The Federal Housing Administration announced earlier this week the passing of two new rules – one that prohibits lenders from charging interest on FHA-insured mortgages that are paid in full and one that changes the requirements for lenders with regards to informing borrowers of changes to their FHA-insured adjustable-rate mortgages. The FHA says the new rules will "provide consistent protections for borrowers with FHA-insured mortgages, while ensuring borrowers have early access to information when making decisions about their FHA mortgages."
One of the rules will prevent borrowers from having to pay post-settlement interest, which is defined by the Consumer Financial Protection Bureau as a "prepayment penalty." The rule applies to FHA-insured mortgages that will close on or after January 21, 2015. Under the second rule, lenders must notify borrowers on FHA-insured adjustable-rate mortgages at least 60 days in advance of an adjustment on their mortgage payment. The current rule requires lenders to provide a minimum of 25 days' notice. This rule will be applied to FHA-insured adjustable rate mortgages that originate on or after January 10, 2015.
A report filed last week by the Office of Inspector General of the Federal Housing Finance Agency states that Freddie Mac and Ginnie Mae ignored "red flags" with regards to a mortgage fraud scheme perpetrated by lenders Taylor, Bean, and Whitaker and Colonial Bank, which resulted in $3 billion in combined losses for Freddie Mac and Ginnie Mae. GSE Fannie Mae avoided losses by voiding a contract to buy loans from Taylor Bean following an investigation in 2000, about two years before the fraud began. The report from the IG states that Fannie Mae failed to notify Freddie Mac or Ginnie Mae that the contract had been terminated, however.