Safeguard Properties

USDA: Single Family Housing Guaranteed Loan Program Integration Update

Posted on by Safeguard

Investor Update
December 6, 2019

Source: USDA

As previously communicated on November 27th, we are transitioning the Single Family Housing Guaranteed Loan Program (SFHGLP) to an integrated, National model. Effective December 8, 2019, the SFHGLP loan processing and activity for the following states will be transferred into the SFHGLP Origination and Processing Division (OPD) as part of the Wave 1 implementation of the new integrated model:

Wave 1 States (December 8th, 2019)*

AZ, DE/MD, HI/WP, KS, LA, ME, NE, NH/VT, NM, NY, OR, PA, SD, VA, WY

*States included in each wave are based on the property location for loan files submitted, not lender location

Loans in all the above states except HI/WP and LA are already being processed by the Auxiliary Processing Unit (APU), and there will be no changes for lenders. For loans in HI/WP and LA, please refer to the below guidance and contact information.

Guidance for Loan Submissions

Files in Process: For loan files in Wave 1 states (listed above), all files received and reviewed by state staff prior to December 8, 2019 will be completed by state staff.

New Submissions: You can continue to use GUS as you have in the past; this integration will have no impact on your access to USDA systems. For loan files in Wave 1 states (listed above), manual file submissions should be sent to: SFHG-APU@usda.gov.

Contact Information

Beginning on December 8th, lenders should send all inquiries for loan files in Wave 1 states (listed above) to SFHG-APU@usda.gov. If you have a question about a specific loan file, please include the following information:

  • Identify the state the application is located;
  • Include your contact information; and
  • Indicate if you want a call back (otherwise you will receive an email reply)

Looking Ahead

Beginning in Wave 2 (projected January 19th, 2020), all states that have been integrated in Waves 1 and 2 will be aligned to one of four production teams, and each production team will have their own email inbox. Additional information will be shared in January.

Wave 2 States (Future – January 19th, 2020)*

AK, AR, CO, FL, GA, IA, ID, IL, KY, MI, MN, MO, MT, NV, PR, SC, TN, TX, WA

*States included in each wave are based on the property location for loan files submitted, not lender location

Remaining states will be integrated in Wave 3 (projected February 16th, 2020). Until states are integrated into the new unit, lenders should continue to contact their state office staff.

Wave 3 States (Future – February 16th, 2020)*

AL, CA, CT/MA/RI, IN, MS, NC, ND, NJ, OH, OK, UT, WI, WV

*States included in each wave are based on the property location for loan files submitted, not lender location

Additional Information

1. Infographic: For more information on the SFHGLP Integration, please reference the attached infographic.

2. Handbooks: The Guaranteed Loan Program regulation (7 CFR 3555) and technical handbook (HB-1-3555) are available online to assist you with questions:

• https://www.rd.usda.gov/publications/regulations-guidelines/handbooks#hb13555

• Additional training, documentation, and resources are also available on USDA LINC: https://www.rd.usda.gov/programs-services/lenders/usda-linc-training-resource-library

1. Technical Issues: If you are experiencing technical issues with the Guaranteed Underwriting System (GUS), e-Authentication passwords, GUS User roles, etc., you may contact the Rural Development Help Desk at 1-800-457-3642.

2. Please Note: The SFHGLP Integration does not impact servicing (loss claims and electronic status reporting), Help Desk, access to USDA systems, or e-Authentication protocols.

DRAFT_Wave 1 Infographic_6Dec2019.pptx

Help Resources

USDA ITS Service Desk Support Center
For e-Authentication assistance
Email: eAuthHelpDesk@ftc.usda.gov
Phone: 800-457-3642, option 1 (USDA e-Authentication Issues)

Rural Development Help Desk
For GUS system, outage or functionality assistance
Email: RD.HD@STL.USDA.GOV

Phone: 800-457-3642, option 2 (USDA Applications); then option 2 (Rural Development)

Freddie Mac: Reining in Reverse Occupancy

Posted on by Safeguard

Investor Update
December 3, 2019

Source: Freddie Mac

Reining in Reverse Occupancy

Reverse occupancy misrepresentation occurs when a borrower claims to be purchasing an investment property or non-owner occupied home so he or she can use the rental income from the property to help them qualify for the loan.

