My New Blog

Among other items that are in the works, starting April 1st 2010 (next month) Up Front Mortgage Insurance Premium wiil raise .50 pts to 2.25% total.

To read the March message from the desk of the FHA Commissioner please visit:

http://portal.hud.gov/portal/page/portal/ver-4/HUD/federal_housing_administration/docs/from_the_desk_of_March_2010.pdf

If you have any questions you can either call or e-mail  

805-245-8115

info@GlobalLendingSolutions.biz

In response to clarification requests from the Appraisal Institute, the Federal Reserve’s Board of Governors issued a Jan. 14 letter confirming that a broker price opinion “does not satisfy the definition of an appraisal in the Board’s appraisal regulation.”

The Fed’s clarification was addressed to the Appraisal Institute and came in direct response to an Oct. 26, 2009, letter sent to the Fed by the nation’s four largest appraiser organizations that asked the Fed about its policy on the use of BPOs in valuing land and other real property collateralizing commercial loans.

“In response to your question as to the use of BPOs, it is the position of the Federal Reserve staff that a BPO does not satisfy the definition of an appraisal in the Board’s appraisal regulation,” the agency’s letter read. “Therefore, a regulated institution would not be able to utilize a BPO to originate a loan secured by commercial real estate when the loan requires an appraisal in accordance with the appraisal regulation.”

In its letter, the Fed added: “With regard to the use of BPOs as an evaluation, Federal Reserve staff has taken the position that a BPO does not provide sufficient detail on a commercial property’s condition, occupancy, and use to meet the guidelines’ requirements for an evaluation.”

Bill Garber, director of government and external relations of the Appraisal Institute, said: “We applaud the diligent position taken by the staff of the Federal Reserve Board, and we believe it is one that should be taken by all of the federal financial institution regulatory agencies.”

The Appraisal Institute and fellow appraiser organizations had sought clarification after reports that BPOs had been ordered by regulated financial institutions to satisfy the “evaluation” requirements for renewals of commercial loans and refinancing transactions. As the appraiser organizations had pointed out in their October letter, “[C]ommercial BPOs typically lack details on a commercial property’s conditions, occupancy and use as stipulated by the Interagency Guidelines. As such, any use by regulated or supervised institutions would constitute a violation of the Interagency Appraisal and Evaluation Guidelines and, we believe, are inconsistent with written Federal Reserve policies.”

The Federal Reserve’s Board of Governors responsible for policy is composed of five members: Chairman Ben Bernanke, Vice-Chairman Donald Kohn, Kevin Warsh, Elizabeth Duke and Daniel Tarullo.

For the appraiser organizations’ letter to the Fed, visit www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2010/AI-ASA-ASFMRA-NAIFA_CommercialBPOs-Final.pdf .

For the Fed’s response letter, which was signed by Director Patrick M. Parkinson, visit www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2010/Fed_Response.pdf

HUD No.10-017
Lemar Wooley
(202) 708-0685                          

FOR RELEASE Friday
January 22, 2010

WASHINGTON – Homeowners with FHA-insured mortgage loans who are experiencing financial hardship are now eligible for loss mitigation assistance before they fall behind on their mortgage payments. Previously, these homeowners were not eligible for such assistance until after they had missed payments.

The Helping Families Save Their Home Act of 2009 signed into law by President Obama expanded FHA’s authority to use its loss mitigation tools to assist FHA borrowers avoid foreclosure to include those facing ”imminent default” as defined by the Secretary. FHA today issued guidance to FHA-approved loan servicers on how to assist these FHA borrowers.

“Loss mitigation assistance is beneficial to both borrowers and FHA because it helps borrowers retain their homes while protecting the FHA insurance fund from unnecessary losses,” said FHA Commissioner David Stevens. “FHA has always required lenders to establish early contact with delinquent borrowers to discuss the reason for missing a payment and to evaluate reinstatement options. Now servicers will have additional options for those borrowers who seek help before they go delinquent, which increases the likelihood that the borrower will be able to retain their home.”

Effective immediately, the loss mitigation options of forbearance and FHA’s Home Affordable Modification Program (FHA-HAMP) may be used to assist borrowers facing imminent default.

