Government

FHA Wants Fewer Defects, More Low-Credit-Score Loans

24.09.2014
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The Federal Housing Administration wants lenders to make fewer mistakes when writing mortgages for the government insurance program. The agency also wants to serve more borrowers with low credit scores. Getting both may be tricky.

FHA lenders already have felt the tension between these two demands. A hard line on defects means lenders are more likely to be on the hook for losses in the event of default, and lower credit scores make defaults more likely. Many FHA lenders such as JPMorgan Chase have been pulling back from the market for this reason.

The FHA expects 75% of the loans it insures from now on will be made to borrowers with FICO scores of 680 or below, an FHA official told a group of risk managers Monday. The housing downturn took many of these borrowers out of the home buying market and the FHA is looking for ways to bring […]

Mozilo Regrets Nothing at Countrywide as Gov’t Closes In

12.09.2014
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Angelo Mozilo cannot believe it.

Six years after he lost control of the largest mortgage lender in the U.S., and days after news that the U.S. Attorney’s Office in Los Angeles plans to sue him, the Countrywide Financial Corp. founder is baffled by a new effort to punish him, proud of past triumphs and incensed by criticism.

“You’ll have to ask those people, ‘What do you have against Mozilo, what did he do?'” he said in a 30-minute call with Bloomberg News before Labor Day, one of his few interviews since the firm’s downfall. “Countrywide didn’t change. I didn’t change. The world changed.”

Interviews with Mozilo, 75, and three friends show what retirement looks like for a chief executive officer linked to the worst financial crisis since the Great Depression. Remaining out of public view like Lehman Brothers Holdings Inc.’s Richard […]

U.S. Treasury Opposes Extending Cutoff Date for HARP Refinancing

3.02.2014
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The U.S. Treasury opposes allowing borrowers with mortgages originated after mid-2009 to become eligible for the Home Affordable Refinance Program, the agency’s chief housing-finance adviser said.

Only borrowers with loans originated by May 31, 2009, are currently eligible for the HARP program, which allows homeowners with mortgages backed by Fannie Mae and Freddie Mac to refinance even if they owe more than their properties are worth.

“Very few homeowners whose loans were originated after the cut-off date are underwater and advancing the date would do more harm than good by prolonging market and investor uncertainties,” Michael Stegman, the Treasury’s housing adviser, told an audience at the Structured Industry Finance Group conference in Las Vegas.

Analysts including those at JPMorgan Chase & Co. and FBR Capital Markets predicted the cutoff date would be changed after Melvin L. Watt took over this month as director of […]

FHA: The incredible, shrinking mortgage resource

21.01.2014
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Is FHA sending its most profitable, lowest-risk customers — homebuyers who have very good to excellent credit — to Fannie and Freddie for their mortgages, thereby losing significant market share?

Yes.

Are FHA’s multiple and costly hikes to its insurance premiums — and worst of all, its revocation of borrowers’ rights to cancel premium payments during the term of the loan — beginning to have a negative impact on its ability to retain good-quality homebuyers?

Yes.

Are credit scores on the downgrade at FHA as the agency turns off new buyers with FICO scores above 700?

Absolutely.
But is all this necessarily bad news? Does it point to an emerging case of adverse selection — something that’s especially ill-timed given Congress’ mandate to the agency to rebuild its depleted insurance fund reserves in the wake of the agency’s first federal bailout in its history?

Or does it simply mean […]