The borrower instead occupies the home or one of the units as his or her primary residence, eliminating rental income without which the borrower may not have qualified.

Potential Indicators of Owner Occupancy

There are many potential indicators that a borrower intends to occupy a property and not use it as a rental.

One indicator is the use of tax credits intended to provide qualified homeowners with a tax exemption on a primary residence. Through our investigations, we’ve found that some borrowers who obtained investment property loans also applied for those tax credits, implying that they would occupy the properties securing those loans.

Another potential indicator is the type of insurance coverage obtained for these properties. Freddie Mac’s Single-Family Fraud Risk (SFFR) team confirmed with insurance agents and Servicers that, for many of these loans, the coverage in place at origination was owner-occupied, not rental.

Servicers of these loans further confirmed that these borrowers maintained that same type of homeowner’s insurance coverage for their purported investment properties since origination.

In other instances, the borrowers changed insurance coverage shortly after closing. In fact, one borrower changed coverage from rental to owner-occupied within 10 days of closing.

We’ve also seen an additional alert to possible occupancy misrepresentation when many borrowers called their servicers shortly after closing and requested a change of their billing/mailing address to the subject investment properties.

Borrowers Seeking Primary Residences

SFFR investigators have interviewed borrowers in connection with potential reverse occupancy misrepresentations.

While some borrowers recounted detailed conversations with their loan officers about the type of loan for which they were applying, others were not aware they had applied for investment loans.

Borrowers frequently stated that they had always intended to occupy the properties and reiterated that their loan officers knew it. One borrower even indicated that her loan officer encouraged her to apply for an investment loan to get her loan approved.

While reverse occupancy isn’t a new scheme, it still occurs − as recent SFFR investigations attest. Any time borrowers are qualified for loans they aren’t truly eligible for, whether through misrepresented income, occupancy, insurance or something else, they create substantial risk to Freddie Mac and our lenders.

If you spot or suspect fraud, let us know by contacting the Freddie Mac Fraud Hotline at 800-4FRAUD8.

For press inquiries, contact Jeanne Hamrick, Single-Family Public Relations Manager, at 571-382-5065.

New York City to Combat the Problem of ‘Zombie Homes’

Posted on by Safeguard

Industry Update
November 25, 2019

Source: Curbed

There are at least 2,000 abandoned and deteriorated homes on the brink of foreclosure in NYC

Back in 2007, the foreclosure crisis first hit New York City neighborhoods: That year, there were around 18,000 foreclosure filings, accounting for more than half of the state’s total filings. Though that was over a decade ago, the city hasn’t fully recovered from the crisis: In 2016, there was a significant spike in home foreclosures, particularly in Brooklyn and Queens.

As a result of the crisis, as Fox 5 New York reported, there are at least 2,000 abandoned and deteriorated homes in the foreclosure process across New York City—particularly in neighborhoods in Central Brooklyn, Southeast Queens, northern Staten Island, and parts of the Bronx—according to the city’s Department of Housing Preservation & Development (HPD). These properties, which HPD calls “zombie homes,” often fall into disrepair when owners fall behind on mortgage payments. Aside from being neighborhood “eyesores,” these properties often attract squatters, and can become overrun with rodents and trash. (Last week, three men died in a fire in an abandoned property in Queens.)

To prevent these homes’s foreclosures and crack down on “zombie properties” the state legislature passed a package of laws in 2016 requiring lenders to inspect, maintain, and report zombie homes to the state. In order to help the state, in the fall of 2017, HPD launched a “Zombie Homes Initiative” to track and identify these properties, conduct exterior surveys, provide resources to homeowners at risk of foreclosure, and create new approaches to “return zombie homes to productive use.”

