There was a hefty increase in mortgage originations for subprime borrowers with credit scores under 620, most of them FHA loans, according to Equifax. From January through October of 2015, some $50.7 billion of mortgages were originated for borrowers with credit scores below 620, the credit bureau said. That was up 28 percent from the same period in 2014. Equifax attributes this to smarter lending habits. Amy Crew Cutts, Equifax’s chief economist, said while there are many ...

The mortgage lending industry is seeing a convergence of regulation, technology and demographics that is fueling a drive toward eMortgages, eDelivery and greater use of mobile devices and other technologies to simplify, digitize and speed up the mortgage process, according to Jeffrey Nuckols, senior vice president of Xerox Financial Services. On the regulatory front, most of the latest impetus, of course, has come from the Consumer Financial Protection Bureau’s integrated disclosure ...

Mortgages to borrowers who misrepresented their occupancy status perform much worse than loans to borrowers who truthfully identify themselves as investors, according to a new analysis by researchers at the Federal Reserve Bank of Philadelphia. The researchers examined purchase mortgages originated between 2005 and 2007. Loan-level data from McDash Analytics was matched with credit bureau data from Equifax. The researchers defined borrowers as having committed ...

Fannie Mae won an appeal in which an apartment building that filed for bankruptcy to reduce payments it owed to Fannie did not act in good faith. According to a recent court ruling, the judge reversed the decision and said the bankruptcy court erred in allowing the plan in the first place. After missing one monthly payment of approximately $55,000 in December 2009, four months later the Memphis-based apartment company filed for bankruptcy under Chapter 11. The bankruptcy prevented Fannie from being able to foreclose on the apartment building. The apartment, Village Green, argued against the ruling, but the...

A U.S. Court of Appeals for the Federal Circuit recently upheld rulings that went against Mortgage Grader, a loan shopping website that has filed a number of patent-related lawsuits. The court upheld a ruling by a lower court that found that Mortgage Grader’s claims related to the “abstract idea” of anonymous loan shopping and that the patents obtained by the firm didn’t include an “inventive concept.” Mortgage Grader filed a lawsuit in January 2013 against Costco Wholesale and ...

The financial crisis has led to a broader, more demanding quality control process to ensure that mistakes are never repeated and that financial institutions adhere strictly to compliance requirements. As a result, mortgage lenders are much more vulnerable now to enforcement actions if they are found to have inadequate controls in place or to be noncompliant. One of the pitfalls lenders worry about is being held responsible – and potentially liable – for the actions of third-party ...

The push for further de-risking Fannie Mae and Freddie Mac, especially by expanded up-front risk sharing by way of private mortgage insurers, is showing no signs of slowing down in 2016.The U.S. Mortgage Insurers said this week that, “The time is right to move forward to expand front-end risk sharing with MI, and USMI members are ready to do more.” The trade group explained that as policymakers are considering proposals to de-risk the GSEs, MIs are strong counterparties and the new capital standards that went into effect in 2015 further enhance reliability. “MI is a first layer of protection against mortgage credit losses and a time-tested method of...

Fannie Mae launched a new version of Fannie Mae Connect on Jan. 29 that includes five seller/servicer reports that were added to the system based on customer feedback. The Loan Delivery Edit Dashboard replaces the Data Quality Dashboard and provides insight into any possible issues at delivery with loan-level detail for fatal, warning and informational edits. About six months worth of data will be provided under this new report. This is the only new report that can be accessed by servicers as well as sellers. The Lender Dashboard gives monthly lender-specific data on things like delivery activity, loan performance and operational activities. It also includes a comparison of profile to peers and to expected loan performance value.

The Federal Housing Finance Agency released guidance in late January on how the Federal Home Loan Banks should classify investment securities. In doing so, it adopted the 2013 Uniform Agreement for FHLBank supervisory purposes. Where FHFA’s rule and guidance and the 2013 Uniform Agreement may conflict, the FHFA said its rules and guidance will apply. The directive states that FHLBanks should use “sound and conservative assumptions” as they pertain to upgrades and it provides classification approach examples and boundaries. For example, when a bank is considering whether to upgrade a classified security to “pass,” it should base its assessment on assumptions that minimize the likelihood that the FHLBank would need to classify the security again in the future.

The former CEO of Fannie Mae is not backing down in his defense that he did nothing wrong in a lawsuit stemming from the Securities and Exchange Commission accusing him of hiding faulty mortgages during the housing crisis. Daniel Mudd is one of three Fannie executives against whom the SEC brought civil fraud charges in 2011. The other two, Thomas Lund, former single family mortgages vice president, and Enrico Dallavechia, a risk officer, settled in September of last year. The court ordered Dallavechia to pay the Treasury $25,000, and Lund was ordered to pay $10,000.But Mudd maintains his innocence and refuses to settle. Last week his lawyer argued in court...