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| Large Mortgage Servicier Delinquency Rates | | With the addition of more servicer data, the Inside Mortgage Finance Large Servicer Delinquency Index shows a significant increase in overall default rates in late 2009. The revised index, covering $6.997 trillion in home mortgages, found that 12.31 percent were in default or foreclosure as of the end of 2009... [Includes one chart] |
| HUD Drafts New RESPA Rule | | The Office of Management and Budget is reviewing a proposed rule that would revise the definition of “required use” under Real Estate Estate Settlement Procedures Act regulations. The Department of Housing and Urban Development drafted the proposal on required use after withdrawing the provisions from the final RESPA rule that took effect Jan. 1. Required use is a prohibited practice... |
| Fannie Mae Reports Strong Net Interest Income, But Losses Continue to Mount for Struggling GSE | | Fannie Mae and Freddie Mac may be losing money at unfathomable rates, but one piece of their business – the one most reformists want to do away with – actually was more profitable in 2009 than it has been in years. Fannie reported $14.5 billion in net interest income in 2009, mostly from a retained investment portfolio that is under regulatory restraint. That was up from $8.8 billion in... |
| FDIC Works on Principal Forgiveness Option for Underwater Borrowers | | The Federal Deposit Insurance Corp. is developing a program to reduce the principal owed by underwater borrowers whose loans were held by banks and thrifts that have gone insolvent. FDIC Chairman Sheila Bair last week announced the program, although agency officials have provided few details. Borrowers would be eligible for a reduction in their mortgage balances if they keep making... |
| Freddie Drops IO Program | | Freddie Mac this week said it will stop buying interest-only loans in September. “Our decision to stop purchasing all interest-only type mortgages – through all flow and bulk purchase paths – and to retire our Initial Interest fixed-rate and adjustable-rate mortgage products in the coming months is a result of continuing poor performance of these products in aggregate,” a company spokesman... |
| Fannie Launches Initiative to Focus on Origination Practices as Buyback Demands Continue Climbing | | Citing lessons learned from the dramatic increase in loan repurchases it has forced lenders to make, Fannie Mae launched a new Loan Quality Initiative to bolster loan production practices. The initiative, announced late last week, focuses on validating and verifying the information gathered in originating loans and selling them to the government-sponsored enterprise. The LQI, for example... |
| Mortgage Repurchases, Indemnifications Soared to Record Levels in Late 2009 | | Commercial banks reported a hefty $18.85 billion in mortgage repurchases and indemnifications during the fourth quarter of 2009, according to a new analysis of call report data by Inside Mortgage Profitability, an affiliated newsletter. Fannie Mae and Freddie Mac both reported increases in the volume of loans they pushed back to their lenders in 2009 because of breaches... [Includes one chart] |
| GAO Says TALF Program Presents Unnecessary Risks; Treasury Balks at Recommendations | | The Government Accountability Office said the Federal Reserve could do more to minimize risk to the government from the Term ABS Loan Facility, but the program’s administrators said the GAO understated TALF’s success and overstated the risk involved. TALF, administrated by the Federal Reserve Bank of New York, can lend up to $200 billion to certain eligible borrowers in return... |
| Investor Group Offers Principal Reduction Proposal As Alternative to Mortgage Cramdown Legislation | | As foreclosures continue to mount and loan modifications produce mixed results, the Mortgage Investors Coalition has offered a second-lien principal reduction, loss-sharing proposal to help remove what is increasingly seen as the primary obstacle to successful loan mods for underwater borrowers: the second mortgage. Under the MIC plan, losses due to principal reduction on such loans would be... |
| State Street Settles With SEC, Massachusetts Over Charges Involving Subprime Disclosures | | Boston-based State Street Bank and Trust Co. has entered into settlements with the Securities and Exchange Commission, the Massachusetts Attorney General and the Massachusetts Securities Division of the Office of the Secretary of State to settle charges that the institution misled investors about their exposure to subprime mortgage investments while selectively disclosing more... |
| GSEs, Ginnie Mae Implement HAMP Documentation Changes Expected to Improve Conversion Rates | | Fannie Mae, Freddie Mac and Ginnie Mae each issued separate directives to adopt recent changes in the Home Affordable Modification Program to loans backing their MBS, including a key change that borrower income has to be verified before a trial mod can be started. The idea is that collecting documents and completing verifications earlier in the loan mod process will improve the... |
| New Data Standards for Non-Agency MBS Seen as Big Plus, But Implementation Remains an Issue | | Investors, ratings analysts and issuers agree that the extensive new data standards for non-agency MBS represent a big step forward for the industry, but it remains to be seen whether they require too much of a stretch for issuers. One of the key benefits of the data requirements for issuing and periodic reporting of new non-agency MBS is that they provide standardized definitions... |
| U.S. Judge Finds Flaw, Dismisses Lawsuits Against S&P, Moody’s | | A federal court judge for the Southern District of New York has thrown out investor lawsuits against Standard & Poor’s and Moody’s Investor Service alleging dubious ratings practices involving structured products sold by defunct Lehman Brothers Holdings, Inc.
