Morning Radar: CFPB takes on forced-placed insurance

HousingWire's Morning Radar provides a look at what's trending across media outlets nationwide.

CFPB takes on forced-place insurance

Richard Cordray, head of the Consumer Financial Protection Bureau continues to lay out the agency's plan for regulating mortgage servicers. One such point of contention is the practice of pushing consumers into high-cost insurance known as “forced-place insurance.”

That's when a homeowners falls behind on insurance and their servicers place them in a new, often more expensive program. Servicers often do so, without giving a reason for any higher-than-market costs. Cordray wants this to end.

According to the Washington Post the CFPB said it will prohibit servicers from charging for new insurance unless there is a reasonable belief that homeowners have fallen behind on their payments. It also plans to allow consumers to find their own replacement insurance, rather than rely on the more expensive option from the servicer.

FHA reserves run low

A report in the Wall Street Journal claims the Federal Housing Administration burned through its reserves over the past three years as defaults mount on loans it guaranteed as housing markets deteriorated.

 The estimates by the White House's Office of Management and Budget show that the FHA's capital reserves, which stood at $4.7 billion in October, would be wiped out in the coming year, forcing the agency to seek nearly $700 million from the U.S. Treasury.

 Despite the headlines that FHA reserves are "at risk," the commissioner tells the Journal the situation is not irreversible. "It's highly unlikely that we'll need any special assistance from the Treasury given the policy changes we're making as well as the settlement dollars," said Carol Galante, the FHA's acting commissioner.

Homebuying rebound coming?

Maybe. An article in The Boston Globe points to positive factors in the housing industry.

The biggest sustained rally in homebuilding stocks in years and recent upbeat home sales data are injecting some long-absent optimism into the outlook for housing.The report is tutorially titled: How to invest in the coming housing market rebound.

The article also states sales of previously occupied homes rose for three straight months at the end of last year. The glut of houses on the market is diminishing, down to 2.4 million previously owned homes on the market in December from 3.8 million in June. And buyers are slowly regaining a little bit of confidence.


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