rc11hill.governmentprograms

8/3/2019 RC11Hill.GovernmentPrograms

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Mortgage Bankers Association

Regulatory Compliance

Conference 2011

Government Program

Requirements

September 26, 2011


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Index

FHA Strategic Priorities

Performance Snapshot

Policy Development Priorities Appendix

Implemented FHA Policy Changes

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FHA strategy and priorities have remained consistent

Stabilizing the housing market during this economic

recovery and assisting homeowners to avoid foreclosure

Ensuring the continued fiscal health of FHA and

strengthening risk management

Ensuring responsible access to credit and liquidity,

particularly for underserved communities

Enable responsible lending in a manner that is sustainable

for FHA and for borrowers, protects the tax payer and

facilitates return of private capital

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5/19

Stabilizing the Housing Market -

Avoiding Foreclosure

FHA has been at the forefront of supporting loss mitigation efforts

Programs supporting conventional and FHA mortgages

FHA specific programs

Administration foreclosure mitigation programs have helped more

than 5 Million homeowners avoid foreclosure since April, 2009 FHA Mortgages - Lenders are required to offer a range of FHA loss

mitigation tools to FHA borrowers

More than 450,000 FHA borrowers have retained their homesthrough these programs

FY2010 FHA servicers assisted 552,000 homeowners;completed final delinquency cures for 183,000

FY2011 (3 Qtrs.) FHA servicers assisted 493,000homeowners; completed final delinquency cures for164,000

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6/19

Stabilizing the Housing Market

Avoiding Foreclosure

FHA outreach to servicers

Lender visits initiated in February, 2010

Identify best practices to share with industry

Housing Counseling 2,759 HUD-approved counselors provided services to more

than 2.1M clients (as of 4/4/11)

909 Certified Counselors (as of4/4/11)

FY2011 Continuing Resolution eliminated HUD housingcounseling grant funds

Aggressive effort by FHA to convince congress to reinstatecounseling funding

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FHA Fiscal Health

Strengthening FHAs Risk Management structure

Unprecedented policy, process and risk control changes overthe last 2 years Credit Policy

Risk Management

Lender Approval

Lender Enforcement and Oversight

Servicing Performance

Loss Mitigation

Ensure that those who buy a home today can maintain thatobligation over the long term

Continue to support FHA reform legislation that would furtherenhance FHAs enforcement capabilities, risk managementefforts and flexibility to respond to the market.

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FHA Fiscal Health Large and strong FY 2009/2010 books of business are stabilizing the fund

2010/2011 books are producing increased MMI premiums and historically high

credit quality (Q3 2011 highlights)

Higher credit scores

97.2% of Q3 2011 transactions have credit scores of 620 or higher compared to

50.4% below 620 in Q1 2008

The percentage of credit scores of 720 or higher is 4 times the Q1 2008 level

Lower LTVs - 24.4% of loans had LTVs below 90% v. low of 15.8% in Q4 2008

Delinquency Rates

Lower seriously delinquent rate (Q2 2011): 8.31% down from 9.05% one year ago

Decrease in early period delinquency rate (2010 book of business): .41% v. 2.54%for 2007 and 1.01% for 2009.

Overall delinquency rate is at lowest level in more than 5 years

Less than 10% of seriously delinquent loans in FHA portfolio are now less than 2

years old compared to 30% in 12/2009.

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10/19


Volume and Market Share

Total active, insured SF Portfolio

7.26 million loans , over $1 Trillion dollars

Projected 2011 Application Volume (Forward Mortgages)

1.2 M endorsements totaling $220 Billion

Market Share 3% in 2005/2006 to 20% in 2008, 2009 and 2010 - Peaked at 28.7% in Q3 2008

Purchase loan share peaked at 47% in Q2 2010 with final expiration of first

time homebuyer tax credits

July 2011 - 76% of purchase transactions were for 1st time homebuyers.

