As proposed in a November 30, 2009, proposed rule (74 FR 62521), HUD is seeking to eliminate FHA approval for loan correspondents. Because this rulemaking is still in process and a final rule has not yet been issued, FHA is extending the deadline for the submission of audited financial statements for loan correspondents seeking renewal of their FHA lender approval for 2010. For loan correspondents with a fiscal year end of December 31, and that would ordinarily be required to renew their FHA approval by March 31, 2010, HUD is providing these lenders with an additional 30 days in which to submit their audited financial statements. These loan correspondents must continue to comply with existing requirements for the submission of their Annual Certifications and renewal fees, but will be given until April 30, 2010, to submit audited financial statements. Again, the deadline for the submission of the Annual Certification and renewal fee has not been changed. Loan correspondents that do not complete their renewal in accordance with the deadlines as specified above will no longer be FHA-approved as of the effective date of the final rule that follows the November 30, 2009, proposed rule.
For years I have been warning anyone who would listen that, sooner or later, FHA would start cracking down on all the lenders out there flouting the rules and risking the safety of the FHA program. It seems our present mortgage crisis, along with some increased funding, may have finally triggered this crackdown. I couldn’t be more pleased. For a long time, bad lenders have been making the mortgage business hard for the originators who want to do things the right way.
FHA today announced some rather major guideline changes which will tighten up the availability of FHA loans. Your view regarding these changes is likely to be guided by your vantage point in the process.
Members of the general public who are not in the market for a home or a mortgage refinance will most likely approve. These changes certainly will improve the quality of the FHA loan pool moving forward. Provided, that is, the average FHA buyer can still meet the requirements.
WASHINGTON – U.S. Department of Housing and Urban Development (HUD) Inspector General Kenneth M. Donohue and Federal Housing Administration (FHA) Commissioner David H. Stevens announced today an initiative focusing on mortgage companies with significant claim rates against the Federal Housing Administration mortgage insurance program.
As part of our government’s continuing crusade to over regulate and over complicate the mortgage process for consumers and mortgage industry professionals alike so that they can continue to blame mortgage brokers for the current crisis instead of government, the new RESPA guidelines took effect on January 1, 2010. More on this later.
As most people are aware by now Taylor Bean and Whitaker, the third largest FHA Direct Endorsement lender in the country and the 12th largest lender in the country has ceased operations. There will be ripple effects from this throughout the mortgage lending industry. Many hundreds of small mortgage brokers and community banks depended on TBW to close their loans.
The third largest FHA lender in the country Taylor, Bean and Whitaker Mortgage has been suspended from FHA lending effective immediately. In addition, the Government National Mortgage Association (Ginnie Mae) is also defaulting and terminating TBW as an issuer in its Mortgage-Backed Securities (MBS) program and is ending TBW’s ability to continue to service Ginnie Mae securities.
At least they don’t do so in any way which stands much chance of meaningful success in the the real world. Here is the direct quote from HUD Secretary Sean Donovan’s May 29, 2009 press release: “Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.” (emphasis added)
