Tag Archives: HUD

Watchdog: HUD lacks sufficient oversight for borrower-financed down payment programs

Report finds HUD “failed to adequately oversee” more than $16 billion in FHA loans

The Department of Housing and Urban Development’s lack of oversight into borrower-financed down payment assistance programs for Federal Housing Administration-insured loans puts borrowers and the FHA’s flagship insurance fund at “unnecessary risk,” HUD’s watchdog said in a new report.

According to the report from the Office of Inspector General for the U.S. Department of Housing and Urban Development, HUD “failed to adequately oversee” billions of dollars in loans that may have “questionable down payment assistance,” thereby putting the FHA’s Mutual Mortgage Insurance Fund at risk because of borrowers with higher than market interest rates.

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Private lenders lobbied heavily for suspension of the reduction of Mortgage Insurance Premiums. Trump’s HUD adviser? Shawn Krause, Quicken Loan lobbyist

NY Times:

In the years since the crisis, many of the nation’s largest banks pulled back their mortgage-lending activities. Quicken Loans pushed in. Today, it is the second-largest retail mortgage lender, originating $96 billion in mortgages last year — an eightfold increase from 2008.

Privately held Quicken, like some of America’s largest banks before it, has also landed in regulators’ cross hairs. In a federal false-claims lawsuit filed in 2015, the Department of Justice charged that, among other things, the company misrepresented borrowers’ income or credit scores, or inflated appraisals, in order to qualify for Federal Housing Administration insurance. As a result, when those loans soured, the government says that taxpayers — not Quicken loans — suffered millions of dollars in losses.

Quicken Loans today is the F.H.A. insurance program’s largest participant.

Executives at Quicken Loans deny the charges, maintaining, among other things, that the government “cherry-picked” a small number of examples to build its case. In an aggressive move, the company pre-emptively sued the Department of Justice, demanding a blanket ruling that all of the loans it had originated met requirements and “pose no undue risks to the F.H.A. insurance fund.”

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Late last year, Donald J. Trump named a former Quicken Loans lobbyist, Shawn Krause, to his H.U.D. transition team. A Trump spokeswoman did not respond to an email asking about potential conflicts of interest. In an emailed statement, Quicken Loans said the fact that Ms. Krause had come from the largest F.H.A. lender in the country “bodes well for the positive impact she has, and will, make on H.U.D.”

In the years since the financial crisis, Quicken has emerged as a leader in the nation’s shadow-banking system, a network of nonbank financial institutions that has gained significant ground against its more heavily regulated bank counterparts in providing home loans to Americans. Increased regulation and decreased profits sent the nation’s banks packing.

Nonbanks, like Quicken, have filled that gap. Today, Quicken is the nation’s second-largest retail residential mortgage lender, behind Wells Fargo, but ahead of banking giants like J. P. Morgan, Bank of America and Citigroup, according to Mortgage Daily.

Day 1 for President Trump: HUD suspends FHA mortgage insurance premium cut

And yes, the FHA insurance will go up and will hurt low income and middle class homeowners…

The Department of Housing and Urban Development announced it suspended the reduction of Mortgage Insurance Premiums, effective immediately.

HUD sent out an announcement just an hour after President Trump was sworn in on Friday, stating that the cuts have been suspended indefinitely.

The letter, found here, stated that the FHA will issue a subsequent Mortgagee Letter at a later date should this policy change.

“FHA is committed to ensuring its mortgage insurance programs remains viable and effective in the long term for all parties involved, especially our taxpayers,” the letter stated. “As such, more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.”

Right before leaving office, the Obama administration cut FHA mortgage insurance premiums, marking the second time it reduced premiums in two years.
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HUD charges Bank of America with lending discrimination

The Department of Housing and Urban Development announced Friday that it is charging Bank of America and two of its employees with discriminating against Hispanic mortgage borrowers.

The charges stem from a complaint filed by the National Fair Housing Alliance, which conducted a series of “secret shopper” tests where Hispanic and non-Hispanic individuals, posing as prospective mortgage borrowers, attempted to get a mortgage from a Bank of America branch in Charleston, South Carolina.

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Mark your calendars: Confirmation hearing for HUD nominee Ben Carson set for Jan. 12

Over the last few days, Ben Carson, President-elect Donald Trump’s choice to lead theDepartment of Housing and Urban Development, met with several senators in preparation for his upcoming confirmation hearing.

During his rounds on Capitol Hill, Carson met with Sen. David Perdue, R-Georgia, and Sen. Chuck Grassley, R-Iowa, but Carson’s real moment of truth is coming soon, according to a report from Lorraine Woellert of Politico.

Per Woellert’s report, on Thursday, the Senate Committee on Banking, Housing, and Urban Affairs set the date for Carson’s confirmation hearing – Thursday, Jan. 12, at 10 a.m. Eastern.

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DOJ nails two more lenders for FHA violations

Primary Residential Mortgage Inc. and SecurityNational Mortgage Companyannounced separate agreements with the United States Department of Justice on behalf of the Department of Housing and Urban Development to pay $5 million and $4.25 million, respectively, to resolve allegations that they violated the False Claims Act.

According to the DOJ, both lenders allegedly violated the False Claims Act by “knowingly originating and underwriting mortgage loans insured by HUD’s Federal Housing Administration that did not meet applicable requirements.”

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EXCLUSIVE: Security vulnerabilities discovered in FHA systems

Some of the systems used by the Federal Housing Administration’s single-family insurance program are vulnerable to security breaches, an investigation by the agency’s watchdog uncovered recently.

Details on the nature of the “vulnerabilities” are limited at this point; the Office of the Inspector General for the Department of Housing and Urban Development chose not to share the full results of its investigation with the public.

The only mention is a short description of the investigation and its methods posted on the OIG website.

Specifically, the HUD-OIG stated in the brief recap of its investigation that it “reviewed the general and application controls over the FHA’s Single Family Insurance System and Single Family Insurance Claims Subsystem as part of the internal control assessments required for the fiscal year 2015 financial statement audit under the Chief Financial Officer’s Act of 1990.”

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