Mortgage lenders will be facing tougher enforcement if Congress decides to act on a series of proposals to hold lenders accountable for noncompliance with FHA policies and regulations. In the wake of an adverse actuarial report regarding the health of the FHA’s Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante announced that the agency will seek new powers to recoup losses from lenders that originate bad FHA loans. The proposals are designed to provide the FHA with greater flexibility to revise policies and procedures to avoid unnecessary losses before they occur. They will also improve the agency’s ...

Redwood Trust issued a $301.46 million non-agency jumbo mortgage-backed security last week with the shortest seasoning period yet on the real estate investment trust’s post-crisis issuance. Loans included in the MBS were seasoned an average of 1.1 months due to Redwood’s increased loan purchase activity. Average loan seasoning on the eight other non-agency jumbo MBS deals issued by Redwood since 2010 has varied from 8.6 months on a deal in 2011 to 1.9 months on the deal Redwood issued in October ...

Members of the Residential Mortgage-Backed Securities Working Group filed a lawsuit this week against Credit Suisse Securities and reached separate settlements last week with JPMorgan Securities and Credit Suisse. New York Attorney General Eric Schneiderman, a co-chair of the working group, said federal and state regulators are working on a number of other actions. “We’re a long way away from wrapping this up,” he said. The lawsuit against Credit Suisse was filed this week by Schneiderman, alleging that ...

Securitization market professionals are jointly promoting the practice of “margining” transactions involving Fannie Mae, Freddie Mac and Ginnie Mae MBS, despite the costs involved, to reduce counterparty and systemic risks. Last week, the Treasury Market Practices Group revised its existing “best practices” for Treasury, agency debt and agency MBS markets to include a recommendation that forward-settling agency MBS transactions be margined in order to prudently manage counterparty exposures. “In order to allow market participants to develop...

According to the latest subprime servicer ranking from Inside Nonconforming Markets, only two major servicers increased their subprime portfolios at the end of the third quarter of 2012 compared with either the previous quarter or the third quarter of 2011: Ocwen Financial and Homeward Residential, which Ocwen intends to acquire in December. Both of the servicers – and eight of the top 15 subprime servicers – are nonbanks. Nonbank special servicers have increased their ... [Includes one data chart]

The top three rating services continued to dominate the new issuance market in non-mortgage ABS during the first nine months of 2012, according to a new Inside MBS & ABS analysis, but the biggest player in the non-agency MBS market was DBRS. Moody’s Investors Service rated 69.7 percent of the non-mortgage ABS issued in 2012 as of the end of the third quarter, down slightly from its 70.4 percent share of the 2011 market. The company’s strengths were in vehicle finance and business loan ABS, where it captured more than three-quarters of new issuance by dollar volume. Standard & Poor’s ranked...[Includes two data charts]

The Department of Housing and Urban Development will raise the annual insurance premium on new FHA originations, reverse the agency’s current policy on mortgage insurance premium cancellation and institute other policy changes to improve the health of the FHA insurance fund. The new measures aim to offset significant losses from FHA’s legacy loans, which have caused significant stress to the agency’s Mutual Mortgage Insurance Fund. Results of a new FHA actuarial audit showed that the stress has plunged the MMI Fund into a deep hole, revealing negative capital of $16.3 billion (negative $13.5 billion excluding Home Equity Conversion Mortgages) on a $1.13 trillion FHA portfolio. The capital reserve ratio fell ...

The Making Home Affordable program might not tap even half of the $29.9 billion in Troubled Asset Relief Program funds allocated for it, according to new estimates from the Treasury Department. Recently loosened requirements for the Home Affordable Modification Program Tier 2 could increase activity, though initial signals suggest that the increase will not be significant. Some 1.30 million MHA actions had been implemented as of the end of the third quarter of 2012, up from 1.22 million at the end of the second quarter, according to an Inside Mortgage Finance analysis. First-lien mods as part of HAMP Tier 1 dominated MHA activity, which also included second-lien mods, short sales and unemployment forbearance plans and other programs. There were...

Many top mortgage servicers reported increases in mortgage delinquency rates during the third quarter of 2012, although data from the Mortgage Bankers Association suggest that seasonally adjusted rates improved in most categories. The Inside Mortgage Finance Large Servicer Delinquency Index rose 7 basis points, to 10.17 percent, during the third quarter. The index was still significantly below the 10.70 percent level recorded at the same point in 2011, but it was up 29 bps from March 2012, when it dipped to 9.88 percent. The increase was driven...[Includes one data chart]

Servicers are on their way to completing required loss mitigation as part of the national servicing settlement well before the 2015 deadline, according to a report this week from Joseph Smith, monitor of the settlement. State attorneys general and federal regulators that helped reach the settlement said they are largely satisfied with servicers’ initial efforts. “With servicers on track to fulfill much of their consumer relief commitments in the first year of this agreement, homeowners are finally beginning to see the light at the end of the tunnel,” said Shaun Donovan, secretary of the Department of Housing and Urban Development. The settlement requires...