FHA Mortgage Review Board (MRB) Trims Lender Herd

HUD/FHA CRACKS DOWN ON LENDERS' ABUSES! FHA Mortgage Review Board (MRB) trims it FHA lender herd by cleaning house and dropping some 900 existing mortgage lender-originators from its lists of authorized and approved lenders who can underwrite their loans closing and sell-back to HUD on the secondary mortgage market. 

FHA & HUD have adapted a "take no prisoners" attitude with many of the country's mortgage lenders and banks in an effort to rein in questionable practices and provide tougher oversight on the nation's mortgage business activities.

FHA & HUD  has tighten the screws on its portfolio mortgage lenders. 900 have been "thrown under the bus", losing authorization rights to underwrite and issue FHA approved  insured mortgages. Many lenders, hard hit by the exploding real estate bubble, have lost their FHA & HUD loan underwriting privileges due to violations of agency policies and regulations, while others had low reserve ratios compared to defaulted mortgages on the books, and a surprising number who were guilty of outright fraudulent activities.

The complete list of the 900 "former" FHA/HUD lenders can be found at:  

CitiMORTGAGES CAUGHT RED-HANDED...
HUD Fines CitiMortgage $700,000 for Failure to Report Delinquencies

And in a related matter, HUD *@#!-slaps CitiMortgage, Inc. (CMI) after the company failed to report delinquent loans by the specified monthly deadline. 

Industry insiders note that non-reporting of defaulted mortgages is a growing trend among many financial and banking institutions as they struggle to stay afloat with the floodgates of reos and non-performing loans currently on their balance sheets.  This fact is pushing-up reserve requirements which is squeezing both profitability and cashflow for the banks. By under reporting their actual nonperforming loans  and not actively foreclosing on them, bank books don't look so bad when FDIC comes-a-knocking to conduct its audits and determine if a bank stays open or is shutdown.  You can read more about Citimortgages' by clicking this link:  for the full article

HUD & FHA ACTIONS NEGATIVELY IMPACT THE MARKETPLACE   

The impact of the FHA & HUD purging and belt-tighten actions on  real estate investors is like a dual-edge sword. Namely, there is a smaller pool of suitable mortgage underwriters and  originators available to fund deals and homeowners and tougher eligibility hurdles to jump over to actually get funding.  And newbie homebuyers don't fair much better either. Both components squeeze the market tighter and keep 1st-time homebuyers and many wholesalers on the sidelines.

(Source: 7/26/10: Articles by Christine Ricciardi of Housing Wire)