Posted tagged ‘Ability to Pay’

FHA to Take First Ever Bailout

October 4, 2013

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With the changes that took effect at the start of October 2013 and the growth in the housing market these problems should not be reoccurring in the future. Please read the article below.

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The Federal Housing Administration (FHA) will be accepting a bailout of more than $1 billion to make up for losses sustained from the agency’s legacy books and its reverse mortgage program.

Following reports last week that FHA’s financial situation would require a Treasury draw in the neighborhood of the Obama administration’s $943 million forecast, Commissioner Carol Galante revealed in a letter to the Senate Banking Committee that the agency is taking an appropriation of approximately $1.7 billion.

“This amount is higher than the estimate provided in the President’s budget because of a decline in FHA endorsement volume in the last few months of the fiscal year—consistent with the trend in the broader housing market in response to higher interest rates,” Galante explained in the letter. “It is also consistent with FHA’s goal of reducing its footprint in the market.”

The majority of damage inflicted to FHA’s Mutual Mortgage Insurance Fund (MMIF) came from losses on loans insured from 2007-2009, which—according to an actuarial report released last year—“continue to place a significant strain on the Fund with $70 billion FHA claims attributable to loans insured in those years.”

Also damaging to the fund was the agency’s Home Equity Conversion Mortgage (HECM) program, which was consolidated earlier this year as part of an effort to bolster FHA’s finances. Other changes include an increase in premiums and a requirement for mandatory underwriting on riskier loans.

In her letter, Galante noted the necessary appropriation “is an accounting transfer and does not reflect an up-to-date view of the MMIF’s performance, its long-term fiscal health, or its current cash position,” saying the calculation does not incorporate recent improvements in loan performance or current economic factors.

To read the complete article please use the link below.

First Ever Bailout

Clear Capital Report Shows New Top Markets

October 3, 2013

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This is good news for the housing market. When Detroit is bouncing back things have to be looking up. We need to wait and see what the government shutdown will do to the market. Please read the article below.

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San Francisco and Detroit led the housing market rebound according to the September Home Data Index released Tuesday by Clear Capital.

San Francisco led metro price performance in September, with 4.4 percent quarterly growth and 28.3 percent yearly growth. Detroit home prices saw 4.3 percent and 23.3 percent in quarterly and yearly growth, respectively.

National home price gains in September picked up to 10.9 percent year-over-year, which Clear Capital attributed to residual summer buying activity.

“While national and regional rates showed more of the same in September, an interesting dichotomy is unfolding beneath the surface,” said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital.

“Strong performances in San Francisco and Detroit remind us that in a dynamic market, the only constant is change. For about a year and a half now, we’ve been focused on First-In, First-Out recoveries characterized by hard hit markets attracting investor interest, like Miami, Phoenix and Las Vegas. Now as the recovery matures, we see home buyers re-engaging in markets that haven’t fit the typical investor profile.”

San Francisco median home prices stood at $600,000 in September according to the report, while the median price in Detroit was $107,500. The national median home price was $215,000.

To read the complete article please use the link below.

New Top Markets

What Does the Government Shutdown Mean for the Housing Market?

October 3, 2013

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The short term effects might be minimal for a lot of people in the housing market but for our business we are shut down as HUD and the VA are not processing any Condo approvals. We are still compiling data and getting projects ready to submit but until HUD and the VA are back up and running we can’t send any packages in. This will be remembered in the 2014 elections for both parties. Please read the article below.

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As the federal government ground to a halt Tuesday, the question of how the shutdown will affect the housing market remains at the front of everyone’s mind. How will the market react? The answer: it depends.

Mortgages will continue to proceed through the usual government channels, although some delays are expected.

More than 90 percent of the residential housing market depends on the government and/or the GSEs for underwriting, insurance, and funding. Mortgages controlled by Fannie Mae and Freddie Mac will not be affected because they are funded by fees from lenders rather than federal appropriations.

Some concern has been raised about how the employment verification process would proceed in the event of an IRS shutdown. Freddie Mac issued the following clarification to lenders Tuesday: “If a loan is made to a government employee and the closing date is during the shutdown period, you do not need to obtain employment verification or re-verification prior to closing if a government office providing the verification is not able to do so as a result of the temporary shutdown. You are also not required to obtain employment verification or re-verification for such loans after the shutdown ends. This exception does not apply to income verification or any other requirements…We only require IRS Form 4506-T to be signed by the borrower prior to closing. We do not require that 4506-T be processed by IRS prior to closing. However, we require that the actual 4506-T information is obtained as part of the Seller’s in-house QC program.”

To read the complete article please use the link below.

Government Shutdown

Freddie Mac Reaches Repurchase Settlement with Citigroup

October 2, 2013

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This article brings to mind the fact that with all the damage that was done to millions of US citizens by the banking/mortgage industry collapse not 1 person of any consequences was even charged. All they ever did was say “Sorry”. Please read the article below.

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Citigroup and Freddie Mac have reached an agreement to settle potential future repurchase claims on millions of loans sold to the GSE in the last decade.

According to a release from Citi, the bank will pay Freddie Mac $395 million, all of which is covered by its existing mortgage repurchase reserves as of the end of Q2.

The agreement covers claims for breaches of representations and warranties on 3.7 million loans sold between 2000 and 2012. It does not release Citi from liability with respect to the bank’s servicing or other obligations on the included loans. Also not included are less than 1,000 loans sold with resource or some guarantee of performance and those currently in the repurchase process.

