fha lending, Ginnie Mae, mortgage lender, premium capital funding, real estate, topdot mortgage

Topdot Mortgage Has FHA Approval Withdrawn

Breaking News On TopDot Mortgage
Lender faulted for gross violations of FHA underwriting standards

(7thSpace.com) WASHINGTON – “The Federal Housing Administration’s Mortgagee Review Board (MRB) today immediately and permanently withdrew the FHA approval of Premium Capital Funding, LLC, a Jericho, New York-based lender doing business as TopDot Mortgage. Today’s action prevents TopDot from participating in FHA programs and seeks a monetary penalty of $674,000.

In addition, the Government National Mortgage Association (Ginnie Mae) is defaulting and terminating TopDot as an issuer in its Mortgage-Backed Securities (MBS) program and is ending the Company’s ability to continue to service Ginnie Mae securities. Servicing of TopDot’s $181.2 million dollar Ginnie Mae portfolio will be transferred to LoanCare Servicing Center, Inc.

The MRB and Ginnie Mae took these actions based upon TopDot’s numerous and egregious violations of FHA requirements, including failure to document borrowers’ income, evaluate borrowers’ creditworthiness, and approving loans with grossly excessive debt-to-income ratios without compensating factors to justify approval.

“This lender demonstrated a pattern of utter disregard for how we do business and its behavior not only put the FHA insurance fund at risk, but placed their own customers at greater risk of foreclosure,” said FHA Commissioner David Stevens.“FHA approval is a privilege that we entrust to the most responsible lenders. If any lender violates that trust, the MRB will take action to protect borrowers, the FHA insurance fund and FHA programs.”

Mary Kinney, Ginnie Mae’s Executive Vice President, said “Ginnie Mae’s requirements are in place to protect the borrower and the American taxpayer. Both, Ginnie Mae and FHA are working aggressively to ensure that borrowers are not harmed by the misdeeds of lenders. These lenders are on notice that they must strictly adhere to Ginnie Mae and FHA regulations to maintain their status within HUD programs.”

While TopDot may appeal FHA’s withdrawal by submitting a written request for a hearing before an Administrative Law Judge within 30 days, the filing of an appeal does not delay the actions announced today. A complaint seeking civil money penalties will be served on TopDot in due course and the Company will have the opportunity to contest the imposition of the penalties before an Administrative Law Judge.

The U.S. Department of Housing and Urban Development (HUD) is also continuing to evaluate the conduct of individuals who participated in TopDot’s violations of FHA requirements and will move quickly to take appropriate action against those individuals.

If TopDot is your mortgage company, see HUD’s website for more information about the status of your loan and the next steps for borrowers. FHA and Ginnie Mae have taken several steps to minimize the disruption to borrowers whose loans are serviced by TopDot and are committed to protecting all FHA-insured borrowers and the American taxpayer.”

federal housing administration, fha lending, guidelines, mortgages, new home buyers

New FHA Guidelines

Tighter lending requirements for loans insured by the Federal Housing Administration may leave some borrowers unable to get mortgages, but economists are divided on the impact they could have on housing’s recovery.
The changes, aimed at strengthening the FHA‘s reserves in the face of rising foreclosures, shouldn’t hurt too many borrowers, officials say.

“We don’t expect this to have a significant impact on the housing market,” says FHA Commissioner David Stevens, adding that “the moves are designed to get the reserves back up.”
The FHA is playing a greater role in the mortgage market, insuring about 30% of new loans, up from 3% in 2007. Growing defaults have cut its reserves below the level mandated by Congress, leading to fears that it might need a taxpayer bailout.

FHA-insured mortgages are attractive to borrowers, however, because down payments are only 3.5%. That won’t change under the new policies the FHA announced Wednesday, which are to take effect in spring or early summer. Among them:
•New borrowers will have to have a minimum credit score of 580 to qualify for a 3.5% down payment. Those with lower scores will have to make at least a 10% down payment. The average credit score of FHA-insured borrowers is 693.

•Allowable seller concessions will be reduced from 6% to 3% of the sale price. The change is intended to discourage inflated appraisals.
•Buyers will have to pay an upfront mortgage insurance premium of 2.25% of the total loan amount, up from 1.75% now. A $150,000 mortgage would require a payment of $3,375, or $750 more.

Article courtesy of UsaToday.