The annual process of renewing Federal Housing Administration mortgagee approvals has been completely digitized, while a nonprofit group has teamed up with two service providers to offer FHA fulfillment servicers for approved correspondents. In other FHA activity, banks are being encouraged to take advantage of a program for purchasing and rehabilitating properties, and a former Fannie Mae chief credit officer says the FHA is headed for a taxpayer bailout.
An electronic annual certification for renewing approved mortgagees will replace the paper Yearly Verification Report, the U.S. Department of Housing and Urban Development said in Mortgagee Letter 2009-25 last month. The move will enable FHA-approved mortgagees to complete the entire annual renewal process digitally.
HUD indicated that only officers of the mortgagee will be allowed to complete the electronic certification, and their social security numbers will be validated.
The Office of the Comptroller of the Currency is prodding U.S. banks to take advantage of FHA's 203(k) Home Rehabilitation Mortgage Insurance Program, an August announcement indicated. The program, which presents less risk to mortgagees due to FHA insurance, can enable potential property investors to finance the purchase and rehabilitation of real estate owned by banks.
"HUD strongly supports OCC's efforts to increase bank participation in the 203(k) Program," HUD Assistant Secretary and FHA Commissioner David Stevens was quoted as saying in the news release. "With so many bank-owned properties in need of repairs, this program offers a great way for homebuyers to finance both the purchase and rehabilitation of these homes."
Neighborhood Housing Services of America has teamed up with Just Price Solutions and LenderLive Network Inc. to provide a new FHA Fulfillment Center, a Sept. 1 statement said. The venture will enable Neighborhood Housing -- a nonprofit mortgage bank and secondary market for home loans -- to facilitate and commit to purchase loans originated by approved loan correspondents under the Non-Supervised Federal Housing Administration guarantee program.
"Much more than a traditional FHA sponsorship program that guarantees to buy loans, NHSA mitigates operating risk to its correspondent lenders by providing access to a 'best-in-class' centralized fulfillment center for processing and underwriting FHA loans while Just Price Solutions provides point of sale e-commerce registration, underwriting and pricing," the press release stated. "Accessing the power inherent in a large consortium of smaller lenders, the e-commerce technology and new fulfillment center will provide an enormous advantage to smaller firms just entering the realm of FHA lending."
Self-proclaimed affordable-lending expert Edward Pinto issued a news release this month supporting his view that FHA is destined for a taxpayer bailout. He noted that increased FHA lending, which has a long history of fraud, has seen more loans with high-loan-to-values than just three years ago, while prices continue to fall. He also highlighted that FHA loans are much larger than in the past.
Pinto, who says he was the chief credit officer of Fannie between 1987 and 1989, acknowledged a 30-point increase in average FHA FICO scores over the past year. But at the same time, the developer of the FICO score has reportedly indicated that mortgages originated in October 2008 with 660 FICO scores perform like loans closed in 2005 with 560 FICO scores.
"FHA's tightening has had no effect," Pinto stated. "You cannot lend on a high risk basis into a declining market without getting excessively high rates of default and soaring non-cure rates."
Guardian First Funding Group announced on Aug. 13 its HUD approval to convert to a non-supervised lender, also known as a "Full-Eagle." Chief Executive Officer Jason Levey projected that the New York-based firm will "quadruple" its loan officer base from last year to this year. Guardian reportedly ranked as a top-20 HUD lender for home-equity conversion mortgages year-to-date through July 31.
FHA Commissioner Stevens spoke at the Lenders One Mortgage Cooperative member conference last month, according to a Lenders One news release this month that praised the new commissioner as the "most qualified FHA commissioner" in recent memory. The St. Louis-based firm, which reports $60 billion in annual aggregate originations, noted that 43 percent of its 140 members' second-quarter volume was FHA business.
In an effort to generate publicity about itself, Roseville, Calif.-based Paramount Equity issued a July 22 press release touting how it provides access to FHA loans with downpayments of just 3.5 percent. The company highlighted in-house underwriting, the $8,000 federal tax credit and 85 percent LTV cashout refinances.