U.S. District Judge Lewis Kaplan let the two ratings agencies off the hook after finding that provisions of the... |
| Fannie and Freddie Announce Plans for Mass Buy-Outs of Delinquencies from MBS Pools | | Agency MBS investors could see the writing on the wall when new accounting standards emerged last year that could make it more economical for Fannie Mae and Freddie Mac to repurchase seriously distressed loans from MBS pools. It was mostly a matter of when and how fast. The government-sponsored enterprises answered those questions this week: soon and very quickly... |
| Fed Chief Bernanke Confirms Exit Strategy: Bulk MBS Sell-Off Is Considered Unlikely | | The Federal Reserve remains on course to stop buying agency MBS by the end of next month, and the agency has no plans to dump its massive holdings in the market, according to Congressional testimony prepared for Fed Chairman Ben Bernanke. Freakishly heavy snowfall in Washington, DC, resulted in a postponement of a hearing on the Fed’s exit strategy... [Includes one chart] |
| News Briefs | | Two subsidiaries of American International Group agreed to pay a minimum of... CitiMortgage will likely sign up for the second lien portion of the Home... Moody’s Investors Service this week placed $5.9 billion of mortgage-backed... In the coming months, Moody’s Investors Service will publish bond recovery... Four former executives at bankrupt jumbo lender Thornburg Mortgage stole... |
| FDIC’s MBS Proposal Met with Dire Warnings | | A proposal by the Federal Deposit Insurance Corp. addressing securitization activity by insured banks could halt any possible recovery of the non-agency mortgage-backed security market, according to industry participants. The FDIC’s proposed MBS safe harbor includes risk-retention requirements and would require lenders to hold mortgages for one year before securitizing the... |
| Federal Government Targets Negative Equity | | The Treasury Department is looking beyond the Home Affordable Modification Program to help borrowers with negative equity. Meanwhile, the Federal Deposit Insurance Corp. is considering testing a negative equity modification program of its own. At the end of 2009, negative equity was concentrated in five states, according to a report released last week by First American... |
| Going Up: Subprime Delinquencies, HAMP Gripes | | The subprime delinquency rate increased again in the fourth quarter of 2009. While the Mortgage Bankers Association projects that the rate will plateau soon, it will not necessarily be due to the Home Affordable Modification Program. The non-seasonally adjusted seriously delinquent rate on subprime mortgages increased to 30.56 percent in the fourth quarter of 2009, up from 28.68 percent the... |
| Legal Implications Hinder Servicers’ Facebook Use | | Servicers must be careful when contacting delinquent borrowers via social networking Web sites such as Facebook, according to industry lawyers. “The concern is that it is not always obvious what is and is not allowed on these sites,” said David Beam, a partner at K&L Gates. Beam detailed the legal implications of using “alternative communication methods” during an audio... |
| Steps Taken Toward Non-Agency MBS Issuance | | The non-agency mortgage-backed security market looks to be awakening from its slumber with help from the Federal Deposit Insurance Corp. and separate jumbo activity. Investors this week began bidding on $1.81 billion of MBS guaranteed by the FDIC. The sale, to be underwritten by Barclays Capital, reportedly includes $1.33 billion of seasoned option ARMs acquired by the FDIC... |
| CFPA Negotiations Continue in Senate | | Senators continued to debate specifics of the proposed Consumer Financial Protection Agency this week, with an emphasis on which federal agency would house the CFPA. A proposal by Sen. Chris Dodd, D-CT, to have the Federal Reserve host the CFPA was met with mixed reviews from Republicans and even Democrats. Rep. Barney Frank, D-MA, said he does not support housing the CFPA in the Fed due to... |
