Compliance & Regulation

WASHINGTON—David Stevens has been a busy man during his first 16 months on the job. Under his lead, the FHA has implemented a whirlwind of reforms, including higher net worth requirements for government-approved lenders, steeper downpayments for borrowers with low FICO scores, and a new mortgage insurance premium structure that was approved by Congress. And he’s not done yet.

Some lenders are taking reforms in the Federal Housing Administration credit policies too far, shutting the door on otherwise good candidates for home ownership, FHA Commissioner David Stevens said in Atlanta at the Mortgage Bankers Association's annual convention.

The Federal Home Loan Bank of Seattle entered into a consent order with the Federal Housing Finance Agency late Monday that requires the bank to take certain steps to improve its capital position and its business and operations.

The robo-gate fiasco is more about faulty internal processes on the part of overwhelmed loan servicers than it is with the securitization of mortgages, a panel of key secondary market executive agreed at the Mortgage Bankers Association's convention in Atlanta. They also said the quicker lenders and investors address the problem, the better off they'll be.

If servicing and processing problems continue to bog down foreclosures, there should be a way to permit "necessary and justified" foreclosures to continue, according to FDIC chairman Sheila Bair.

Lenders should face penalties for violating representation and warranty clauses — beyond their obligation to re-purchase the loans — according to an expert in managing risk on mortgage-backed securities.

Capacity issues — in terms of the number of reliable bodies available to take mortgage loan applications — is a key reason why the loan brokerage sector will survive, attendees of the MBA convention in Atlanta were told Monday morning.

New regulations pending as a result of the recently enacted Dodd-Frank Financial Reform Act have sparked a mad dash among mortgage lenders to income, employment and asset verification products.

It's time for mortgage originators to draw a line in the sand when it comes to being forced to buy back loans from investors, an industry veteran said at the Mortgage Bankers Association's annual convention in Atlanta.

Housing developer AvalonBay Communities Inc. and partners will pay $2.2 million to settle a two-year-old discrimination case brought by the U.S. Justice Department regarding a bond-financed multifamily project in New York.