter extended the Mortgagee Letter 2012-11 implementation date to Jan. 1. The letter concerned explanation for title approval at conveyance.

Though FHA activity centered mostly around increasing financial strength and testing its reach, the influx of opinions related to all recent FHA operations offered further insight into the agency.

Mortgage Bankers Association President and Chief Executive Officer David H. Stevens put his FHA thoughts on record with his U.S. Senate Committee on Banking, Housing and Urban Affairs testimony released by on Feb. 28. Stevens commended Senate approval of FHA Commissioner Carol Galante and acknowledged positive moves the FHA made to fix problems causing single-family portfolio losses. Stevens also suggested future and necessary FHA actions.

"Looking ahead, MBA believes further programmatic changes at FHA must balance three priorities: restoring financial solvency; preserving FHA's critical housing mission; and maintaining the agency's countercyclical role," Stevens' said.

The National Association of Realtors launched a February print campaign opposing FHA reform that could disrupt and further weaken the housing market, according to the Realtors' website. The Feb. 28 ad titled Fact: FHA Matters listed four ways the FHA played a vital role in the housing industry then presented the Realtors' view.

"The one million members of the National Association of Realtors support changes that are vital to the solvency and strength of the FHA fund," the statement said. "However, any actions to deliberately lower FHA's market share could reduce the availability and affordability of mortgage credit and undermine the fragile real estate recovery. Let's strengthen housing markets and our national economy by working together to ensure that FHA maintains its critical role for American homeowners."

Taking a more academic approach, a report from the UNC Center for Community Capital mirrored the Realtors' outlook on the FHA from a contextual, historical and present-day perspective. In Sustaining and Expanding the Market: The Public Purpose of the Federal Housing Administration, co-authors Roberto G. Quercia, Center director, and Kevin A. Park, Center research associate, argued the FHA's insurance fund was still justified because the fund served the agency's purpose and filled in holes the private mortgage market created.

The UNC report said lawmakers and analysts must consider the FHA's history of fulfilled duties and the FHA's challenges for future fulfillment. As a result, the authors concluded the FHA needs power to protect communities from lender abuse and needs more leeway, policy- and resources-wise, keeping up with the housing market.

"As has been the case following previous crises, FHA's market share can be expected to decrease as the economic recovery strengthens" Quercia and Park said. "Its current elevated share is more of an indication of the weakness in the private conventional mortgage market than any deliberate policy."

In opposition, American Enterprise Institute Resident Fellow Edward J. Pinto openly criticized the Realtors' political agenda. In his American Enterprise blog post titled National Association of Realtors Continues to Oppose FHA Reform, Pinto said the FHA's mortgage insurance requirements hampered approximately 3.2 million homeowners since 1975, and the Realtors' advocacy of the FHA program "is nothing short of scandalous."

"Indeed, the NAR proposes to subject even more first-time home buyers and working class families, many of whom are minorities, to the FHA's abusive lending practices," Pinto wrote. "The NAR would have these families experience foreclosure rates of 10, 15, and even 25 percent. History tells us that families in working class neighborhoods will suffer even higher rates of failure."

Elsewhere, the Community Associations Institute recently commended FHA on its new temporary rules promising increased opportunity in the condominium market for sellers and FHA-approved buyers. The Sept. 13 announcement also urged the FHA toward taking more permanent regulatory action with its rulings, and the organization's CEO, Thomas Skilba, offered his group's legal prowess to help the agency meet those objectives.

FHA political debates aside, a few companies expanded services that offered help to all agency-affected parties.

On Jan. 15, Carrington Mortgage Services LLC revealed it now offers a complete streamlined FHA 203(k) loan service in the company's wholesale and retail lending initiatives.

Carrington's retail side will manage the full life of the loan, which allows buyers to finance up to $35,000 in home repairs. The new feature includes loan servicing.

Effective April 1, Carrington's wholesale side will include the 203(k) product in its government-backed offerings portfolio.

Also that month, Envoy Mortgage expanded its existing streamline 203(k) loan to offer borrowers an option for allocating a larger part of their funds to home repairs. This loan supplements Envoy's products in its national builder channel.

HUD approved All Reverse Mortgage Co. as an FHA direct lender, according to a Nov. 9 press release. Previously a reverse mortgage broker, the company will offer FHA-insured home equity conversion mortgages.

On. Oct. 22, The Collingwood Group and Motivity Solutions revealed a new risk management tool called NW-Insight for FHA, Ginnie Mae and warehouse lenders. NW-Insight provides clients with immediate access to web-based business analytics on the FHA's Neighborhood Watch database for proactive FHA compliance monitoring and default loan trends tracking and identification at a single organization-level. As well, users can monitor FHA compliance internally or externally with third party or correspondent businesses.

"Staying aware and ahead of positive and negative trends in you FHA business performance has never been more critical," Collingwood Chairman Brian Montgomery said. "Collingwood's expertise in FHA risk management, combined with Motivity Solution's business intelligence technology, has enabled real time access to relevant Neighborhood Watch data, so FHA lenders can easily identify areas of vulnerability and more effectively manage risk."

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Political Mortgage News | Mortgage Laws
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