The Federal Housing Administration, facing a dramatic increase in technical defaults on reverse mortgages, will launch a major review of its program with a possible overhaul coming down the road.
“The time has come to reassess program options and origination requirements to ensure that the program serves its intended purpose and borrowers understand and are able to meet their obligations related to the transaction,” acting FHA commissioner Carol Galante says in an October 5 letter to lenders.
While that reassessment and rulemaking process will be a lengthy process, the acting commissioner is urging HECM lenders to start evaluating new borrowers now to make sure they can meet their tax and insurance obligations.
Such upfront assessments are not required under FHA regulations, but Gallant points out in the letter that such financial capacity assessments don’t violate fair lending laws or the Equal Credit Opportunity Act.
With the U.S. economy in its worst condition since the Great Depression, seniors are finding it harder to pay their real estate taxes and insurance, prompting the agency to consider an overhaul to its home equity conversion mortgage program, or HECM for short.
FHA-insured HECMs do not require mortgage payments and instead the “borrower” actually receives monthly income but mortgagors are required to pay property taxes and homeowner insurance on their own.
The federal mortgage insurance agency has taken several steps to address the problem over the past year, but now believes a major review is in order.
Daily Briefing | Friday, October 7, 2011
Another Retail Shoe Drops at B of A: Top Producer Departs
Bank of America continues to say that it’s committed to retail mortgage lending, but the megabank suffered another blow recently with the departure of one of its top loan producers in the nation, Kevin Budde of Southern California.
Although Refis are Picking Up, Mortgage Jobs Lag
Mortgage companies continued to pare back their payrolls in August as lenders cut 2,800 full-time employees during the month, following 1,900 layoffs in July.
FHA May Allow Investors to Use 203(k) Program
As the Obama Administration examines options to expedite the sale of foreclosed properties, the Federal Housing Administration is weighing a tweak to its 203(k) program, opening it once again to investors.
Dems Demand More Relief for Underwater Borrowers
The GSE regulator told House Democrats at a closed door meeting that the Federal Housing Finance Agency is committed to making meaningful changes to a special program that will allow more borrowers with high LTV loans to refinance at lower mortgage rates.
Helios, CRE Special Servicer, Acquires Situs
Helios AMC, a commercial real estate special servicer which is sponsored by Ranieri Partners, has acquired real estate advisory firm The Situs Companies. The combined entity will retain the Situs name. The purchase price was not disclosed.
Fitch: CMBS Delinquencies Drop Again
Fitch Ratings found delinquencies on loans underlying commercial mortgage-backed securities declined for the second month in a row in September as its numbers bore out what the company has identified as a trend toward improvement in the hotel sector.
Due Diligence Provider Gets Rating Agency Approval
Credit rating agency DBRS this week approved American Mortgage Consultants, New York, as a third-party due diligence provider for residential MBS.
Prepayment Reports Show Surge in Speeds
Analysts found prepayments surged notably in September.
The Sticking Point on GSE Refis: Reps and Warranties
The Obama Administration’s efforts to expand a GSE refinancing program and reach a large number of underwater borrowers will depend on how far the Federal Housing Finance Agency will go in providing lenders relief from loan buy-backs, according to industry officials and analysts watching the effort.
Massachusetts Preparing to Sue Servicers Over Foreclosures
Fearing that the megabanks might get off too easy in the multi-state mortgage settlement talks, Massachusetts Attorney General Martha Coakley is preparing to file lawsuits against the nation’s largest servicers for wrongfully foreclosing on customers.