The revised “HARP 3.0” proposal pending in the Senate would likely have only a limited impact on boosting Fannie Mae and Freddie Mac refinance activity, according to a report released by RBS Securities last week. Senate Democrats have proposed legislation designed to expand the Home Affordable Refinance Program for underwater Fannie/Freddie borrowers, although most observers see little chance of it being enacted in the lame duck session of Congress. RBS said...

Some real estate agents are refusing to accept offers from buyers using FHA financing prompting minority rights advocates to question whether racial discrimination is causing the problem or some other factors. While illegal flipping and steering that targeted minority communities appear to have abated, bias against borrowers using FHA financing continues in the real estate market, according to Janis Bowdler, director of the Wealth-Building Policy project of the National Council of La Raza. Bowdler expressed her concern during a recent panel discussion of an FHA Working Paper on the FHA’s role in the housing finance market hosted by the Urban Institute. She said there have been reports of ...

Ginnie Mae is in sound financial health and poised to potentially absorb any FHA losses, if required, but the enduring fallout from Taylor, Bean & Whitaker’s collapse three years ago continues to plague the agency, according to an independent audit commissioned by the Department of Housing and Urban Development Inspector General. The report by CliftonLarsonAllen disclosed no material weaknesses in Ginnie’s internal controls over financial reporting and no instance of legal or regulatory noncompliance during fiscal years 2012 and 2011. Ginnie’s loss reserves for its MBS program declined to $357.4 million in fiscal 2012, from $395.8 million at the end of fiscal 2011. “Ginnie Mae believes...

The Department of Housing and Urban Development has announced changes to existing loss mitigation options to reduce the number of claims against the FHA Mutual Mortgage Insurance Fund.The changes will benefit qualified, distressed FHA borrowers, who will be able to qualify for FHA loss mitigation interventions and get more help than what was allowed under previous guidelines. HUD has issued a mortgagee letter to amend existing FHA Home Affordable Modification Program guidelines, the definition of “special forbearance,” and loss mitigation-priority guidelines. Specifically, HUD eliminated the ...

Private mortgage insurers have been making a slow comeback and reclaiming market share, thanks in part to policy changes adopted by the FHA, according to MI industry executives. Executives say MI penetration of the market has grown from 2.8 percent in the first quarter of 2012 to anywhere between 8-10 percent in the third quarter, an increase they attributed in part to gaining market share from FHA. Currently, private MI companies account for approximately one-third of loans with loan-to-value ratios of 80 percent or more, which are also ...

FHA Loan Delinquencies Drop in 3Q. The number of delinquent loans with FHA insurance has dropped 75 basis points to 11.14 percent in the third quarter of 2012 from the previous quarter, according to the Mortgage Bankers Association’s latest delinquency and foreclosure rates survey. Foreclosure starts and the percentage of loans in foreclosure fell after a spike in the second quarter when some larger servicers restarted the foreclosure process after being stalled for more than a year by the “robo-signing” investigations and subsequent negotiations. Both rates, however, remain ...

Refinancing of underwater and nearly submerged Fannie Mae and Freddie Mac mortgages continued to spur business at the government-sponsored enterprises during the third quarter. During the third quarter of 2012, the two GSEs securitized a total of $66.91 billion of refinance mortgages with loan-to-value ratios exceeding 85 percent, a proxy for business originated under the Home Affordable Refinance Program. That was up 13.3 percent from the second quarter, according to an Inside MBS & ABS analysis of loan-level securitization data. Official HARP data are reported...[Includes two data charts]

Legislation drafted by Senate Democrats to expand the Home Affordable Refinance Program has made the short list of items to be considered during the lame-duck session of the 112th Congress, insiders say, but industry analysts see only marginal impact if the bill becomes law. The Responsible Homeowner Refinancing Act, S. 3522, sponsored by Senate Democrats Robert Menendez (NJ) and Barbara Boxer (CA), would provide equal access to streamlined refinancing under HARP, waive loan-to-value ratio requirements and prohibit the government-sponsored enterprises from charging upfront fees to refinance any loan they guaranty. A legislative staffer said...

Federal regulators revealed this week that they are considering changing proposed Basel III capital requirements for available-for-sale securities. Banks have raised concerns about the proposed treatment of available-for-sale securities, which could cause capital volatility and force sales of debt tied to the government-sponsored enterprises and the Treasury Department. In June, federal regulators proposed changes to the treatment of accumulated other comprehensive income that would require unrealized gains and losses on available-for-sale securities to flow through to regulatory capital as opposed to the current treatment, where unrealized losses generally do not affect a bank’s regulatory capital. At a Senate Banking, Housing and Urban Affairs Committee hearing this week, Michael Gibson, director of the Federal Reserve’s division of banking supervision and regulation, indicated...

The Federal Reserve appears likely to continue to maintain an arguably oversized footprint in the secondary mortgage market in its effort to foster the gradually improving housing market, analysts say. “Our view is that the Fed continues its purchase of agency MBS at least to the end of 2013,” said Ankur Mehta, an MBS analyst with Citigroup. “The fact that the market is now talking about QE 4 and Treasury space, you can say that further argues they’re going to stay the course in the mortgage space because they’re still looking to ease their monetary policy.” The Fed’s actions have improved...