HUD and State of Florida Settle Case Against First American Title Co.

As of 11/29/2007 HUD, the Florida Department of Financial Services (DFS), and the Florida Office of Insurance Regulation (OIR) announces a legal settlement with First American Title Insurance Company regarding alleged violations regarding payments to 84 limited partnerships based on the referral of business back to their own company. According to HUD, First American will shut down those 84 partnerships and also pay $5 million to the U.S. Government and the State of Florida.

To learn more about this settlement, please visit http://www.hud.gov/offices/hsg/sfh/res/resetagr.cfm

FHA Home Equity Conversion Mortgage Update

Home Equity Conversion Mortgage (HECM) counseling services are being offered through the FHA to provide guidance for senior homeowners aged 62 or older to use FHA-insured mortgages to convert their home into equity. According to FHA, a clarification on this issue states that prospective HECM borrowers are currently prohibited from paying for counseling services until FHA issues guidance. Lenders, however, may continue to pay for services through a lump sum contribution to a HUD-approved HECM counseling agency, or on an individualized basis.

For more information regarding the FHA’s HECM program and counseling services, please visit http://www.fha.gov/reverse/index.cfm and http://www.hud.gov/offices/hsg/sfh/hcc/hcc_home.cfm

In Light of 2007 Housing Market, Fannie Mae Adjusts Standard Pricing Requirements

With the 2007 year almost come and gone, Fannie Mae has looked back and carefully reviewed the market of the past year. The result has been a recognition of and action on the impact of those widespread and unprecedented changes in the housing market. Declines in national home prices that are predicted to continue through 2008, have caused Fannie Mae to respond with newly established standard pricing requirements. Results from these price declines and higher severity include a national rise in delinquency rates and an increase in credit losses.

These new standard pricing requirements will apply to wholesale loans purchased on or after March 1, 2008, as well as loans delivered into MBS with issue dates on or after March 1, 2008. Changes to the pricing requirements for loan-level price adjustments (LLPAs) will impact two unit properties, a range of loan-to-value (LTV) ratios combined with certain “representative credit scores,” and subordinate financing structures with certain “representative credit scores and/or interest-only amortization features.

As Fannie Mae seeks to adjust the conditions on pricing to remain appropriate for the current status of the market, what this could mean for borrowers is an increase in both pricing and interest rate, though it is an effort to increase safety and avoid the trend of delinquency and credit losses. For lenders, the pricing is adjusted for specific loan characteristics, which could result in decreased profitability if not compensated through additional fees to the borrower. Overall, these actions are a result of Fannie Mae maintaining their commitment to providing sustainable liquidity to their lender partners, as well as their belief in the importance of promoting responsible lending practices.

**For FHA training classes, visit http://www.FHAtraining.org.