TheMReport

54 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT FHA Takes on Riskier Loans Credit scores for FHA borrowers are on the decline, according to a HUD report. T he Department of Housing and Urban Development (HUD) released the quarterly report on FHA single-family mutual mortgage insurance fund programs for the first quarter of the year. According to the Q1 2019 report, single-family forward endorsements decreased 11.7% by count from the prior quarter. Ad - ditionally, the average credit score in Q1 2019 fell by one point to 667. HUD noted that although this continues to be above the levels preceding the mortgage and credit crisis, it is well below the Q2 2011 peak of 703. The report also covered delin - quency and refinancing rates. The portfolio-level serious delinquency rate decreased in Q1 to 4.08%, from 4.11% the previous quarter. The cash-out refinance mortgage share increased as a percentage of overall business to 17.2% from 14.4% in the previous quarter. More borrowers experience debt-to-income ratios (DTI) of over 50% in Q1 2019. The share of borrowers with DTI of 50% or more increased from 25.9% in Q 4 2018 to 27.4% in Q1 2019. HUD also noted that the FHA's credit risk profile has been shift - ing from nearly 60% of borrowers with credit scores greater than 680 in 2011 to about 35% as of Q1 2019. At the same time, the per - centage of borrowers with scores below 640 has grown from 8% to nearly 30%. "This increase shows a much riskier popula - tion of mortgages being endorsed by FHA," HUD stated. "Performance of these mortgages will be closely monitored to determine when policy changes should be imple - mented." In Q1 2019, the early-payment delinquency rate rose by 28 points compared to the previ - ous quarter, while serious delinquency rates decreased to 4.08 percent, 3 basis points lower than the previous quarter. "Recent disasters such as hurricanes Harvey, Irma, and Maria, as well as wildfires in the Western United States, had a near term effect on overall delinquency rates," HUD noted. "Overall, serious delinquency rates are significantly improved from the highs seen in 2012 and considerably lower than for those mortgages originated during the financial crisis of 2006-2009." Is Facebook Violating the Fair Housing Act? HUD takes issue with Facebook's selective advertising practices. T he Department of Housing and Urban Development (HUD) announced that it is charging Facebook for violating the Fair Housing Act by allowing landlords and home sellers to use its advertising platform to engage in housing discrimination. HUD claims Facebook enables advertisers to control which users receive housing-related ads based upon the recipient's race, color, religion, sex, familial status, na - tional origin, disability, and/or ZIP code. HUD alleges that Facebook then invites advertisers to express unlawful preferences by offering discriminatory options, allowing them to effectively limit housing options for these protected classes under the guise of "targeted advertising." "Facebook is discriminating against people based upon who they are and where they live," said Ben Carson, HUD Secretary. "Using a computer to limit a per - son's housing choices can be just as discriminatory as slamming a door in someone's face." HUD originally leveled a complaint against Facebook back in August 2018, MReport reported, claiming that Facebook violates the Fair Housing Act by enabling advertisers to display housing ads either only to men or only to women; not show ads to Facebook users interested in an "assistance dog," "mobility scooter," "accessibility," or "deaf culture;" not show ads to users whom Facebook categorizes as interested in "child care" or "parenting," or show ads only to users with children above a specified age. Other ad categories are based on religion, origin, and ZIP codes with target words such as "Christian Church," "Sikhism," "Hinduism," "Southeast Asia," "China," and more. Advertisers may also draw a red line around ZIP codes and then not display ads to Facebook users who live in specific ZIP codes. HUD's charge against Facebook claims Facebook allows advertis - ers to specifically exclude people whom Facebook classified as parents; non-American-born; non- Christian; interested in accessibil - ity; interested in Hispanic culture; or a wide variety of other interests that closely align with the Fair Housing Act's protected classes. In a release, HUD stated that through its charge, it "seeks to address unresolved fair hous - ing issues regarding Facebook's advertising practices and to obtain appropriate relief for the harm Facebook caused and continues to cause." According to HUD, the agency's charge will now be heard by a United States Administrative Law Judge "unless any party to the charge elects to have the case heard in federal district court. If an administrative law judge finds after a hearing that discrimina - tion has occurred, he may award damages for harm caused by the discrimination. The judge may also order injunctive relief and other equitable relief, as well as payment of attorney fees. In addi - tion, the judge may impose fines to vindicate the public interest. If the matter is decided in federal court, the judge may also award punitive damages." "Performance of these mortgages will be closely monitored to determine when policy changes should be implemented."

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