Uncertainty about risk in a rapidly changing regulatory environment and the still destabilized economics of the housing market continue to keep private capital from returning to the mortgage market, according to industry officials at this week’s American Mortgage Conference sponsored by the North Carolina Bankers Association. “Everybody’s very concerned about the role of the government, that the government is supporting too much of the marketplace today,” said Meg Burns, senior associate director for housing and regulatory policy for the Federal Housing Finance Agency. “But it’s really hard to envision how people can pull back from that government support when we don’t actually understand not only who holds the credit risk but what the requirements are for retaining that risk in terms of capital.” All of the Dodd-Frank Act regulations that are still in play are...

Fannie Mae and Freddie Mac both saw substantial declines in deliveries of home mortgages with balances exceeding $417,000 during the second quarter, offsetting a significant increase in FHA originations of conforming jumbo loans. Combined, the three agencies did $24.1 billion in conforming jumbo mortgage business – loans on single-unit properties in the lower 48 states that exceed the old $417,000 loan limit. That was down 16.3 percent from the first three months of 2012 at a time when overall mortgage origination volume fell 5.2 percent. Meanwhile, originations of non-agency jumbo loans rose...[Includes two data charts]

House lawmakers this week overwhelmingly approved legislation that would essentially codify some of the measures already adopted by the Department of Housing and Urban Development to help strengthen the FHA Mutual Mortgage Insurance Fund as well as improve risk management and tighten oversight of FHA lenders and third-party originators. The long-awaited bill, the FHA Emergency Fiscal Solvency Act of 2012, passed by a vote of 402-7, nearly six months after it was voted out of the House Committee on Financial Services. Rep. Judy Biggert, R-IL, who chairs the Financial Services Subcommittee on Insurance, Housing and Community Opportunity, introduced the bill after her subcommittee approved an initial draft in early February. The MMI Fund has been below minimum capital reserve levels and is not projected...

Mortgage industry officials are lauding the Federal Housing Finance Agency’s long-awaited move toward clarity on repurchase demands made by Fannie Mae and Freddie Mac based on lenders’ representations and warranties. Part of a broader series of FHFA strategic initiatives called seller-servicer contract harmonization, the new rep and warranty framework on GSE mortgages sold or delivered on or after Jan. 1, 2013, “aims to clarify lenders’ repurchase exposure and liability on future deliveries,” according to FHFA Acting Director Edward Demarco. “Lenders want more certainty about their risk exposure and the enterprises want...[Includes two data charts]

Two years after the enactment of the Dodd-Frank Act, banks with mortgage operations are faced with the question of whether to build up or scale back their mortgage lending operations, or simply divest and wait for a more favorable regulatory environment. Financial institutions are beginning to feel the impact of Dodd-Frank as the Consumer Financial Protection Bureau carries out its mandate to write rules based on the law’s goal of targeting systemic risk and protecting consumers. But while ...

Excess servicing spreads qualify as real-estate related investments for real estate investment trusts, according to a new ruling by the IRS. The private-letter ruling issued in August allows an un-named REIT to invest in the assets, with others exploring the possibility, according to industry analysts. “In anticipation of new financial industry regulations and in order to improve their liquidity and capital positions, many servicers have begun selling their excess servicing spreads to passive ...

The Federal Housing Finance Agency’s streamlined short sale guidelines set to kick in Nov. 1 could increase losses on certain home-equity loans and second liens held in bank portfolios, according to a recent analysis by Fitch Ratings. Under the new guidelines, which were announced last month, servicers will be able to accelerate their processing of a short sale for borrowers with eligible hardships without any additional approval from either of the government-sponsored enterprises. This will ...

The average mortgage banking business earned a tidy $2.94 million in after-tax income during the second quarter of 2012, up 44.9 percent from the first three months of the year, according to the Mortgage Bankers Association’s latest performance report. Midway through the year, average after-tax income was $4.97 million for the 300-odd companies that participate in the MBA survey. That was up more than five-fold from the first half of last year. The stronger earnings resulted from increased profitability ...

Banks and thrifts reported a substantial decline in the volume of mortgages they repurchased during the second quarter of 2012, according to a new Inside Mortgage Trends analysis of call-report data. The financial institutions reported a total of $3.86 billion in mortgage repurchases and indemnifications during the second quarter, down 6.1 percent from the first three months of the year. It marked the lowest quarterly repurchase volume since the final three months of 2008, when banks reported ... [Includes one data chart]

Fifth Third Bank received the highest ranking among servicers ranked by Fannie May during the first half of 2012, the GSE recently announced. In 2011, Fannie rolled out its Servicer Total Achievement and Rewards (STAR) program, designed to encourage customer service improvements and better foreclosure prevention outcomes for homeowners by rating servicers on their performance in those areas.