A Federal Home Loan Bank may base its calculation of tangible capital for an insurance company member on financial statements prepared using statutory accounting principles for purposes of applying regulatory limits to members’ access to advances, according to the Federal Housing Finance Agency. The FHFA’s regulatory interpretation, issued earlier this month, would permit the use of SAP-based financial statements under certain conditions if the Bank’s insurance company member does not otherwise prepare financial statements based on generally accepted accounting principles.

In a mortgage market still dominated by Fannie Mae, Freddie Mac and government-insured lending, the non-agency jumbo sector stood out as the only one to show year-over-year growth in 2011, according to a new Inside Mortgage Finance ranking and analysis. Jumbo mortgage originations rose 13.5 percent from 2010 to 2011, while overall production was down 17.2 percent from the year before. The $118 billion of non-agency jumbo originations in 2011 represented the biggest annual output since the market collapsed in 2008 and agency loan limits were jacked dramatically...(Includes two data charts)

Fannie Mae and Freddie Mac have asked lenders to repurchase some $76.4 billion of mortgages under representations and warranties provisions in their contracts, although a significant volume of these demands ended up being withdrawn by the two government-sponsored enterprises. A new Inside Mortgage Finance analysis of reps and warranties disclosures made by Fannie and Freddie shows that 37.3 percent of the buyback demands made by the GSEs over the years ended up being withdrawn. Fannie, Freddie and other mortgage securitizers are now required to file reps and warranties...(Includes one data chart)

With Congress unlikely to move major mortgage finance reform any time soon, the Federal Housing Finance Agency this week outlined its “strategic plan” to use the next phase of the conservatorships of Fannie Mae and Freddie Mac to build a new mortgage securitization infrastructure. The plan’s roll out comes one year and one week after the Obama administration proposed three potential options to shut down Fannie and Freddie within 10 years. No significant action has been taken since, although Treasury Secretary Timothy Geithner recently noted that the White House expects to provide more details of its...

The Supreme Court of the United States heard oral arguments this week in an important fee-splitting case under the Real Estate Settlement Procedures Act, and one issue that took up a lot of air time was whether RESPA is fundamentally a law barring kick-backs or a price-control statute. The key legal provision being examined in Freeman v. Quicken Loans is RESPA Section 8(b), which provides that, “No person shall give and no person shall accept any portion, split or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a...

Citigroup acknowledged some responsibility for a portfolio of badly underwritten FHA loans that led to a $158.3 million settlement with the government, but the company managed to avoid an admission of wrongdoing. As part of the terms and conditions of the settlement, CitiMortgage “admits, acknowledges and accepts responsibility” for the conduct alleged in the government’s complaint. The FHA sought treble damages and civil penalties from CitiMortgage under the False Claims Act for fraud associated with FHA loans it originated. The default rate for FHA loans originated by Citi in 2006 and 2007 was 47...

Most major servicers reported increases in mortgage delinquency rates during the fourth quarter of 2011, but some industry data suggest seasonal factors influenced the increase. According to the Inside Mortgage Finance Large Servicer Delinquency Index, 10.88 percent of loans serviced by 19 major companies were in some stage of default at the end of 2011. That was up from 10.70 percent at the end of September and marked the fourth consecutive increase in the index. The biggest increase was in the serious default category, loans 90 days or more past due but not yet in foreclosure. Some 3.27...(Includes one data chart)

A new report detailing servicers’ compliance with foreclosure laws in San Francisco found that the mortgage industry has systematically violated state and municipal code. While California allows for both judicial and non-judicial foreclosures, the majority of servicers use the “power of sale” clause from the trust deed to choose a non-judicial foreclosure, wherein little oversight takes place. Prepared by Aequitas Compliance Solutions, the report was commissioned by San Francisco’s Office of the Assessor-Recorder. Aequitas compiled and reviewed 382 residential mortgage foreclosures, 16 percent of the...

The long-anticipated mortgage servicing settlement between the federal government, 49 state attorneys general and the nation's largest servicers isn’t just a big deal in terms of dollar amount and legal liability. It’s a critical shift in the legal and regulatory enforcement paradigm that will alter the landscape for years to come. “[T]he settlement is a strategic change in the legal and reputational risk landscape, and not just for what’s left of mortgage banking,” explained Karen Shaw Petrou, a managing partner at Federal Financial Analytics, a Washington, DC, think tank...

The Treasury Department’s Financial Crimes Enforcement Network recently put out final regulations that extend anti-money laundering program requirements and Suspicious Activity Report filing requirements to nonbank mortgage lenders. This means that nonbank mortgage lenders and originators are going to have to set up AML programs, assign a compliance officer and develop training programs, legal experts say, and compliance will be complex and costly. “Today, FinCEN is closing a regulatory gap by requiring nonbank mortgage lenders and originators to develop anti-money ...