One of those possible productive uses is affordable housing—which New York City is in dire need of as it faces a homelessness and affordability crisis.

For full article, please click the source link above.

Better Predicting Mortgage Default

Posted on by Safeguard

Industry Update
December 2, 2019

Source: DS News

Credit scores alone are not enough to determine the likelihood of default, Fitch Ratings notes, as a variety of factors can complicate the default risk process. In a report, Fitch discusses how consistency is needed in this process.

“Assessing downside risk of U.S. consumer credit can be more difficult if different versions of credit scores are used when lending, underwriting standards are relaxed amid a supportive economy, or when lenders are reaching for growth,” Fitch Ratings says. “As these dynamics can be exacerbated during an economic downturn, it is essential to view credit scores in combination with other key risk variables to most accurately assess default risk.”

According to Fitch, higher FICO scores are indicative of a more solid repayment history of debt obligations, with a lower probability of default. However, different versions of credit scores have been introduced post-crisis that are not used consistently across asset classes and providers, which complicates comparing these scores and has prevented their widespread use in credit analysis.

Current higher FICO score trends in mortgages are partly attributable to a higher percentage of originations from the prime segment following the financial crisis amid the benign economic environment. Borrowers are paying their bills, as is to be expected given strong labor markets, rising wages, and low unemployment and interest rates. FICO scores are also improving as a result of the extended duration of the favorable economic environment, as past payment history with higher delinquency levels falls off.

Much of the market is reliant on older FICO versions. Fitch notes that the mortgage industry uses older versions like FICO 2, 4, and 5 when assessing creditworthiness for new mortgages and deciding interest rates, while the newer FICO versions are currently not used by the mortgage market. Newer versions, such as FICO 8, which is commonly used in other industries, factors in on-time payments, account balances, and length of credit experience when calculating scores. FICO 9 differs when it comes to collections, factoring in rental payment history while putting less weight on delinquent medical collections.

For full article, please click the source link above.

HUD: Major Disaster Recovery Support Announcement

Posted on by Ashley Shepherd

Investor Update
December 3, 2019 

Source: HUD

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) today allocated over $2.3 billion to support the long-term disaster recovery process in hard-hit areas in fifteen states, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, American Samoa and the Commonwealth of the Northern Mariana Islands.

This allocation today is supported through HUD’s Community Development Block Grant – Disaster Recovery (CDBG-DR) Program and will address seriously damaged housing, businesses and infrastructure from disasters that occurred since 2017. The CDBG-DR Program requires grantees to develop thoughtful recovery plans informed by local residents. Learn more about CDBG-DR and the State’s role in long-term disaster recovery (en español).

“Today, we take another important step to ensure those hardest-hit by recent disasters can fully recover,” said HUD Secretary Ben Carson. “The grants awarded today will help these local communities continue the recovery process of rebuilding their homes, restoring their businesses and repairing their critical infrastructure.”

CDBG-DR grants support a variety of disaster recovery activities including housing redevelopment and rebuilding, business assistance, economic revitalization, and infrastructure repair. Grantees are required to spend the majority of these recovery funds in “most impacted” areas as identified by HUD. HUD will issue administrative guidelines shortly for use of the funds to address grantees’ long-term recovery needs, particularly in the area of housing recovery.

On October 5, 2018, President Trump signed Public Law 115-254, which provides $1.68 billion in CDBG-DR funding for “disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared in 2018.” HUD allocated all but $205 million of those funds in an announcement on May 14, 2019.  This announcement allocates that $205 million between the American Samoa and Northern Marianas as well as providing additional funding for those communities and the other disasters of 2018 through Public Law 116-20.

