The NCRC alleges that the practice by large banks such as Wells Fargo, Bank of America, and J. P. Morgan Chase of imposing FICO overlays up to 640 on borrowers obtaining credit through their Correspondent and Wholesale lending sources is a form of “Red Lining” and effectively discriminates against those entry level borrowers who don’t have the means to pay larger down payments.

David Berenbaum, NCRC Chairman, notes that this potential “Red Lining” is being arbitrarily imposed only on loans originated by Mortgage Brokers and Mortgage Bankers, as all of the banks mentioned will accept lower FICO scores from borrowers who apply directly through the bank’s real estate lending offices.

Lawyers for several the largest Banks are on record saying that they have been expecting law suits on this matter and that it will be hard to defend these Bank practices because FHA loans are 100% insured.

FHA Commissioner Dave Stevens has gone on record stating that HUD’s move to a 580 FICO score minimum would effectively “open up” the credit box that has been constricted due to mortgage industry consolidation. In fact that has not been the case, as large numbers of potential customers have been denied credit due to these Bank FICO overlays.

Greg Frost, Sr., President of Frost Mortgage Banking Group, Albuquerque, New Mexico, the mortgage industry’s 1st billion dollar Originator, says “ FHA has been in existence for over 70 years. For 60 of those years there were no FICO scores or Automated Underwriting Systems. The FHA insurance fund was not in jeopardy, nor did it need refinancing until after the industry started relying on this new technology driven method of assessing risk. I long for a return to the days of manually underwritten credit evaluations, done by FHA certified Underwriters, who utilize the FHA underwriting guidelines to assess risk, approve loans, and allow credit to be extended to a larger community of qualified borrowers.”

Section 203(b) Mortgage Insurance

The purpose of this insurance program is to provide insurance for a single family to refinance/buy a primary residence. A mortgage lender provides the funds and the insurance is provided by HUD.

Section 203(b) Mortgage Insurance for Disaster Victims

As the name suggests the purpose of this insurance program is to help victims of a major disaster, who have lost their homes, to get mortgages and become homeowners again. Any citizen who has lost their home in a presidentially declared disaster area is eligible to apply for this program.

Section 255 HECM Program

The Home Equity Conversion Mortgage is a reverse mortgage insurance program for senior citizens above the age of 62. What happens in this program is that a homeowner who has paid or nearly paid their mortgage is allowed to borrow money against the equity of the house from an FHA approved lender, and the loan is insured by the FHA. Lenders recover their principal, plus interest, when the home is sold.

Section 203(k) Rehabilitation Mortgage Insurance

The purpose of this program is rehabilitation and repair of single family properties for general community and neighborhood development. The idea is to provide homeowners with quick access to cash for home improvements/repairs. The repairs have to be first identified by a FHA appraiser for qualification to this program.

Energy Efficient Mortgage Program

The Energy Efficient Mortgage program (EEM) helps homeowners to finance the addition of energy efficient appliances and features to their homes by rolling the costs into the FHA insured home purchase or refinancing mortgage. The FHA encourages lenders to finance borrowers who wouldn’t otherwise qualify for affordable, conventional loans (e.g. first time homebuyers) and to homeowners in poorer neighborhoods.

Call one of our Licensed, Loan Officers today to learn more about these great programs.

www.mortgageqna.com

“Over this past week, the industry responded with support of the new fee structure, but voiced strong concern about having system changes ready in time to meet the original September 7, 2010 deadline. Since these system changes impact regulatory disclosures, lenders expressed they must have the additional time to implement and test systems. FHA took this feedback seriously and has accommodated the need for additional time.”

We’ve written before about a move to raise the minimum net worth worth requirements for loan originators. The FHA recently set out a timeline for implementation (MortgageDaily.com; subscription required). Among the requirements is a $1 million net worth for all new FHA applicants, with at least 20 percent being liquid. The timeline was announced in a mortgagee letter.

The new requirements are likely to shake up portions of the mortgage industry, making it all the more important to look for evidence of stability in your potential lending partner (such as Frost Mortgage’s “Full Eagle” status). If you have any questions, please feel free to contact one of our loan officers today–we’ll be happy to talk with you about our qualifications and the depth of our resources.

Meanwhile, the U.S. Department of Housing and Urban Development (HUD) and the Treasury Department have announced that they’ll be distributing a monthly “scorecard” on the national housing market, including updates on FHA programs. This should be a good resource for those of us who follow the industry closely and should help  us and our branch partners continue to provide you better service and useful products.

If you’re in the market for a loan, now is a great time thanks to low interest rates, and if you’re considering making a move up in the business, it’s a great time for that as well–Frost Mortgage has one of the best programs in the mortgage industry, and we’ve got the resources to thrive even in an environment like this one.

The minimum net worth requirement had been $250,000 since 1993. Within the next few days, the amount will change to $1 million, though existing lenders will have one year to meet the new requirements.

Frost Mortgage has some of the best Branch Partner and Loan Officer offerings in the business. If the new requirements have you looking at platforms that can help you continue to be a top producer, give us a call–we don’t just close loans, we open doors.

The U.S. Census Bureau and the Department of Housing and Urban Development (HUD) made the announcement recently, releasing figures showing a seasonally adjusted annual rate of 411,000.

We’ve said before that you can’t try to “time the market” when it comes to housing. This news, though, must be seen as a positive sign for the economy. And if you’re considering a Branch Partner Opportunity, this could be an encouragement. We hope to talk with you soon.

In a mortgagee letter released last week, HUD said the policy is effective immediately for forward mortgages and Home Equity Conversion Mortgages. The letter continued:

Third party documents are those that are originated and signed outside of the mortgagee’s control, such as a sales contract. An indication of the electronic signature and date should be clearly visible when viewed electronically and in a paper copy of the electronically signed document. Mortgagees must employ the same level of care and due diligence with electronically signed documents that they would for paper documents with “wet” or ink signatures. Additionally, mortgagees are reminded that the origination case binder must be maintained in either hard copy or electronic format for two years from the date of endorsement [HUD Handbook 4000.2 REV-3].

These changes should make the process simpler and quicker for all involved. If you’re in the market for a mortgage, please consider Frost. Since 1991, from California to Florida, we’ve been doing more than just closing mortgages–we’ve been opening doors.