Non-agency mortgage-backed security investors frustrated with the lack of buybacks on non-agency MBS are being encouraged to explore servicer termination. The tactic is less expensive and less burdensome than researching potential buybacks, according to Steve Ruterman, an independent consultant to non-agency MBS investors.“While much of the focus in recent years has been on enforcing put-back rights, there has been talk of broader efforts to replace servicers,” he said. “Creditors would be wise to make better use of this complementary strategy going forward.” ...

The Department of Justice is reportedly investigating Standard & Poor’s and Moody’s Investors Service regarding the ratings the firms placed on non-agency mortgage-backed securities. The increased attention on the rating services follows S&P’s recent downgrade of the credit rating for the U.S., revelations by a former Moody’s employee and numerous other investigations that found problems with the ratings on non-agency MBS. In a letter sent this month to the Securities and Exchange Commission, William Harrington, a former senior vice president at Moody’s, alleged that the rating service knowingly published “worthless opinions” on non-agency MBS. ...

Springleaf Financial reportedly plans to issue a $292 million mortgage-backed security backed by seasoned subprime mortgages. Fortress Investment Group acquired an 80 percent stake in the company – formerly known as American General Finance – from American International Group in August 2010. ... [includes three briefs]

More than 20 percent of counties across the country will be affected by the scheduled decline in the FHA loan limits announced by the Department of Housing and Urban Development recently, with the fallout varying from one area to another. Announcing the new loan limits taking effect on Oct. 1, HUD said the change is expected to affect 669 counties, or 20.7 percent of the 3,234 jurisdictions in which FHA insures home loans. Despite dire warnings from mortgage industry groups, HUD estimates that only a fraction of borrowers living in high-cost areas would be impacted by the new loan limits. Last year, only 3 percent of FHA borrowers lived ... [Includes two data charts]

The Obama administration is seeking ideas from stakeholders on how to thin out the FHA’s inventory of foreclosed homes, including turning the homes into rental properties to meet the growing need for affordable housing. In addition to addressing the FHA’s real estate-owned, or REO, problem, the Federal Housing Finance Agency, the Department of the Treasury and the Department of Housing and Urban Development are also calling for recommendations for similar home rental programs for REO properties held by Fannie Mae and Freddie Mac. The agencies’ request is aimed at finding the best alternative for “maximizing value to taxpayers and increasing private investment in the housing market, including ...

The Department of Housing and Urban Development’s Office of the Inspector General called for improvements in the servicing of Home Equity Conversion Mortgage loans, particularly in detecting and reporting fraud, after auditors discovered certain advance payments that were made after the borrowers were reported to have died. Although most of the suspicious payments were due to posting errors, some transactions raised red flags, the IG report said. There was no evidence that servicers had sent those potentially fraudulent cases to HUD for further action, it added. The anomalies were found during a routine OIG audit of the HECM program, which insures ...

The Department of Housing and Urban Development has developed a new Web-based tool which allows FHA, Fannie Mae and Freddie Mac to map all foreclosed properties for viewing by potential investors and homebuyers. The new mapping tool displays the location of all foreclosed homes in the agencies’ inventories, which account for nearly half of all real estate-owned or REO properties in the U.S. Communities with high foreclosure rates that are participating in HUD’s Neighborhood Stabilization Program (NSP) will find the REO portal useful in targeting federal funds to acquire, rehabilitate or demolish these REO properties, according to department officials. The map’s consolidated graphic listing enables ...

The National Association of Realtors is backing legislation Rep. Karen Bass, D-CA, is planning to introduce next month, which would provide incentives to first-time FHA homebuyers who obtain housing counseling. The measure is being drafted and will be introduced after Congress returns from its August recess, according to a Bass spokesperson. The bill would provide a reduction in the upfront mortgage insurance premium for FHA borrowers who get pre-purchase counseling. “The irresponsible and abusive lending practices that lead to our financial crisis hurt millions of American families, and continue to impact our nation’s economy,” said Ron Phipps, NAR president. “Housing counseling and consumer education can help ...

The Department of Housing and Urban Development has spelled out the conditions under which borrowers must successfully complete a trial payment plan before they can get a permanent standard loan modification under the FHA’s loss mitigation program. A HUD mortgagee letter (ML 2011-28) also specifies the time requirements for completing loan modification and partial claim documents for a servicer to receive an incentive fee. The FHA reported 13,368 loan modifications and 3,082 partial claims paid in June. A total of 119,703 FHA loan modifications were reported from October 2010 through June 2011, and 21,035 foreclosure claims were paid over the same period. Their workout ratios were ...

The Department of Housing and Urban Development’s Office of the Inspector General recommended that an approved FHA lender be ordered to indemnify HUD against any future losses on a number of loans with material underwriting deficiencies. An audit of Ameritrust Mortgage Bankers, based in Lake Success, NY, found that 11 of the 20 FHA-insured mortgages that the lender had originated failed to meet FHA underwriting guidelines and that a quality control plan did not meet agency requirements. Inadequate verification and documentation of borrowers’ income, assets, liabilities and credit histories resulted in actual losses of $183,327 on one loan and potential losses of more than $2.7 million on 10 loans, for total losses of more than $2.9 million, the audit found. In addition, Ameritrust officials allegedly charged ...