Tag Archives: Underwriting Standards

The Aloha State recently passed three new bills related to mortgage servicing and mortgage origination. All three went into effect at the beginning of this month. The first requires the Office of Consumer Protection to educate consumers regarding fraud schemes aimed at homeowners facing foreclosure. The second offers adjustments to loan originator registration fees and amends Hawaii's Secure and Fair Enforcement for Mortgage Licensing Act to comply with a host of recent changes to federal law.

Rallying investors by end of day Friday, JPMorgan Chase posted strong earnings from the second-quarter, with Home Affordable Refinance Program modifications helping boost income for the laggardly mortgage servicing unit year-over-year. For mortgage production and servicing, the financial institution fielded $604 million in net income over the second quarter, a figure that trumps a net loss of $649 million from the past year. Mortgage production rose to $931 million in pretax income for the lender.

Wells Fargo wrote a check for $175 million on Thursday to settle claims that independent brokers drove a disproportionate number of otherwise creditworthy minority borrowers to higher-priced variable mortgages in the lead-up to the financial crisis. Wells Fargo denied any of the claims and took action Thursday to stop originating loans with independent mortgage brokers by Friday, a move that it billed as one separate from the settlement and ensuing controversy. The lender will work to close and process existing applications after Friday.

Mortgage Insurance Companies of America released on Friday its monthly statistical report showing that member companies reported a total of $396 billion in primary insurance in force for May. This total is down nearly $1 billion from April and is the lowest total in a year-long fall. Member companies received 38,355 mortgage insurance applications for May, and 35,431 borrowers used private mortgage insurance to buy or refinance a home. Both figures are relatively large jumps up compared to flatter increases.

The Office of the Comptroller of the Currency released the findings of its 18th annual Survey of Credit Underwriting Practices, showing that credit writing standards were mostly unchanged from the year before. The survey, which included federal savings associations for the first time, examined the underwriting standards of 87 banks with assets of $3 billion or more in the 12-month period ending February 29. Underwriting standards largely remained the same despite some easing in standards for retail and commercial products.

HUD rescinded guidance Friday that would have obligated homeowners to resolve debts outstanding of $1,000 or more or enter into a repayment plan by closing time for a mortgage backed by the Federal Housing Administration. Guidance from February required that lenders with homeowners in dispute of credit accounts or collections in that amount resolve or pay down the debt in order to meet eligibility criteria for a FHA-insured loan. That policy would have gone into effect by July 1, although earlier guidance remains.

More homeowners continue to reap benefits from the newly modified Home Affordable Refinance Program, with 79 percent of homeowners with government-backed mortgages either keeping the same level of mortgage debt as before or reducing it over the first quarter. Of those homeowners, Freddie Mac found recently, 79 percent held onto the same level of debt for first-lien home mortgages, while 21 percent of homeowners shaved off dollars from their principal balance. The share of borrowers keeping their original loan amounts hovered at the highest level in the 26-year history of the survey.

The Obama administration made another push Friday to expand refinancing opportunities for homeowners, with HUD Secretary Shaun Donovan behind the effort to adopt any one of three bills currently in Congress. Officials told reporters in a teleconference Friday that President Barack Obama would appear with a family in Nevada later that day to tout the need for a wider refinance net. The HUD secretary outlined three bills before Congress that seek to streamline the refinance application process and increase servicer competition by reducing barriers.

The Consumer Financial Protection Bureau unveiled new rulemaking proposals Thursday that would require background checks for mortgage originators and complement a previous rule that prohibits loan officers from steering borrowers to higher-priced products. Together with these rules, others would provide consumers with discounts for paying mortgage origination points, mandate comparison plans for those interested in tracking different products, and ban brokerage firms from charging fees that vary by the loan size.

Solvency issues re-emerged for the Federal Housing Administration in a hearing convened Tuesday by the Senate Banking Committee, with HUD Secretary Shaun Donovan calling for lower loan-to-value thresholds and more servicer competition to expand refinance opportunities. The hearing follows a bill by Sens. Barbara Boxer and Robert Menendez to roll back refinancing barriers for homeowners with GSE-held mortgages and featured the legislation as lawmakers discussed solutions to the housing crisis. The hearing quickly turned to servicer competition.