| Ocwen Looks for Growth and ‘Self-Serve’ Servicing | | With implementation of the Home Affordable Modification Program complete, Ocwen Financial Corp. is looking to grow its portfolio and “self-serve” servicing options. The specialty servicer this week reported net income of $9.4 million for the fourth quarter of 2009 compared with a net loss of $4.3 million during the same period in 2008... [Includes one graph] |
| GSE IO Activity Decreased Significantly In 2009; Freddie to Discontinue Completely | | Fannie Mae and Freddie Mac significantly curtailed their purchases and securitization of interest-only mortgages in recent years, according to a new analysis by Inside B&C Lending. Freddie’s recent announcement that it will cease buying and securitizing interest-only loans leaves the dwindling market to Fannie. The government-sponsored enterprises pooled a total of... [Includes one chart] |
| Loan Mod Takes Major Part In Market Bailout | | Congress this week approved sweeping legislation to inject up to $700 billion in liquidity into distressed mortgage and mortgage securities markets that includes a number of provisions to spur one of the hottest alternative mortgage lending programs: loan modifications. “The loan modification section of the emergency bailout package is not only needed, but it is... |
| New FHA Refi Program Launched | | The Department of Housing and Urban Development this week launched a new FHA alternative loan product designed to give the growing number of underwater mortgage borrowers a chance to refinance to a more economic loan. Authorized by the 2008 housing act, the new HOPE for Homeowners program features an unusual equity-sharing mechanism and underwriting requirements... |
| TECH MANAGEMENT | | Loan-Score Decisioning Systems, a provider of enterprise-class automated underwriting solutions, has hired industry veteran Jon McGuire as chief technology officer. He will be charged with... Citigroup has appointed Marty Lippert as chief information officer and corporate operations and technology chief operating officer. He will play a central role managing Citi’s newly centralized... |
| TECHNOLOGY NEWSWIRE | | Advantage Systems, a provider of accounting and contract management tools for the mortgage and real estate industries, has enhanced its Accounting for Mortgage Bankers software package with... LogicEase Solutions, a provider of risk management solutions for the mortgage industry, has obtained a patent for a product dealing with compliance issues. The product will be offered through... |
| CRA Ratings | | Recent CRA Ratings issued by federal agencies. |
| Worth Noting … | | CitiMortgage, as manager for the California Public Employees Retirement System (CalPERS) Member Home... Ted Tozer was sworn in Feb. 24 as president of Ginnie Mae. Prior to his new position... The Mortgage Bankers Association has proposed a new forbearance program that would... Federal thrift and banking agencies, the Federal Trade Commission, and other government... |
| Federal Roundup | | Revised HMDA Exam Procedures. The OCC has changed its Home Mortgage Disclosure Act examination... Loan Correspondent Renewal. The Federal Housing Administration is extending the deadline... HARP Extended. The Home Affordable Refinance Program, a government refinancing initiative... Data Collection to Preclude Property Flipping. HUD has sent a proposal to the Office of Management... |
| State Roundup | | CSBS/AARMR. The Multistate Mortgage Committee of the Conference of State Bank Supervisors... Illinois. State Attorney General Lisa Madigan sued two mortgage brokers for their... Florida. Administrative charges were filed against unlicensed providers of loan... New York. The Manhattan District Attorney’s Office has announced the establishment of the... |