On June 6, 2019, President Trump signed Public Law 116-20, which provides $2.431 billion, including $431 million to address additional unmet infrastructure needs for 2017 disasters and $2 billion “related to disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation in the most impacted and distressed areas resulting from a major disaster that occurred in 2018 or 2019.” HUD is announcing allocations for all but $272,072,000 of the funds appropriated under 116-20. After information on all disasters in calendar year 2019 have been taken into consideration, those remaining funds will be allocated.

For full announcement, please click the source link above.

OCC Bulletin 2019-60: Other Real Estate Owned: Final Rule

Posted on by Safeguard

Investor Update
November 26, 2019

Source: OCC

Summary

On October 22, 2019, the Office of the Comptroller of the Currency (OCC) published a final rule on other real estate owned (OREO) activities for national banks and federal savings associations. OREO refers to real estate acquired in satisfaction of debts previously contracted and real estate no longer used or planned to be used to conduct banking activities. The final rule is effective January 1, 2020.

Note for Community Banks

The final rule applies to all national banks and federal savings associations.

Highlights

The final rule

  • clarifies and streamlines the OCC’s existing OREO rule for national banks.
  • updates the regulatory framework for OREO activities at federal savings associations.
  • makes technical amendments to the capital rules, including on provisions related to OREO.

Further Information

Please contact Charlotte Bahin, Senior Advisor for Thrift Supervision, at (202) 649-6281; or J. William Binkley, Attorney, or Kevin Korzeniewski, Counsel, Chief Counsel’s Office, at (202) 649-5490.

Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel

Related Links

HUD: FHA INFO #19-59: 2020 Nationwide Home Equity Conversion Mortgage Limits

Posted on by Safeguard

Investor Update
December 3, 2019 

Source: HUD

In this Announcement:
• 2020 Nationwide Forward Mortgage Limits
• 2020 Nationwide Home Equity Conversion Mortgage Limits

Today, the Federal Housing Administration (FHA) published Mortgagee Letter 2019-19, 2020 Nationwide Forward Mortgage Limits, which provides the maximum mortgage limits for FHA-insured Title II forward mortgages. These new loan limits are effective for case numbers assigned on or after January 1, 2020, through December 31, 2020.

This year, the change in the national median home price increased the Federal Housing Finance Agency (FHFA) loan limits. Therefore, FHA’s “floor” and “ceiling” loan limits will increase for Calendar Year (CY) 2020, to $331,760 and $765,6001, respectively, for a one-unit property.

for full announcement, please click the source link above.

FHFA: Non-performing Loan Sales Report

Posted on by Safeguard

Investor Update
December 2, 2019

Source: FHFA

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today released the latest report on the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the Enterprises).  The Enterprise Non-Performing Loan Sales Report includes information about NPLs sold through June 30,2019 and reflects borrower outcomes on NPLs sold through December 31, 2018 and reported through June 30, 2019.  The sale of NPLs reduces the number of delinquent loans in the Enterprises’ portfolios and transfers credit risk to the private sector.  FHFA and the Enterprises impose requirements on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure.

This report shows that, through June 30, 2019, the Enterprises sold 117,466 NPLs with a total unpaid principal balance (UPB) of $22.2 billion.  While the Enterprises conducted NPL sales in the first half of 2019, none of the sales settled by the end of the reporting period.

•  NPLs sold had an average delinquency of 3.0 years and an average loan-to-value ratio of 92 percent.

•  NPLs in New Jersey, New York and Florida represented nearly half (45 percent) of the NPLs sold.  These three states accounted for 47 percent of the Enterprises’ loans that were one year or more delinquent as of December 31, 2014, prior to the start of NPL program sales in 2015.

• Fannie Mae sold 78,281 loans and Freddie Mac sold 39,185 loans.

The borrower outcomes in the report are based on 114,745 NPLs that were settled by December 31, 2018 and reported as of June 30,2019.  These outcomes reflect the following:

•  Compared to a benchmark of similarly-delinquent Enterprise NPLs that were not sold, foreclosures avoided for sold NPLs were higher than the benchmark.

