Underwriting standards for subprime mortgages and borrower demand for such loans remained unchanged in the third quarter of 2012 compared with the previous quarter, according to the Federal Reserve’s senior loan-officer opinion survey on bank lending practices. While 64 banks surveyed reported offering prime mortgages, only four reported offering subprime mortgages and 23 reported offering nontraditional mortgages. Underwriting and demand for nontraditional mortgages ... [Includes two briefs]

Wells Fargo has asked a federal district court in Washington, DC, to declare the U.S. government in violation of the terms of the landmark $25 billion mortgage servicing fraud settlement earlier this year that resolved federal and state claims against the bank and four other major servicers for alleged servicing malpractices. In a complaint filed last week, Wells Fargo also asked the D.C. court to order the Department of Justice to halt all legal actions seeking to impose additional liability on Wells Fargo based on a ...

There is substantial risk that the FHA may end up with a negative net worth, which would require congressional appropriations for the mortgage insurance fund and passage of legislation reforming the FHA, said a former top official at the Department of Housing and Urban Development. In remarks this week at the Urban Institute, John Weicher, former assistant secretary for housing and FHA commissioner in 2001-2005, said it is very unlikely in this weak economic recovery to see ...

The volume of loans guaranteed by the Department of Veterans Affairs rose 4.0 percent in the third quarter of 2012, reflecting an upward trend that the agency attributes to strong underwriting. A production increased to $33.3 billion from $32.0 billion in the second quarter and $28.3 billion in the first quarter. The agency reported $93.6 billion in total originations over the nine-month period, with refinancing accounting for 51.8 percent of guaranteed loans. “VA has had the best performing loans in the industry for quite some time, with the ... [1 chart]

Banks that say they were less likely to approve an application for an FHA-insured mortgage cited a higher risk of putback of delinquent mortgages by the FHA as an important reason for the change, according to the Federal Reserve’s latest survey of bank lending practices. Responding to a special question on FHA lending, 14 of the respondents (36.8 percent) ranked putbacks as a “very important” issue, nine banks (23.7 percent) thought it was the “most important” while an equal number said it was “somewhat important.” Nine of the 14 respondents were ...

A second-term Obama administration is expected to continue support for lowering maximum loan-to-value ratios and upward premium pricing to strengthen the FHA’s Mutual Mortgage Insurance Fund, according to the Mortgage Bankers Association. While President Obama has indicated an interest in reducing the FHA’s presence in the mortgage market for a larger private sector role in mortgage finance, he is inclined to proceed cautiously so as not to disrupt consumer access to affordable FHA financing, said MBA President/CEO David Stevens. Stevens observed that Obama has been ...

Hurricane Sandy homeowners with FHA and VA mortgages have been given temporary relief, including a 90-day suspension on foreclosures and as much as 100 percent financing for victims who have lost their homes. The Department of Housing and Urban Development and the Department of Veterans Affairs have announced federal disaster assistance to hard-hit areas in Connecticut, New York and New Jersey. Both agencies announced a three-month freeze on foreclosures in the affected areas as well as forbearance on foreclosures of FHA and VA home loans. The VA advised its lenders that careful counseling should ...

GSEs, Private MIs Agree to Drop Pre-Approval Requirements. Fannie Mae and Freddie Mac and the private mortgage insurance industry have agreed to eliminate pre-approval requirements for foreclosure alternatives, such as short sales and deeds-in-lieu of foreclosure. The separate agreements with MIs should help distressed homeowners avoid foreclosure by doing away with costly, time-consuming MI reviews that delay foreclosure-prevention transactions, according to the government-sponsored enterprises. WIMC Fully Acquires Reverse Mortgage Solutions. Walter Investment Management Corp. has completed its $120 million acquisition of ...

Fannie Mae and Freddie Mac this week reported a combined $4.74 billion in net income during the third quarter, as the two government-sponsored enterprises avoided taking further draws from the Treasury Department by staying in positive earnings territory. The GSEs’ combined third-quarter income was down 41.7 percent from the previous three-month period, mostly because Fannie’s net income fell 64.6 percent from second-quarter earnings that were pumped up by a $3.04 billion recorded benefit on credit losses. Fannie’s $1.81 billion in third-quarter net income was much more in line with the $2.72 billion it earned in the first three months of the year, as well as Freddie’s recent performance. Freddie reported...

An adverse independent actuarial report on the FHA’s Mutual Mortgage Insurance Fund would set off another round of debate on higher downpayments, tighter credit and increased insurance premiums, along with dire warnings from lawmakers about a potential FHA taxpayer bailout, according to the Mortgage Bankers Association and other industry observers. The annual FHA actuarial review is expected to be released next week and reportedly has troubling news about the state of the MMI Fund, particularly its capital reserve ratio. The strength of the MMI Fund is conveyed through this capital reserve ratio, which has fallen far below its statutory mandate of 2 percent but has still remained positive in the past three annual actuarial reports. The Department of Housing and Urban Development reassured...