A proposal from the Financial Accounting Standards Board that would impact accounting for mortgage servicing rights is getting support from industry trade groups. In August, FASB issued proposed accounting standards covering derivative contract novations on existing hedge-accounting relationships. A task force at the accounting standard setter had found that guidance in generally accepted accounting principles wasn’t explicit on the effect of a ...

An independent dispute resolution program for resolving loan defects is currently in the works to determine if there was a violation in loan eligibility or not in loans sold to Fannie and Freddie. The Federal Housing Finance Agency said to expect further clarity on the IDR in fiscal year 2016. According to its annual performance plan release last week, Fannie Mae and Freddie Mac are expected to deliver a report on the results of the IDR pilots. The FHFA said that over the next 12 months, it will complete an evaluation of the pilots being tested for resolving disputes over alleged defects. It will also make a decision on whether or not to extend the pilot to additional...

Mortgage banking firms managed to increase their employee rolls by 1,200 workers as autumn began, even though traditionally this is the time when lenders cut back. Hiring at mortgage brokerage shops remained relatively flat at 77,100, according to figures compiled by the Bureau of Labor Statistics. BLS found that mortgage banking companies had 218,300 full-timers on their payrolls at the end of August, a meager sequential gain of 0.5 percent. The figures, which are seasonally adjusted, do not distinguish between production and servicing workers.

The Federal Housing Finance Agency is tackling all things fraud related, from prevention to managing and detecting the various types of potential fraud, according to recently issued guidance to Fannie Mae and Freddie Mac. The FHFA warned that mortgage fraud may occur in loans purchased for the GSEs’ own portfolios or for securitization. Fraud can also be committed by a number of external and internal parties and can occur as part of the origination, underwriting, or closing process or in conjunction with the servicing of a loan on behalf of Fannie or Freddie.The GSEs’ boards of directors are responsible for making sure that the GSEs have appropriate policies in place for preventing and detecting fraud, according to the guidance.

A significant percentage of active Ginnie Mae issuers use subservicers in their operations, and agency officials estimate that 22 subservicers handle roughly a third, or $510 billion, of the program’s portfolio. The four top subservicers handle approximately 21 percent of Ginnie’s total portfolio or 65 percent of the subserviced portion. During the recent Ginnie Mae annual conference in Arlington, VA, representatives from Lakeview Loan Servicing, Pingora Asset Management and ...

The volume of cash-out refinance in the second quarter reached its highest level in five years as more borrowers take advantage of rising home values, according to Black Knight Financial Services. Cash-out refinance volumes in the second quarter of 2015 rose close to 70 percent from the same period last year, said Ben Graboske, a Black Knight senior vice president. Today’s levels are comparable to those in 2006, with borrowers now taking out an average of ...

As the Federal Housing Finance Agency continues to take issue with Property Assessed Clean Energy loans, the program is growing and rating service DBRS said many of FHFA’s concerns about risks can be addressed with proper program design. Earlier this year, FHFA Director Mel Watt said that although the agency is not opposed to energy retrofit programs, they must be structured to ensure protection of the core financing for the home. The issue at stake is that residential PACE assessments threaten to move existing Fannie Mae and Freddie Mac mortgages to a second -lien position, said the FHFA. In the event of a default, PACE assessments would be repaid before...

The Inspector General of the Federal Housing Finance Agency has accused the FHFA of being too lax when it comes to overseeing the budget of Fannie Mae and Freddie Mac and in many instances waiting until the start of the GSEs’ fiscal year to even approve the budget. Inundated with cursory-level analysis and inadequate resources, the IG noted that the FHFA’s budget review and approval process for Fannie and Freddie is seriously flawed. The recently released review was completed in June 2015 and the FHFA for the most part agreed with the IG report and revamped its budget-review process a month later in July 2015. The IG noted that the GSEs often submitted proposed annual operating budgets after...

In the years after the financial crisis, returns on mortgage-banking activities have been more profitable for smaller banks than for large banks, according to researchers at the Federal Reserve. In an analysis of about 1,000 banks, William Bassett, a deputy associate director, and John Driscoll, a senior economist, found that returns on mortgage sales and securitization have been higher for community banks than for larger banks. Community banks also had higher returns on ...

A slightly larger percentage of mortgage loan applications were turned down by lenders in 2014 than in 2013, according to Home Mortgage Disclosure Act data. The reason may be linked to the early 2014 effective date for the ability-to-repay rule and the qualified mortgage standard. The two most common reasons for loan denial have historically been poor credit history and excessive debt-to-income ratio. Both became more prevalent in 2014 ... [Includes one data chart]