Because the mortgage industry is so focused on staying on top of regulatory changes, adopting new technology has taken a back seat, according to a vendor of a cloud-based management tool. “When you’re up to your ankles in alligators, it’s easy to forget your goal is to drain the swamp,” said Brian Coester, CEO of Coester Appraisal Group. This year, the company launched Cloud Control, a web-based management technology that integrates different aspects of the appraisal process – from compliance to social media to real-time data – in a cloud-based system. “There’s a huge backlog in terms of what people...

Seven months after launching as a new wholesale and retail mortgage firm with national ambitions, Bexil American Mortgage originated its first loan, highlighting the current barriers to entry in the mortgage industry. The company, founded by industry veteran John Robbins, has obtained 18 state licenses with others pending, as well as approval from the Department of Housing and Urban Development, the FHA, Veteran’s Administration and the Department of Agriculture. Although he has started and sold two previous mortgage companies, he said “it’s a significantly different environment. It’s been more challenging...

Despite the immense popularity of fixed-rate mortgages in an environment of once-in-a-lifetime low interest rates, adjustable-rate mortgages still hold a significant chunk of the mortgage marketplace. In 2011, ARMs accounted for 19 percent of banks’ total loan originations, an American Bankers Association 2012 report on real estate lending showed. Last year’s ABA survey showed that ARM products are still being actively marketed by lenders even though the fixed-rate products dominated the mortgage marketplace. ARM lending is extremely popular with community banks, which hold such loans in...

Two separate working papers by Federal Reserve economists conclude that the two government-sponsored enterprises were not significantly responsible for the financial crisis of 2008, and that GSE mortgage standards had only a “modest impact” on loan terms in the years leading up to the mortgage meltdown. Fed economist Valentin Bolotnyy estimates that only 2.5 percent to 5.0 percent of additional credit to high-risk borrowers was made available to meet the GSEs’ Underserved Area Goals, a subset of the Affordable Housing Goals mandated by Congress in 1992. “The results suggest a small UAG effect and...

The sharp pullback by wholesale lenders from the correspondent market has forced many originators to reconsider keeping mortgage servicing rights when they sell loans in the secondary market. As Bank of America and other wholesalers shut down their correspondent programs, bids for mortgage servicing rights began to deteriorate, several market participants noted during the Mortgage Bankers Association Secondary Market Conference in New York last week. To many originators, MSR prices don’t reflect the value in the asset given the high credit quality of current production and expected slow...

The Federal Housing Finance Agency is requesting public comment on its draft document Strategic Plan: Fiscal Years 2013-2017. The FHFA said it’s updating its plan in order to incorporate the strategic plan for conservatorships of Fannie Mae and Freddie Mac that the Finance Agency sent to Congress in February.

Fannie Mae received a leg up earlier this month in its defense against a former staffer’s wrongful termination lawsuit when a federal judge ruled that the GSE is not legally considered a government entity while under the conservatorship of its regulator, the Federal Housing Finance Agency. Caroline Herron, a former Fannie vice president who left in 2007 but returned as a consultant in 2009, filed suit against the GSE in June 2010. Herron claims she was wrongly fired for reporting what she said was Fannie’s mismanagement of the Obama administration’s housing rescue initiatives. According to papers filed in U.S. District Court for the District of Columbia, Herron sought to prove that Fannie was not a private company but an adjunct of the state while under FHFA conservatorship as part of her claim against Fannie. Herron asserted a Bivens claim, a claim under the First Amendment for private damages against federal officials for civil rights violations outside the purview of the Federal Tort Claims Act.

Look for the Federal Housing Finance Agency to press its multiple legal actions against many of the nation’s biggest issuers of non-agency mortgage-backed securities after a federal judge rejected a bid by UBS Americas to turn back the FHFA’s lawsuit over its sale of non-agency MBS to Fannie Mae and Freddie Mac. Judge Denise Cote, of the U.S. District Court for the Southern District of New York, two weeks ago denied UBS’ motion to dismiss on statute of limitations grounds, while dismissing the FHFA’s negligent misrepresentation claims. The FHFA, as GSE conservator, sued UBS in July 2011 alleging that billions of dollars of MBS purchased by Fannie and Freddie were based on offering documents that contained “materially false statements and omissions.”

Investors will be able to bid on Fannie Mae real estate-owned single-family homes intended for rent “in the next few months” but the Federal Housing Finance Agency warns not to expect fire sale prices from its pilot program.FHFA Senior Associate Director for Housing and Regulatory Policy Meg Burns testified last week before a congressional field hearing that the agency is completing its review of investor applications and is on target to complete its first pilot transaction in the next few months. “The application process is comprehensive, rigorous and demanding, requiring exhaustive amounts of information and documentation from the applications and their business partners,” said Burns.

The White House is backing a trio of Senate bills filed last week to expand the Home Affordable Refinance Program to an even wider circle of underwater borrowers as part of the Obama administration’s re-election “to-do list.” The Equity Rebuilding Act sponsored by Sen. Jeff Merkley, D-OR, would lower costs for some homeowners seeking to refinance through HARP. Under the bill, homeowners who are current on their mortgage seeking to refi into a 20-year loan term or shorter would have their closing costs covered by Fannie and Freddie. A second bill by Sen. Dianne Feinstein, D-CA, the Expanding Refinancing Opportunities Act of 2012, would create a $6 billion FHA fund to provide insurance for underwater homeowners who currently don’t have a federally backed loan. To pay for the FHA extension, Feinstein would extend by one year the temporary, 10-year, 10 basis point increase of the GSE guarantee fee that took effect April 1.