| AIG Subs Settle with FFETF to Resolve Biased Lending Charges | | Two subsidiaries of American International Group have agreed to pay $6.1 million to the government to settle allegations of discriminatory pricing against African American borrowers. AIG Federal Savings Bank and Wilmington Finance, Inc. allegedly violated the Fair Housing Act and the Equal Credit Opportunity Act by allowing wholesale mortgage brokers to charge black borrowers... |
| HUD Sends Proposed ‘Required Use’ Rule to OMB for Clearance | | The Office of Management and Budget is reviewing a proposed rule from the Department of Housing and Urban Development addressing the revised definition of “required use.” Submitted Feb. 26, the proposed rule is expected to show a more streamlined definition of “required use” that would allow settlement service providers, possibly including home builders, to offer incentives to... |
| Senate Negotiators Continue Talks On Consumer Protection Location | | Senate lawmakers continued to negotiate after efforts to craft an alternative to an independent Consumer Financial Protection Agency hit another brick wall last week. A proposal drafted by Sens Christopher Dodd, D-CT, and Bob Corker, R-TN, was spurned by Democrats and Republicans in both the House and the Senate, further slowing progress to get a consensus bill... |
| Risk Retention Concerns Remain High Despite Focus on CFPA | | Lobbying for changes to the risk-retention requirements embedded in Sen. Chris Dodd’s draft regulatory reform legislation continues despite the bigger focus on where consumer protection will end up in the final legislative package. Industry groups have been lobbying quietly on Capitol Hill to soften or eliminate risk-retention requirements, despite speculation that a... |
| Revamped RESPA Rule Increases Litigation Risk, Attorney Warns | | The revamped Real Estate Settlement Procedures Act regulations create more compliance risks and potential pitfalls that could result in more litigation, according to Rebecca Redmond, a closing attorney and a partner with Sirote & Permutt. The revised RESPA rule comes with a host of questions, which the Department of Housing and Urban Development is trying to... |
| Industry Nixes Licensing of Mod Specialists | | Requiring mortgage servicers and loss mitigation specialists to be licensed as if they were loan originators would be counterproductive and likely impair foreclosure prevention efforts, according to industry trade groups and state regulators. Groups responded with a resounding “no” to a proposal by the Department of Housing and Urban Development in December to require the licensing of... |
| FHFA Seeks Minor Revisions to FHLB Advance Regs | | The Federal Housing Finance Agency is proposing to amend some of the regulations that refer to Federal Home Loan Bank advances to expand the kind of collateral that can be pledged for advances. “The FHFA is proposing to amend the advances regulations to allow Community Financial Institution members to pledge secured loans for community development activities as eligible collateral for advances... |
| Key Regulations Forthcoming From FHFA; RBC Still in the Works | | Recent comments from Ed DeMarco, acting director at the Federal Housing Finance Agency, and input from other sources indicate the agency has a handful of important regulatory proposals on the verge of issuance. The FHFA expects to release proposed housing goals for the Federal Home Loan Banks soon, after having issued updated goals for Fannie Mae and Freddie Mac last month. On a related note... |
| Lawmakers Slam, DeMarco Defends GSE Exec Comp | | House Financial Services Committee members of both parties were sharply critical last week of the multi-million-dollar pay packages awarded to the CEOs of Fannie and Freddie late last year.“The $6 million pay packages given to each of their CEOs...represents just one example of what happens when the federal government is given the responsibility for regulating compensation,” said Rep. Spencer Bachus...
