Fannie Mae is moving ahead to buy out some $880 million of distressed FHA and VA mortgages from multi-class structured securities the government-sponsored enterprise guaranteed because the sellers have stopped making contractually required interest shortfall payments after loan modifications resulted in lower interest rates. That means investors in those securities can expect to receive an unscheduled distribution on Aug. 25, 2011, the GSE said. Fannie made the initial purchase on Aug. 1, 2011. Fannie said it will release additional information on the purchase of the remaining ...

The Treasury Department is making significant changes to the Home Affordable Modification Program designed to match some of the success servicers have had with proprietary loss mitigation programs.Non-agency servicers participating in the Home Affordable Foreclosure Alternatives short sale and deed-in-lieu of foreclosure portion of HAMP need to update their policies immediately, the Treasury announced this week. The structure for servicer incentive payments on non-agency first-lien HAMP mods will also change in October. "Unless prohibited by ... [includes one data chart]

Ocwen officials said last week that they are in talks with various mortgage holders to acquire more than $250 billion in mortgages to service. “We are in the midst of several discussions that could result in one or more substantial additional transactions later this year or early next year,” said William Erbey, chairman of Ocwen.Ron Faris, president and CEO of Ocwen, added that many of the deals are large and could involve servicing platforms. Most of the potential acquisitions are related to primary servicing, not subservicing.The announcement comes as Ocwen is set to ...

Preparations for a hoped-for return of non-agency jumbo origination and securitization have taken a financial toll on Redwood Trust, according to officials at the real-estate investment trust. “We have built our origination businesses for more volume than is currently available on the right terms,” Redwood officials said last week as part of their earnings release for the second quarter of 2011. “We believe our scale will ultimately pay off. For now, however, our operating costs are high relative to the net revenues we can earn off our invested capital without taking ...

A decline in high-cost conforming loan limits come October will either destabilize the mortgage markets or have a negligible impact on borrowers, depending on who is talking. Legislation to maintain temporarily elevated loan limits was recently introduced in the Senate, leading some non-agency players to fear that an extension is more likely. Sens. Robert Menendez, D-NJ, and Johnny Isakson, R-GA, last week introduced S. 1508, “the Homeownership Affordability Act of 2011.” The bill would extend high-cost conforming loan limits of up to $729,750 until ...

Carrington Mortgage Services announced last week that it is expanding into nonconforming wholesale lending with the acquisition of certain assets of American Home Equity Corp. Carrington and AHE each offer a variety of agency and non-agency mortgages, including jumbos of up to $1 million. “This addition will provide Carrington with an immediate proven foundation to launch our wholesale origination model on a nationwide basis,” said Steve Patton, executive vice president of mortgage lending at Carrington. AHE was founded in 2001 and originated more than ...

Mortgage industry veteran Lewis Ranieri says big banks will easily dodge the risk-retention requirements for mortgage securitizers that have been proposed by federal regulators. Issuers of non-agency mortgage securities that aren’t backed by “qualified residential mortgages” would have to retain a 5 percent interest in the transaction. In a joint comment letter submitted by Ranieri and Kenneth Rosen, chairman of Rosen Consulting Group, a real estate research firm, the pair warned that risk retention as proposed will benefit ...

Rules proposed by federal regulators to establish “qualified mortgage” and ability-to-repay standards would severely limit the originations of alternative mortgages, including certain ARMs, according to lenders. Consumer advocates, meanwhile, are calling for even more restrictive underwriting standards than those proposed by the Federal Reserve. In April, the Fed proposed strong ability-to-repay requirements that expand upon existing rules for higher-priced mortgages, include stringent penalties for violations, and would apply to ...

Wells Fargo agreed last week to settle with disgruntled Wachovia shareholders regarding Wachovia’s option ARM portfolio. Wachovia and its affiliated entities agreed to pay $590 million and KPMG, Wachovia’s auditor, agreed to pay an additional $37 million. The settlement is subject to approval by the U.S. District Court for the Southern District of New York. The claims asserted by government-run pension and retirement funds were largely based on allegations that Wachovia misrepresented and/or omitted material facts regarding the quality of the ...

The National Credit Union Administration filed a lawsuit against Goldman Sachs this week, marking the fourth non-agency buyback lawsuit filed by the federal regulator in recent months. The action seeks damages in excess of $491 million from Goldman Sachs, bringing the total sought by the NCUA to nearly $2 billion.The lawsuits claim the sellers and underwriters of “questionable” non-agency mortgage-backed securities made numerous material misrepresentations in the deals’ offering documents. The NCUA claims the misrepresentations caused ...