“Nationally, more than 30% of the 2010 mortgages guaranteed by the FHA—an entity historically focused on first-time, low-income and minority borrowers—are made to families making more than 115% of area median income (AMI),” the report states. “Of the 30%, more than half went to those with incomes greater than 150% of AMI.”

Additionally, FHA loans are often financing homes that are above their neighborhood average in price. In 2011, more than half of FHA’s insurance was of loans with values greater than 125% of the area median house price—a figure that has risen from just 15% in 2007. 

“The FHA didn’t create the housing bubble and crash, and it has been a useful part of the recovery,” said Robert Van Order, one of the study’s authors. “However, partly in an effort to redeem its mounting and highly publicized delinquencies, it has expanded to a market—higher income borrowers—that it has not traditionally served. We recommend acknowledging FHA’s losses and the need for help from the Treasury, if that is necessary, and then moving on to what works best in the long run; returning to a smaller, more traditional FHA.”

The report cites the increase in loan limits as one of the main reasons for the shift, despite evidence that loans of greater amounts have a greater chance of delinquency. 

View the report. 

Written by Elizabeth Ecker

The lawsuit, filed in May 2011, sought damages and penalties of Deutsche Bank for false certifications under the company’s Mortgageit subsidiary over a period of time beginning in 2007. 

“Among other things, the suit accused the defendants of having submitted false certifications to HUD, including false certifications that Mortgageit was originating mortgages in compliance with HUD rules when in fact it was not,” according to a statement from the U.S. Attorney’s Office. 

The company admitted to the fraudulent activity, which included stating certain loans were eligible for FHA mortgage insurance when they were not, and leading to HUD losses in the case of loans that defaulted. 

“Mortgageit and Deutsche Bank treated FHA insurance as free Government money to backstop lending practices that did not follow the rules,” said Manhattan U.S. Attorney Preet Bharara. “Participation in the Direct Endorsement Lender program comes with requirements that are not mere technicalities to be circumvented through subterfuge as these defendants did repeatedly over the course of a decade.”

Written by Elizabeth Ecker

March applications year-over-year however, are down nearly 20%.

While reverse mortgage applications have experienced a slow increase in the first months of 2012, endorsements have fallen sharply, and are expected to fall further on a monthly basis in 2012, according to industry estimates.

March marks the mid-way point through current fiscal year 2012. At the halfway mark, the mid-fiscal year HECM application count totals 40,587, HUD reported. There were 95,691 HECM applications in fiscal year 2011, amounting to 73,129 endorsements.

View FHA’s March housing outlook.

Written by Elizabeth Ecker

The Department of Housing and Urban Development has since revised its reverse mortgage projections down slightly for 2012, HUD representatives told attendees of the National Reverse Mortgage Lenders Association eastern regional conference in March, but compared with the totals for forward FHA lending, the proportion of HECMs still stands to rise.

The reverse mortgage estimates compare with “forward” purchase and refinance volume of near 1.2 million loans in 2011 to less than 800,000 in 2013. Recent changes made to FHA’s lending programs including insurance premium raises for forward loans are working to encourage private capital back into the market.

Written by Elizabeth Ecker

The loan officers, Marcos Echevarria, Louis Gendason, John Incandela and title agent Kimberly Mackey were convicted in 2011 year for their involvement in a scheme that defrauded seniors in a total amount of $2.5 million. There were ordered in addition to their sentences to pay restitution and are currently serving prison terms.

“HUD will not tolerate those who abuse the mortgage system and target elderly borrowers for their personal gain,” said HUD Secretary Shaun Donovan in announcing the debarring. “Reverse mortgages can help senior citizens on fixed incomes plan for the future, but it is shameful to bilk the elderly out of their life savings.”

The former loan officers worked for 1st Continental Mortgage based in Fort Lauderdale and Boca Raton, Florida and Mackey was proprietor of Real Estate One Land Services, Inc., based in Pittsburgh. The scheme involved pressuring senior borrowers into reverse mortgages, fraudulently closing the loans, falsifying HUD-1 documents and changing real estate appraisals to fraudulently represent equity in the properties.

Written by Elizabeth Ecker

The Republican presidential candidate in the 2012 election met with supporters in Palm Beach, Florida on Sunday at a closed-door fundraiser where he detailed some the policies he’d pursue, if elected, according to a report from MSNBC. That includes merging or scaling back some agencies, such as the Department of Eduction. HUD would be another contender for serious cuts, he said.

MSNBC reports:

“Romney went into a level of detail not usually seen by the public in the speech, which was overheard by reporters on a sidewalk below. One possibility floated by Romney included the elimination of the Department of Housing and Urban Development, the Cabinet-level agency once led by Romney’s father, George.

“I’m going to take a lot of departments in Washington, and agencies, and combine them. Some eliminate, but I’m probably not going to lay out just exactly which ones are going to go,” Romney said. “Things like Housing and Urban Development, which my dad was head of, that might not be around later. But I’m not going to actually go through these one by one. What I can tell you is, we’ve got far too many bureaucrats. I will send a lot of what happens in Washington back to the states.”

Read the original article.

Written by Elizabeth Ecker

For FHA-insured forward loans grater than 15 years that have a less than or equal to 95% loan-to-value ratio, the new premium effective today is 120 basis points. For loans with terms 15 years or greater that have a greater than 95% LTV, the annual insurance premium paid by the borrower is 125 basis points.

Loans with less than or equal to 15-year terms will see mortgage insurance premiums of 35 basis points and 60 basis points for loans less than or equal to and greater than 90% LTV, respectively.

FHA also made changes for insurance premiums on loans in amounts exceeding $625,500, as specified in Mortgagee Letter 12-04.

The changes were made, FHA officials said in February, to help protect the stability of the mutual mortgage insurance fund. Reverse mortgages were not included in the changes and HUD officials told RMD upon the announcement that there weren’t any premium increases planned for FHA-insured Home Equity Conversion Mortgages.

View Mortgagee Letter 12-04.

Written by Elizabeth Ecker

Lenders seeking new FHA approval will submit the application through an online portal and those currently in the application process or planning to apply should contact HUD’s lender approval division to avoid delays during the transition, HUD advises.

Additionally, lenders should not pay their application fee until discussing application details with a lender approval representative.

The online application will be available for new FHA approval only, according to the HUD notification.

Find out more.

Written by Elizabeth Ecker