Updated: Lender May Still be FHA Approved--HOPE for Homeowners: Lender Thrown Out of Program with 47% of Loans Agrees to Pay Civil Money Penalty of $150,000.

Update: 
I did some additional checking and HUD HERE continues to show 1st Alliance LLC of Houston as an approved FHA lender. This MAY mean that the civil penalty referenced below was in lieu of throwing them out of FHA lending program, but I did not change text below). 
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In my prior post HERE I reported that one FHA lender, 1st Alliance Lending LLC of Houston, had accounted for 47% of the endorsed HOPE for Homeowner loans in the public database of loans endorsed from April-November of 2010. 

In the Dec 27 Federal Register HERE HUD has published a list of recent actions taken by the Mortgagee Review Board and it turns out (pg 2) that this lender in April agreed to make a civil money penalty payment of $150,000; this is apparently in addition to being thrown out of the FHA lending program. 

To date none of the HUD published sanctions data for 1st Alliance indicates that any of the HUD actions were based on HOPE for Homeowner loans.  

Irregardless (and unless HUD has obtained indemnifications) HUD is on the hook for 71 H4H loans from this lender, with a combined insured value of $14.6 million, ALL at a high 7.25% interest rate. IF the $150,000 civil money penalty relates to these loans it seems pitifully low compared to the potential cost to the insurance fund.

Originally created and posted on the Oregon Housing Blog.

FHA HOPE for Homeowner Loans: 5 Lenders Made ALL Loans, 1 Now Barred Lender Has 47% of All H4H Loans.

Correction: It was 5 not 4 lenders, I corrected headline and text below
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It gets curiouser and curiouser.....

Table HERE I prepared shows the 5 lenders that originated ALL 150 HOPE for Homeowner loans in the FHA databases, and includes the average interest rate for each lender. 

Lender with 47% of H4H Loans Thrown Out of FHA Lending, But Endorsements Continue.

I noticed that the 1st Alliance LLC made ALL of their loans at a 7.25% interest rate, much higher than the average rate for other FHA lenders. I did some additional checking and found that this lender had been thrown out of the FHA lending program back in April (Housing Wire story HERE). 

Appears to me that sanctions against this lender only applied to loan applications taken after a specific date, because 49 (69%) of endorsements for this lender occurred in May or later of 2010 and 100% of loans appear in database as endorsed in April or later.

Originally created and posted on the Oregon Housing Blog.

First Take, FHA HOPE for Homeowners Loan Analysis.

The FHA HOPE for Homeowners program was the original FHA program that was designed to allow underwater borrowers to refinance into an affordable FHA loans, IF lenders agreed to principal reduction. (Program requirements from HUD's regulations can be found HERE).

As my earlier post indicated HUD has said that they have endorsed a TOTAL of 167 HOPE for Homeowner loans in FY 2010 and through November of 2010.  I have gone back into the relevant FHA databases and extracted data for 150 of those loans (data indentifying the remaining 17 loans is NOT in the earlier FHA databases).

I have prepared a table HERE showing the state location of these loans.

Two Initial Observations 

• Oregon had ZERO H4H loans,
• 10 states accounted for 70% of all H4H loans.

More observations to follow ...

Originally created and posted on the Oregon Housing Blog.

HUD/FHA Now Projecting 96,875 Loans for Short Refinance Program; No Way Do I See That Happening.

HUD has filed a new information collection request related to the FHA Short Refinance program with the Office of Management and Budget HERE. 

Buried within an associated document HERE is some additional background on the paperwork requirements for lenders under that program. (File is in MS Word 2007/2010 format).

Notably this form indicates that:

1. HUD/FHA expects 96,875 loans applications annually , with several form types submitted for each loan.
2. HUD says that the program expires September 30, 2011.
3. HUD says that that debt to income ratios can be up to 38%/50% for Loan to Values less than 90%

If projected TARP subsidy for the FHA short refinance program is $8.1 Billion that would mean that per loan subsidy cost for these 96,875 loans would be $83,691, a highly unlikely per loan subsidy amount. (Subsidy amounts per loan would actually be higher since not every application results in an actual loan).

With volume during the first two months at 35 loans (my prior post HERE) it also seems likely that far FEWER than 96,800 FHA additional short refinance loans will be insured in the 11 months from November 2010 to September 2011.  

Actual Volume , Less than 1% of Prior Projection?

My prior Sept 2010 post HERE shows WSJ story had data projecting nearly 11 million underwater borrowers, so the actual likely production under this program will clearly have very little impact AND could be less than 1% (5,000-15,000 loans) of the "500,000 and 1.5 million " range projection previously made by administration officials.

With likely loan volume under the FHA short refinance falling far short of Administration projections it continues to appear that a significant portion of the projected $8.1 billion in TARP subsidy could be recaptured. (Wouldn't it make sense to use this money for the still unfunded Housing Trust fund for example)? 

Originally created and posted on the Oregon Housing Blog.

Frank TARP Reform Bill Includes Several Housing Provisions.

House Financial Services Committee Chair Barney Frank released a version of a TARP reform bill that would guide use of the remaining $350 Billion that requires Congressional approval.

The Thomas page for the bill text (H.R. 384) is HERE. (I'd suggest bookmarking so you can track as bill makes it way through Congress).

The page HERE is a shorter summary of the various Titles of the bill.

Title II (Foreclosure Relief) , Title V (HOPE for Homeowners revisions) and Title VI (Home buyer Stimulus) contain the housing provisions. I have copied and pasted provisions from the summary into a PDF file HERE.

HUD Loosens Rules for FHA Hope for Homeowners Program In Attempt to Pump Volume.

Reuters news story HERE.

HUD press release is HERE.

Secretary Preston is speaking at National Press Club luncheon, so may be more later.