Currently FHA accounts for 17% of total market share 30% of purchase market and 10% of refinance market

Volume down more than overall market during FY 2011

Down 32% over first 3 quarters from the year-earlier period compared to 14%

for overall mortgage market

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11/19

Policy Development Priorities

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12/19


Loan Limits new loan limits effective 10/1/11

MBA Q and A session (9/27 from 12:00 1:30 PM)

Exceptions for Credit Approved transactions and FHA to FHA

refinances

Lender Insurance Final Rule

Expands FHA authority to require indemnifications, additional

requirements re: performance monitoring and eligibility and

process for LI mortgagees that have undergone corporate

restructuring

Condominium Approval and Recertification Guidelines

Rule Making

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Underwriting Guidelines - Manually Underwritten Loans

Reduction of Maximum Seller Concessions

HECM rule making to address issues related to Property

Charge (T&I defaults)

Financial and Credit Capacity Assessment at origination

Additional flexibility and options for lenders to ensure

ability to pay property charges

Limit on funds advanced by lenders for delinquentproperty charges

Servicing requirements

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14/19


Automated Fraud and Risk Tools and Infrastructure

Total Scorecard Review

Consistency across 4 HOCs and Headquarters

Miscellaneous Policy Updates

2-4 Units

Refinance policies

Funds to close, Identity of Interest, DisputedAccounts, Self Employed Documentation

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Appendix

Implemented FHA Policy Changes

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FHA Fiscal Health

Implemented Policies Mortgage Insurance Premiums

Increased Upfront MIP to 2.25% (1/12/10)

Upfront premium reduced to 1% from 2.25%; annual premium

increased to 85/90 bps. depending on LTV (10/4/10)Results in approximately $300 M per month in value to the MMI fund

Annual premium increased 25 bps. (4/18/11)

LTV/FICO Changes (10/4/10)

Minimum 500 FICO

>580 eligible for max financing

500-579 limited to 90% LTV

Refinance Program Policy (4/18/11)

Clarifications and changes to streamlined and standard Refi

programs

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17/19

FHA Fiscal Health

Implemented Policies

Lender Approval Policy (5/20/11)

Higher Net Worth Requirements (5/20/10)

Discontinue loan correspondent program; focus oversight

on lenders with greatest responsibility for loan (1/1/11) Lender Monitoring Policies

Mortgagee Eligibility and Electronic Recertification

Requirements (11/17/10)

Quality Control Requirements - Sponsored Originator, LoanSales (1/05/11)

Audited Financial Statement Reporting Requirements for

Parent/Subsidiary Structures and Multifamily Mortgagees

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18/19

FHA Fiscal Health

Implemented Policies HECM Program (10/4/10)

HECM Saver lower upfront premium (.01%) with lower max principal

limitWill significantly reduce risk ARM Loans with lower initial draws, higher

appraised values; using program as a financial planning tool

HECM annual MIP increase to 1.25%Principal Limit Factors changes which result in lower maximum

principal limits

HECM Property Charge Loss Mitigation - Guidance for existing

delinquencies (ML 2011-01 published 1/3/11)

Requirements for reporting delinquenciesEmphasis on Loss Mitigation

Due and Payable Approval Process

Additional funds allocated for housing counseling

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FHA Fiscal Health

Implemented Policies Condo Guidelines

Temporary guidelines were extended through 6/30/11 (ML 2011-03 published

11/09)

Condo Recertification and Approval Process introduced (12/10) - Requires project

re-approval and recertification for 25,000 plus condo projects

Mortgagee Letter and Guidebook published 6/30/11

H4H Termination (ML 11-20 published 6/10/11)

Program expires 9/30/11; loans must be endorsed on or before that date

Last date for assigning case numbers was 7/20/11

Maximum Loan Limits (ML 11-29 published 8/19/11: effective 10/1/11)

Operational Process Improvement throughout FHA (ongoing) One HOC, four locations

Training and Outreach

Internal Processes to support pace of change, ability to effectively execute

New, improved HMID Meetings with HOCs

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