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...

Financial counseling improves the long-term sustainability of a loan by reducing the redefault rate, according to a new report by NeighborWorks America. Homeowners who received National Foreclosure Mitigation Counseling were twice as likely to get a mortgage modification than homeowners without counseling. And counseled borrowers were 67 percent more likely to remain current on their mortgage nine months after the mod. Annual savings for families with loan modifications could reach up to $2,100. The report contended that, despite the big savings accrued through modification, borrowers...

The outcome of the securities fraud case leveled against six former top executives of Fannie Mae and Freddie Mac could hinge on what exactly is considered a subprime loan. At least one defendant is prepared to argue that there is no standard definition.In fact, the GSEs appear to still be reporting their subprime and Alt A exposure in much the same way they did in the period covered by the Securities and Exchange Commission lawsuits.Late last week, the SEC pulled the trigger on its three-year investigation of claims that the two GSEs failed to disclose to investors the companies’ exposure to subprime mortgages prior to the 2008 housing market crash.

The use of Federal Home Loan Bank advances among bank and thrift members fell overall during the third quarter of 2011. Two of the three top members show a drop-off larger than the overall industry’s year-over-year rate of decline, according to the Inside Mortgage Finance Bank Mortgage Database.All of the nation’s bank and thrifts reported using a combined $323.3 billion in advances as of Sept. 30, 2011, down 5.2 percent from the second quarter and off 19.7 percent from the same period a year earlier.The Federal Home Loan Bank’s Office of Finance in its third quarter combined finance report cited decreased member demand, regular maturities and continuing prepayments for the third quarter decline.

The Federal Home Loan Banks of Seattle and New York recently announced personnel changes in the executive ranks of both Banks.The Seattle Bank’s Board of Directors last week appointed Michael Wilson as its new president and CEO, replacing acting president and CEO Steven Horton, who himself replaced Richard Riccobono in October 2010. Wilson, currently executive vice president and chief business officer of the FHLBank of Des Moines, brings 17 years of experience in the FHLBank system, serving in various Bank posts. He will join the Seattle Bank effective Jan. 30, 2012.

Industry trade groups, as well as Fannie Mae and Freddie Mac’s regulator, are questioning the wisdom of Congress as lawmakers in both chambers have bills pending to hike the fees charged to guarantee GSE mortgages as a way to help offset the cost of extending the payroll tax cut through 2012.Both House and Senate versions of tax cut extension bills would add an additional 10 basis points to the guarantee fees charged by Fannie and Freddie through 2021. The increase would offset about $35.7 billion in costs, including $1.3 billion in the first year, according to the Congressional Budget Office.As Inside the GSEs went to press, the prospect of any tax cut extension was in doubt after the House rejected the bill calling for a two-month extension. Instead, House Republicans demanded immediate talks with the Senate on a year-long plan but the Senate ruled out further negotiations until the House passes the stop-gap measure.

California Attorney General Kamala Harris filed suit this week against Fannie Mae and Freddie Mac, taking up a notch her probe of the two GSEs’ mortgage lending and foreclosure practices.The lawsuits, filed in California Superior Court in San Francisco, seek to compel the companies to turn over documents the AG’s office had sought through a subpoena served to the two companies on Nov. 15.The Federal Housing Finance Agency directed Fannie and Freddie not to respond to the subpoenas.The subpoenas sought information about how Fannie and Freddie are handling thousands of foreclosed properties, as well as details about the GSEs’ mortgage-servicing and home-repossession practices.

House Republicans last week moved a bill that would create a new non-agency residential mortgage-backed securities market to the full Financial Services Committee while the clamor grows for Congress to act on a more “comprehensive” legislative solution to GSE reform.By an 18-15 vote, the House Financial Services Capital Markets and Government-Sponsored Enterprises Subcommittee approved the Private Mortgage Market Investment Act, advancing the measure to the full committee.The bill’s sponsor and Subcommittee Chairman Rep. Scott Garrett, R-NJ, said passage of the measure is an “important first step” to permit private market participants to re-enter the marketplace without adding more burdens to the taxpayer.The revised bill would require the Federal Housing Finance Agency and the Securities and Exchange Commission to create several categories of mortgages with uniform underwriting standards for each, as well as to develop standard and uniform securitization agreements.

The Federal Housing Finance Agency is cutting lenders a break for the holiday season in the form of a deadline extension for implementing changes to how lenders submit mortgages to Fannie Mae and Freddie Mac.The FHFA announced last week that Fannie and Freddie would delay implementation dates for the Uniform Loan Delivery Dataset, a key component of the GSEs’ Uniform Mortgage Data Program.“Industry participants have demonstrated continued support for the UMDP and the updated timeline will allow for a successful transition to a new loan delivery format,” said the Finance Agency. Announced by the GSEs in May 2010, the UMDP initiative was established to help improve loan data accuracy, simplify the exchange of data and increase confidence to lending institutions that the loan data provided are complete and accurate.