• FHA defines an “FHA borrower facing imminent default” to be an FHA borrower who is current or less than 30 days past due on the mortgage obligation and is experiencing a significant reduction in income or some other hardship that will prevent him or her from making the next required payment on the mortgage during the month that it is due.
• A forbearance agreement is an agreement by the loan servicer to postpone, reduce or suspend payments due on a loan for a limited and specific time period.
• FHA-HAMP allows qualified FHA-insured borrowers to reduce their monthly mortgage payment to an affordable level by permanently reducing the payment through the use of a partial claim combined with a loan modification. The partial claim defers the repayment of a portion of the mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off. The remaining balance is then modified through re-amortization and in some cases, an interest rate reduction.

The borrower must be able to document the cause of the imminent default which may include, but is not limited to, one or more of the following types of hardship:

1. A reduction in or loss of income that was supporting the mortgage loan, e.g., unemployment, reduced job hours, reduced pay, or a decline in self-employed business earnings. A scheduled temporary shutdown of the employer, (such as for a scheduled vacation), would not in and by itself be adequate to support an imminent default.
2. A change in household financial circumstances, e.g., death in family, serious or chronic illness, permanent or short-term disability.

Loan servicers must document the basis for its determination that a payment default is imminent and retain all documentation used to reach its conclusion. The servicer’s documentation must also include information on the borrower’s financial condition.

Additional information and guidance can be found on HUD’s website.

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HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

REUTERS

On Monday December 21, 2009, 11:24 am EST

By Kim Dixon

WASHINGTON (Reuters) - Serious delinquencies among U.S. prime mortgages rose nearly 20 percent in the third quarter from the prior quarter, as the percentage of current and performing mortgages fell for the sixth consecutive quarter, banking regulators said on Monday.

The report by the Office of Comptroller of the Currency and the Office of Thrift Supervision, which are part of the Treasury Department, covered about two-thirds of all U.S. mortgages.

It found 3.6 percent of prime mortgages -- those made to the most credit-worthy borrowers -- were seriously delinquent in the third quarter. That was more than double the year-ago quarter and up nearly 20 percent from the 2009 second quarter.

The report defined "serious delinquencies" as those loans 60 days or more past due and loans to delinquent bankrupt borrowers.

Big U.S. banks and thrifts carried out 2.4 million home loan modifications, trial period plans or payment plans in the quarter, spurred mostly by a government plan offered by President Barack Obama, according to the report.

Most came from the government's Home Affordable Modification Program. Mortgage servicers carried out 274,000 trial plans in the third quarter, up 240 percent from the second quarter when the plan was launched.

But only 1 percent of those had been converted to permanent modifications as of September 30, 2009, the report said.

A major cause of this disconnect is that loan servicers are finding that many borrowers who initially appear to qualify for the program do not, according to the report.

The Treasury Department has been pressuring lenders and mortgage servicers to do more to ease the harm from rising foreclosures.

Loan modifications made outside the new aid program fell in the third quarter by nearly 8 percent, the report said.

(Reporting by Kim Dixon, editing by Matthew Lewis)

AP

By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer – 35 mins ago

WASHINGTON – Executives at two of the nation's largest banks say they are struggling to get homeowners to complete the necessary paperwork for the Obama administration's mortgage relief plan, and only a fraction of homeowners have finished the process.

A Bank of America executive said only about 15,000 homeowners, or a quarter of the 65,000 borrowers in trial modifications that are set to expire by year-end have sent back their paperwork, according to prepared testimony for a Tuesday hearing on Capitol Hill.

Jack Schakett, Bank of America's credit loss mitigation strategies executive, cited "ineffective communications with customers, shortcomings in document maintenance, misunderstandings about program requirements, and the inability to comply by some borrowers."

Similarly, JPMorgan Chase & Co. said that about 16,000 of its borrowers have been approved for a permanent modification, with 4,300 completing the process as of the end of last month.

"We are facing challenges with borrowers completing documentation or making trial plan payments as agreed," Molly Sheehan, JPMorgan Chase's executive in charge of housing policy, said in testimony prepared for the same hearing.

The program, announced in February by President Barack Obama, allows homeowners to have their mortgage interest rate reduced to as low as 2 percent for five years. Borrowers who qualify sign up for trial periods of up to five months. They must complete a stack of paperwork, including proof of income, to make the modifications final.

Faced with disappointing progress, the Obama administration said last week it would spend the coming weeks cracking down on mortgage companies, also known as loan servicers. Treasury Department officials said they would send "SWAT teams" to monitor the eight largest companies, including Bank of America and Chase, and request twice-daily reports on their progress.

In an effort to shame the companies into doing a better job, Treasury will publish a list this week of the mortgage companies that are lagging.