It will be months rather than weeks before the Federal Housing Finance Agency and other government departments are ready to deploy a plan for bulk sales of the inventory of government-owned foreclosed properties, according to the head of the FHFA.Testifying before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises last week, FHFA Acting Director Edward DeMarco told members that with the long-awaited revision of the Home Affordable Refinance Program out of the way, focusing on the government’s ample real estate owned inventory is the “next priority.”

Congress should permit the conforming mortgage loan limits for Fannie Mae, Freddie Mac and the FHA to remain lower as attempts to restore the higher limit could do the mortgage market more harm than good, an expert says.The “emergency” high cost conforming loan limits enacted in 2008 for the GSEs and the FHA expired on Sept. 30, dropping the limit to $625,500 from $729,750.

A bill introduced in the Senate this week would “responsibly unwind” Fannie Mae and Freddie Mac and “end the dependence on the government for housing finance.” Sen. Bob Corker, R-TN, said he introduced the Residential Mortgage Market Privatization and Standardization Act to start a conversation on how to best to rebuild the mortgage finance market.

Top mortgage lenders continued to write big checks to settle repurchase claims during the third quarter, but they continued to face a huge inventory of unresolved cases, according to a new analysis of corporate earnings reports by Inside Mortgage Trends. As of the end of September, the top five lenders in the industry reported a combined $19.22 billion in outstanding repurchase demands, mortgage insurance denials and other disputes related to their representations and warranties. That was down slightly, by 0.2 percent, from the previous quarter. As a group, the lenders reported... (Includes one data chart)

The second round of mortgage banker earnings reports for the third quarter drained some of the positive results for the industry as two key players – Ally Financial and PHH Mortgage – posted significant losses. Ally – the fifth largest lender in the industry in 2011 originations – reported a $311 million net loss in continuing mortgage banking operations, following a string of positive results that ended with $47 million in net earnings in the second quarter. Company officials blamed the downturn on poor performance on its servicing asset valuations and hedges. The company reported a $471 million net loss on... (Includes one data chart)

Any proposed restrictions on asset-backed securities issuers, real estate investment trusts and other mortgage-related pools under the Investment Company Act would be harmful to the market and further restrict liquidity and capital formation, warned stakeholders. In comments to the Securities and Exchange Commission’s possible amendments to Rule 3a-7 and Section 3(c)(5) of the ICA, most stakeholders noted that the two provisions have worked well through the years to distinguish asset-backed issuers from investment companies, address investor protection concerns and allow the growth and innovation of...

In today’s dramatically changed mortgage lending and regulatory environment, lenders must aggressively manage their originator compensation structures if they want to guarantee their compliance with all applicable laws and regulations, according to a top industry consultant. The first step is “to eliminate all incentive arrangements that pay commissions or bonuses based on any of the terms or conditions of the loans such as interest rates, demand features, prepayment penalties or proxies for these loan terms,” said Henry Oehmann, national executive compensation services executive director for Grant Thornton. Lenders...

Many mortgage lenders are concerned about a new fee-for-service compensation plan proposed by Fannie Mae, Freddie Mac and their federal regulator – including a change in how servicers get their fees. Under the current minimum servicing fee system, servicers take their slice of compensation out of the interest payments being passed through from borrowers to the government-sponsored enterprises. Under the proposed fee-for-service plan, servicers would pass through the entire consumer payment and then get their compensation from the GSEs. Beyond the economics of the proposed change – servicers would get a flat fee, perhaps...

Freddie Mac reported that 82 percent of homeowners who refinanced in the third quarter kept the same loan amount or reduced their principal balance by paying-in additional money at the closing table. Of this group, 37 percent reduced their principal balance and 44 percent maintained around the same loan amount. The other 18 percent were cash-out borrowers, who increased their loan balance by approximately 5 percent. For refi borrowers taking a new 30-year FRM, the median interest rate reduction was about 1.2 percentage points. In practice, that means a borrower with a $200,000 loan saves $2,500 in interest payments during...

The private mortgage insurance industry, driven toward irrelevance during the first two years of the housing market collapse, is staging a quiet comeback in 2011. A new Inside Mortgage Finance ranking and analysis reveals that private MI activity in the third quarter rebounded to its strongest market share in three years, and accounted for 24.2 percent of new primary mortgage insurance written. While FHA volume dropped 6.2 percent from the second quarter, private MIs provided coverage for $22.01 billion in new mortgages, a gain of 38.6 percent. The increase in private MI activity outstripped...(Includes three data charts)