Bank of America reached a landmark $335 million agreement with the Department of Justice to settle allegations that Countrywide systematically discriminated against African-American and Hispanic borrowers during the housing boom, manipulating them into taking subprime loans when they were qualified for prime financing. It’s the largest settlement ever for a residential fair lending claim. The case also marks the first time the Justice Department has alleged and obtained relief for borrowers who were steered into mortgages on the basis of their race or national origin, a practice that placed...

The MGIC Investment Corp. has announced a $200 million capital contribution to its principal mortgage insurance provider, Mortgage Guaranty Insurance Corp., to enable it to continue writing new business and meet statutory capital requirements. The cash infusion was made as Fannie Mae’s approval of the MGIC Indemnity Corp. (MIC) as an eligible mortgage insurer expired on Dec. 31. A regulatory waiver of capital requirements issued by the Wisconsin Office of the Commissioner of Insurance (OCI) two years ago also lapsed on the same date. The MIC and the regulatory waivers are part of a strategy to...

As a group, commercial banks reported a small increase in the volume of loan repurchases and indemnifications made during the third quarter, but some institutions posted much bigger increases than the overall industry trend. At the same time, a number of banks – including two of the top five – reported declines in the volume of buybacks and indemnifications compared to the second quarter of 2011, according to a new analysis of bank call report data by Inside Mortgage Trends. Bank mortgage repurchases and indemnifications totaled $5.94 billion during the third quarter, up...(Includes one data chart)

Mortgage bankers reported significant gains in profitability during the third quarter of 2011 as strong secondary market margins more than offset losses on the servicing side. The average mortgage banker earned $7.33 billion in gross income during the third quarter, up 24.3 percent from the previous period, according to the Mortgage Bankers Association’s latest quarterly performance report. Average pre-tax income was up a more robust 147.9 percent from the second quarter to $1.12 million, while average net income after adjustments surged 122.2 percent, the MBA data show. Through the first nine...

There are new signs of life in the market for mortgage servicing rights, where observers suggest real estate investment trusts could become significant buyers and the government-sponsored enterprises are facilitating more transfer activity. Newcastle Investment Corp. recently announced a $44 million investment in excess mortgage servicing rights, done jointly with Nationstar Mortgage, a mortgage special servicer. Both companies are affiliates of Fortress Investment Group, a global investment management firm. Newcastle, a commercial mortgage real estate investment trust, acquired 65 percent...

Risk-sharing programs that have already been tested and proven effective could be dusted off and made the focal point of efforts to steer the mortgage finance system to a more sustainable, less volatile foundation, investors say. There is widespread agreement that private capital needs to play a much greater role in the mortgage finance system that has been dominated by Fannie Mae, Freddie Mac and the government mortgage-insurance programs since the financial crisis of 2008. There is no consensus on how to do that, and little likelihood that Congress will agree to a solution any time...

For the past 18 years, listeners to the nationally-syndicated Dave Ramsey Show have heard the host recommend Nashville-based Churchill Mortgage. While Ramsey’s debt-free living message might seem at odds with a mortgage banking company issuing loans, Churchill Mortgage has found in Ramsey an excellent partner. “We get phone calls and hits to our website from every state in the country,” said Matt Clarke, Churchill’s CFO and COO. “The population of callers is largely high quality borrowers.” Churchill has been a sponsor of the Dave Ramsey show since it began, and continues to reap benefits. The question...

The one category of distressed loan that the federal government has the most control over – mortgages insured by the FHA and VA – continues to show the worst success rates for loan modifications. After 12 months of post-modification seasoning, over half (51 percent) of government-insured loans were 60 days or more past due, according to a report issued this week by the Office of the Comptroller of the Currency. That compared to an overall 60+ re-default rate of 39 percent. Fannie Mae and Freddie Mac mortgages, along with loans held in the servicer’s portfolio, showed the best...

Some mortgage servicers have done a better job than others in adjusting to a market environment of high default and foreclosure rates, according to a new Barclays Capital report, and the difference can have a significant impact on the value of non-agency mortgage securities they service. Servicing is not as easy as it used to be and has come much more under the spotlight, Barclays noted. Servicers have to work with distressed borrowers to determine whether loan modification, refinance or liquidation is the most appropriate response. Servicer performance can be shaped by the composition of...

The timing and method of disposing of real estate owned properties will have significant implications for home prices, according to Fitch Ratings analysts. The supply of REO homes is unprecedented, with the large overhang of distressed properties in the housing market and weak demand, analysts said. The REO industry estimates that more than 2 million properties nationwide are in foreclosure and that 25 percent to 35 percent of all home sales are related to properties whose mortgages have defaulted. In a recent home-price projection report, which uses the rating agency’s Sustainable Home...