Banks and thrifts increased their holdings of first-lien residential mortgages in the first quarter of 2012 compared with a year ago, according to the Inside Mortgage Finance Bank Mortgage Database. The 3.0 percent growth rate was partly due to originations of nonconforming mortgages, which helped offset portfolio runoff. Banks and thrifts held $1.74 trillion in first-liens in portfolio at the end of the first quarter. Among the top three bank portfolio lenders, only Wells Fargo ... [Includes one data chart]

Capital rules proposed by federal regulators last week for banks could have a significant impact on originations and holdings of non-agency mortgages and mortgage-backed securities. The changes are part of Basel III reforms. Non-bank special servicers have already started to increase their portfolios due to sales by banks getting a head start on complying with Basel III rules. Industry analysts warn that originations of “non-vanilla” mortgages will also be curtailed. “Following the qualified mortgage rules and ...

Redwood Trust and the main lenders it sources mortgages from largely rank above average, according to new assessments by Moody’s Investors Service. Moody’s ranked Redwood Residential Acquisition Corp. above average as a jumbo aggregator based on the performance of Redwood’s collateral, lending practices, and operational stability. “In our view, Redwood has a stable, credit-savvy team with a sound lending philosophy that has successfully managed its way through the financial crisis,” the rating service said. Moody’s also ...

The field of firms looking to place ratings on non-agency mortgage-backed securities got a little more crowded last week. Morningstar Credit Ratings released its non-agency MBS rating guidelines with criteria similar to the five firms that have placed ratings on non-agency securities in recent years. Morningstar said it will provide “timely, unbiased and transparent” ratings on both new-issue and seasoned non-agency MBS. Securities will have to be able to withstand a “catastrophic event” to receive ...

Mortgage industry participants are concerned about plans by the Federal Housing Finance Agency to expand the non-agency market via a contraction of Fannie Mae and Freddie Mac. The comments were submitted to the FHFA last week in response to the FHFA’s proposed strategic plan for fiscal years 2013 to 2017. “To attract private capital to the mortgage market and reduce [government-sponsored enterprise] risk exposure, FHFA will direct the [GSEs] to price guarantee fees to levels that align pricing with ...

Attorneys representing non-agency mortgage-backed security issuers suggest fighting repurchase-request lawsuits to narrow the claims and eventually settling such lawsuits. Jason Halper and Martin Seidel, partners at the law firm of Cadwalader, Wickersham & Taft, said reducing the claims can help lead to a better settlement for issuers. “You can very often narrow the case substantially,” Seidel suggested this week during a presentation by the State Attorneys General Enforcement Network. Among other issues ...

With an increasing amount of PennyMac Mortgage Investment Trust’s revenue coming from correspondent originations, some have questioned how much longer the company will remain a real estate investment trust for tax purposes. Officials at the company said the REIT status remains beneficial, though they are considering other options. REITs must distribute at least 90 percent of their taxable income to their shareholders each year and generally are not subject to federal or state income taxes. REITs also face limitations ...

Berkshire Hathaway became the lead bidder for Residential Capital’s loan portfolio this week while Nationstar Mortgage remained the stalking horse bidder for ResCap’s mortgage servicing rights and origination platform. ResCap’s parent company Ally Financial was previously the top bidder for ResCap’s loan portfolio. Auctions for the MSRs, origination platform and loan portfolio are expected in October. An investigation by the Consumer Financial Protection Bureau helped a borrower receive a ... [Includes two briefs]

A new secondary market policy announced by Wells Fargo last week is sending ripples across the industry and could potentially cause the FHA Streamline Refinance program to falter in the coming weeks. Major FHA lenders have quietly adopted similar policies as FHA refinance volume, fueled by increased streamline refi business, more than doubled over the week. Wells Fargo raised eyebrows by announcing it will do FHA streamline refis only on loans in its own servicing portfolio and will not accept streamline refis from third-party originators. The top FHA producer in the first quarter of 2012 said focusing on ...

FHA lenders may expect new guidance on the use of credit overlays as the Department of Housing and Urban Development expressed concern over lenders imposing additional underwriting beyond what FHA already requires. Acting FHA Commissioner and Assistant Secretary for Housing Carol Galante said there is concern about FHA lenders raising credit score requirements much higher than the agency requires to shield themselves from future liability. She said many lenders are requiring credit scores of 700 or higher, way above the traditional FHA borrower score of 640-650 – a practice that is not prohibited but ...