Citi says it is “adequately reserved” for those loans not covered by the agreement.

Jane Fraser, CEO of CitiMortgage, said the agreement “marks another important milestone in successfully resolving Citi’s remaining legacy mortgage issues.” She added that the bank will remain focused on “continuing to provide high quality mortgage products and service to [its] customers.”

To read the complete article please use the link below.

Repurchase Settlement with Citigroup

HUD Proposes New Definition of Qualified Mortgage

October 2, 2013

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If this is the new definition of what a Qualified Mortgage is, what was the old one? There also seems to be no reference to the borrower having any ability to repay the loan. Please read the article below.

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HUD proposed a new definition of “qualified mortgage” (QM) in a statement released Monday. To meet the new QM requirements, a mortgage will have to require periodic payments, have terms not exceeding 30 years, limit upfront points and fees to no more than three percent with adjustments to facilitate smaller loans, and be insured or guaranteed by FHA or HUD.

The Dodd–Frank Act required HUD to propose a QM definition that is aligned with the ability-to-repay criteria set out in the Truth-in-Lending Act (TILA) as well as the department’s historic mission to promote affordable mortgage financing options for qualified lower income borrowers.

“The new limit on upfront points and fees for all Title II FHA-insured single family mortgages is consistent with the private sector and conventional mortgages guaranteed by Fannie Mae and Freddie Mac to attain qualified mortgage status under CFPB’s final rule.” HUD said in a statement. “Currently, HUD does not insure, guarantee or administer mortgages with risky features such as loans with excessively long terms (greater than 30 years), interest-only payments, or negative-amortization payments where the principal amount increases. Moreover, HUD’s existing underwriting standards require lenders to assess a borrower’s ability to repay their mortgage debt.”

The proposed rule establishes two categories of QMs that have different protective features for consumers and different legal consequences for lenders. HUD’s proposed Qualified Mortgage categories are determined by the relation of the Annual Percentage Rate (APR) of the loan to the Average Prime Offer Rate (APOR).

To read the complete article please use the link below.

Definition of Qualified Mortgage

HUD Delays Dual Agency Restrictions

September 30, 2013

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This is another case of the Government “Fixing” a problem that they had no evidence of it even existing. This rule would have produced wide spread havoc in the short sale market. At least they caught their foul-up in time to curtail the damage. Please read the article below.

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HUD has delayed its prohibition of dual agency listings on short sale properties according to a statement made this week by the National Association of Realtors (NAR).

The HUD prohibition had first been outlined in a July letter to mortgage servicers describing new anti-fraud requirements for short sales and deed-in-lieu of foreclosure transactions. The original policy was slated to go into effect October 1, 2013.

In response, NAR President Gary Thomas wrote a letter to HUD outlining NAR’s concern with both the reasoning behind the prohibition and the possible consequences of it.

“NAR has been told that the policy was implemented because the HUD Inspector General detected fraud and abuse in the pre-foreclosure sales process; however, no statistics or reports were provided to NAR detailing short sale fraud by real estate agents,” the letter said. “NAR takes fraud very seriously…If there is evidence of fraud by our membership, we would like to be part of an effort to develop policies that effectively address these issues.”

Thomas’s letter also raised concerns about how a prohibition on dual listing would affect agents’ and brokers’ ability to effectively serve their clients.

To read the complete article please use the link below.

Dual Agency Restrictions

FHFA OIG Recommends More Efficient Pursuit of Deficiencies

September 28, 2013

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Reports like this are getting old. Freddy Mac lets 4 Billion dollars just melt away with no effort to recover it and Fanny Mae does the same thing with over 2 billion dollars of your tax money. They blame it on the people that are servicing the foreclosures but in reality they are the ones that these people work for.

If you can’t oversee your employees then you’re should be out and let’s find someone who can. As far as anything can be found by searching records no one has been disciplined for this foul up let alone fired. What would your boss do if you lost 4 billion dollars without any effort to recover it? GSE’s answer is – we’re sorry we will try to fix it by next year. Please read the article below.

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The Office of the Inspector General (OIG) of the Federal Housing Finance Agency (FHFA) has issued a pair of reports critical of the GSEs’ efforts to collect billions of dollars in deficiencies from underwater homeowners who walked away from their mortgages.

“If either the foreclosure sale’s proceeds or the value at which [the GSE] records a property in its real estate owned portfolio is less than the borrower’s mortgage loan balance, the shortfall (or deficiency) represents a loss to [the GSE],” one of the reports explained. “Such losses can be reduced if the enterprise recovers deficiencies from borrowers who possess the ability to repay. Enhanced deficiency management practices can also serve as a deterrent to those who would choose to strategically default on their mortgage obligations.”

The reports found that Freddie Mac did not refer nearly 58,000 foreclosures with estimated total deficiencies of approximately $4.6 billion to its deficiency collection vendors. Between January 2010 and June 2012 Fannie Mae failed to pursue 26,000 foreclosures that had an average deficiency of $79,000.

In most cases the collection of deficiencies was abandoned because of state laws limiting the amount of time that can pass between a foreclosure sale and a collection action. Delays in collecting and processing paperwork often allowed this statute of limitations to pass.

To read the complete article please use the link below.

Efficient Pursuit of Deficiencies