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| Paulson Criticizes FHFA, OFHEO Oversight of GSEs | | Former Treasury Secretary Henry Paulson’s new book, On The Brink: Inside the Race to Stop the Collapse of the Global Financial System, makes clear that the Bush administration put on a full-court press to rein in Fannie Mae and Freddie Mac before they collapsed, making foreign investors lose confidence in the U.S. and perhaps even causing a run on the dollar. However, the Federal... |
| Realtors Propose Converting Fannie, Freddie into Nonprofits | | The Obama administration may be unwilling to tip its hand on the fate of the housing GSEs, but that’s not keeping industry groups from trying to stoke the restructuring fire a bit. The National Association of Realtors is circulating some talking points on Capitol Hill that revolve around the concept of transitioning Fannie Mae and Freddie Mac into nonprofit organizations. Under the NAR framework... |
| Obama Punts on GSEs, But Frank to Press Ahead | | The Obama White House says it will spend the next year developing a plan for overhauling the mortgage finance system in the United States, including the form and future of Fannie Mae and Freddie Mac, but that extended delay is not going to keep House Financial Services Committee Chairman Barney Frank, D-MA, from pressing ahead. “I believe the time has come to see to a total reorganization of housing... |
| Freddie Not Purchasing IOs Anymore, But What Took You So Long? | | Freddie Mac announced last week that, as of September, it will stop its support of interest-only mortgage products, which didn’t surprise observers who have seen the GSE’s stake in such products plummet. To them, the real surprise is, what took you so long? “On or about Sept. 1, 2010, the company will cease purchasing and securitizing interest-only mortgages, including Freddie Mac Initial Interest... |
| Fannie, Freddie Get Tagged Big for MBS Buyouts | | The more successful that GSE loan modification efforts are, the bigger the resulting fair value net charges offs for Fannie Mae and Freddie Mac become – particularly for Fannie, which reported a huge leap in such costs during 2009. “The pace of our loan workouts increased in the fourth quarter, particularly modifications. In most cases, we must purchase a loan from our MBS trusts to modify it, at... |
| Freddie Struggles With Partners to Enforce Buybacks | | Freddie Mac is finding that the inherent tension between the GSEs and their sellers is intensifying as it struggles to enforce the buybacks of loans that went bad when the mortgage market hit the skids amid more push-back and slow-footing from some of its lenders. In its annual Form 10-K filing with the Securities and Exchange Commission, Freddie indicated the buyback issue is becoming increasingly... |
| Lawmakers Hoping to Move Covered Bonds Legislation | | Rep. Scott Garrett, R-NJ, is working with colleagues on the House Financial Services Committee as well as Sen. Bob Corker, R-TN, to advance bipartisan legislation in both chambers of Congress that will promote the use of covered bonds in the United States. “There’s a lot of bipartisan support, and I’m optimistic that the time is right” that sometime in this session of Congress that a mark-up of his... |
| Technology Briefs | | To help provide a solution to the question of how financial institutions can price troubled... Mortgage technology company FNC Inc., has signed a three-year contract with... The Clarifire software developed by eMASON Inc. was recently certified by... Mortgage Pricing Systems, a provider of product and pricing solutions for small... National Default Servicing LLC, a provider of default and servicing-related... |
| TBW’s Assets Scattered After Collapse | | The highly publicized fall of Taylor, Bean & Whitaker had a tangible impact on many corners of the mortgage industry, and details of the multi-faceted portfolio realignment are still emerging. Ginnie Mae re-assigned TBW’s $26.5 billion FHA/VA servicing portfolio after the FHA suspended the lender earlier this month. The agency assigned the portfolio to Bank of America, its master servicer... |
| Quarterly Rankings: Non-Agency MBS Production by Collateral Type & Characteristics 4Q07 | | Non-agency MBS Production by Collateral Type: all FRMs, all ARMs (hybrid & option ARMs), HELOC, closed-end seconds, NIMs, reverse, and MBS. Non-Agency MBS Production by Collateral Characteristics: subprime, Alt A/Stated incomce/no doc, prepay penalty, interest-only, and ballon as well as by purchase mortgage, rate/term refi, and cash-out refi. |
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