Banks reported a solid 9.6 percent increase in the volume of home loans sold by their mortgage banking operations during the third quarter, but activity remained at its lowest level since the financial crisis of late 2008. A new Inside Mortgage Trends analysis of call report data reveals that banks sold $248.8 billion of loans through their mortgage banking businesses during the third quarter, rebounding from an especially slow three-month period ending in June. Even with the gain in sales, the third quarter was the second-lowest three-month total since the end of 2008. On a year-to-date basis...

PHH Corp. over the last month has felt the pinch of being the largest mortgage banking business not associated with a depository institution as it faced some setbacks in lining up financing for its operations. The company this week priced a $220 million offering of 6.00 percent convertible senior notes that is being co-managed by JPMorgan Securities and BofA Merrill Lynch. That was up from the $150 million offering originally announced, and PHH gave the underwriters the option to purchase an additional $30 million. PHH will use the money to pay off $250 million of 4.00 percent convertible senior...

Mortgage insurer United Guaranty Corp. says it is offering lenders a high-quality, semi-automated independent file review as their first line of defense against rescission and loan buybacks. Dubbed CoverEdge, the product is essentially a second-look tool developed by UG to catch and fix underwriting errors and identify missing documents to avoid denial of payment claims on mortgages gone bad as well as repurchase demands. CoverEdge’s comprehensive credit and documentation analysis at loan origination and post-closing seeks to avoid misrepresentation and fraud. It also provides a repository...

The Federal Reserve is urging government policy makers to consider more aggressive responses to the housing debacle, including a government-backed program to transform much of the real estate owned overhang into rental housing. In a white paper sent to Congress, the Fed suggested that a government-facilitated REO-to-rental program can boost the housing market and improve loss recoveries on REO. Such a program could take many forms, the Fed noted. “The REO holder could rent the properties directly, sell the properties to a third-party investor who would rent the properties, or enter into a joint...

Demands to repurchase poorly performing mortgages have resulted in a spike in the number of mortgage fraud-related Suspicious Activity Reports (SARs) filed by banks in 2011, according to the Department of the Treasury’s Financial Crimes Enforcement Network. In its 2011 annual report, FinCEN said increased buyback demands by investors have forced large mortgage lenders to conduct additional reviews of loans they originated, resulting in higher SARs filings last year. A review of SAR filings in the first quarter of 2011 found that the number of mortgage fraud reports rose to 25,485, up 31 percent from...

“The simple way to think about the long view is that we’re five years through a 10-year transition,” said Fannie Mae Chief Economist Doug Duncan during a housing conference sponsored by Fitch Ratings in New York this week. 2012 will be “the year of the political economy,” Duncan said. While the moniker partially refers to the election for the White House, as well as on Capitol Hill, it also points to the number of political decisions this year that will help to determine financial fortunes. Stateside, this year will see the expiration of a number of business and household taxes, from the payroll tax cut to...

There is a significant difference in foreclosure timelines depending on whether states require judicial foreclosures. The liquidation probability, according to an Amherst Securities analysis, increased greatly in a non-judicial state, like California, versus judicial states like Florida. “We can work our way through the backlog more quickly in non-judicial states,” said Larry Litton, chairman and CEO of Selene Finance. He noted that some judicial states were easier to work with than others, based on whether the legislature was willing to work with servicers. In other areas of the country, servicers...

It started last week with an unsolicited white paper outlining “a framework for thinking about certain issues and tradeoffs that policymakers might consider” and blossomed into a coordinated assault by the Federal Reserve on the housing slump that won’t go away. Having purchased over $1 trillion in mortgage securities in an effort to drive mortgage interest rates to all-time lows, the Fed appears to be using its speechmaking and paper-writing powers to try to get the rest of Washington moving on housing. In addition to the policy paper, Fed officials in the past week have made three speeches on...

A growing consensus is emerging among legal experts that someone will challenge in court President Obama’s contentious recess appointment of Richard Cordray as the first director of the Consumer Financial Protection Bureau. But a final outcome could take years and have no impact on the agency’s actions while the case is unfolding. “These appointments establish a dangerous precedent that threatens the confirmation process and undermines the system of checks and balances embedded in the Constitution,” a number of House Republicans said in a letter they fired off to the president after he made his...

Fed Governor Sarah Bloom Raskin late last week stumped for creating an effective enforcement system to deal with shortcomings in the mortgage servicing industry that have come to light since the foreclosure crisis, as state officials pressed to expand a potential settlement over past abuses. “The law is not a scarecrow where the birds of prey can seek refuge and perch to plan their next attack,” Raskin said in a speech to a group of attorneys. The Fed governor said it’s important for servicers to have transparent, enforceable and sensible rules, adding that deferring to “standard industry...