•  NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes (36.6 percent foreclosure avoided versus 14.9 percent for vacant properties).

•  NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (73.4 percent foreclosure versus 31.4 percent for borrower occupied properties).  Foreclosures on vacant homes typically improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants.

FHFA will continue to provide reporting on NPL sales borrower outcomes on an ongoing basis.

Link to Non-Performing Loan Sales Report

Link to NPL page on FHFA.gov

Contacts:

Media:   Raffi Williams (202) 649-3544  / Stefanie Johnson (202) 649-3030

Three Unusual Tornadoes Confirmed in Arizona Friday

Posted on by Safeguard

Disaster Alert
November 29, 2019

Source: The Weather Channel

Additional Resources:

azcentral.com (3 tornadoes touched down in metro Phoenix on Friday morning, National Weather Service confirms)

FOX 10 Phoenix (NWS confirms tornadoes blew through parts of the Valley)

Approximate locations sustaining home damage

Texas

– Gilbert (Maricopa County, 85295)*
*Tornado touch down in the area of Williams Field Rd. and Highway Loop 202)
– Phoenix (Maricopa County, 85028, 85032))*
*Damage reported in the 30-40th St./E.Shea Blvd. and Roadrunner Park area
– Paradise Valley (Maricopa County, 85253)
– Queen Creek (Maricopa/Pinal counties, 85140, 85142, 85143)

NOTE: This has not yet been declared a FEMA Major Disaster.

At a Glance

  • The National Weather Service confirmed 3 tornadoes developed Friday morning in the Phoenix, Arizona, area.
  • This was the third time three tornadoes occurred on the same day in Maricopa County.
  • The severe weather was due to a powerful low pressure system moving through the West.

Three tornadoes developed in the Phoenix, Arizona, area early Friday as a powerful storm system moved through the West.

This was the third time since 1950 that three tornadoes were observed on the same day in Maricopa County. This is also the latest in the year that multiple tornadoes have occurred in Maricopa County, according to the National Weather Service.

Tornado warnings were issued early Friday morning and the first tornado developed just before 4 a.m. MST in Paradise Valley. This tornado tracked into northwest Scottsdale and has been rated EF1. Numerous trees were downed and roofs were damaged.
A second tornado formed near Higley and has been rated EF0. Small trees were damaged.

The third tornado was in the Queen Creek area just before 5 a.m. MST and has also been given a rating of EF0.

For full report, please click the source link above.

High Winds Become Catalyst for Oklahoma Wildfire Outbreak

Posted on by Safeguard

Updated 11/27/19: KSN.com published a report offering an update on a rash of wildfires that broke out across Oklahoma and have destroyed at least two homes.

Oklahoma wildfire danger eases with weather shift

Disaster Alert
November 26, 2019

Source: KOCO ABC 5

Approximate locations sustaining home damage

Oklahoma

– Fargo (Ellis County, 73840)
– Mooreland (Woodward County, 73852)

NOTE: This has not yet been declared a FEMA Major Disaster.

MOORELAND, Okla. — Parts of towns in northwestern Oklahoma had to be evacuated Tuesday afternoon after dangerous wildfires sparked and spread quickly because of high winds.

Shortly before 2:30 p.m. Tuesday, a dangerous wildfire was located just southwest of Mooreland. Authorities said the flames are moving rapidly northeast. Evacuation instructions were sent out, but the order has since been lifted in Mooreland.

Authorities said the wildfire threatened about 100 homes, and police said the fire burned two houses and a barn. A senior living center in Mooreland also had to be evacuated. Woodward Public Schools officials said employees drove two school buses to the nursing home to help in the evacuation.

The Mooreland police chief told KOCO 5 that all fire and police units have been released from the fire scene and they are gong to let the rest burn itself out.

Around 4:20 p.m., a dangerous wildfire was located just northwest of Fargo and moving rapidly toward the southeast, officials said. Evacuation orders were issued shortly afterward. They have since been lifted.