More borrowers who have remained current on their mortgage are choosing strategic defaults, raising fears of a renewed increase of underwater borrowers with higher origination balances walking away from their mortgage obligations, according to a recent report by Moody’s Investors Service. Moody’s analysts found that between 12 to 24 percent of performing mortgage loans, depending on the asset type, have loan-to-value ratios that are higher than those of defaulted mortgages. They also have risen more steeply compared to other ...

The sponsors of bills in the Senate and House that would allow underwater borrowers to refinance with Fannie Mae and Freddie Mac into a lower-rate loan say they are gathering support. Despite the renewed attention, industry observers say passage remains a tall order.

Closing and origination costs on a sample $200,000 purchase mortgage rose by almost 9 percent in 2011 nationwide, according to a survey by Bankrate, an online aggregator of financial rate information. In its annual closing cost survey, the group found that nationwide closing costs averaged $4,070, up from $3,741 last year. New York’s closing costs were highest at $6,183, followed by Texas at $4,944 and Utah at $4,906 on the same size mortgage. Arkansas had the lowest closing costs with $3,378, followed by ...

Hope Now, a voluntary private sector alliance of mortgage servicers, insurers, investors and non-profit counselors, said nationwide foreclosure sales were at roughly 68,000 in May, down 7 percent from April. But foreclosure starts increased 8 percent from the previous month, climbing to 176,000, the group said. Permanent loan modifications for homeowners for May were virtually unchanged from April. Of the 85,000 loan mods completed in May, approximately 53,000 were proprietary and 32,398 were through the Home Affordable Modification Program. Of the proprietary modifications ...

The Consumer Financial Protection Bureau, a potential nemesis regarded warily by the mortgage finance industry, officially opened for business this week without a Senate-confirmed director, but not without new brouhaha over the position. President Obama nominated Richard Cordray, the CFPB’s chief of enforcement, to be the first official director of the new agency. Prior to joining the bureau in January, Cordray was the Ohio attorney general for two years. Before that, he served for two years as Ohio’s state treasurer. It came as no surprise that Obama did not ...

Republican senators this week renewed their vow to block confirmation of a permanent director of the new Consumer Financial Protection Bureau unless the Obama administration agrees to revamp key parts of the agency’s structure and make it more accountable. Some, like Adam Levitin, a law professor at the Georgetown University Law Center, believe the CFPB is actually more accountable than any other federal agency. During testimony at a hearing in the Senate Banking, Housing and Urban Affairs Committee this week, he noted that the CFPB is subject to ...

Most mortgage loans made in recent years meet several of the major requirements to be classified as “qualified mortgages,” but debt-to-income tests could be problematic, according to a new Government Accountability Office report released this week. Loans that meet nine provisions specified in the Dodd-Frank Act would be classified as qualified mortgages and provide the lender some legal protection that the new law’s ability-to-repay standard has been met. The Federal Reserve has proposed a regulation to implement the DFA requirements but left some key issues – such as ... [includes one data chart]

Mortgage lenders operating as a “series limited liability company” should reevaluate the structure in the wake of an enforcement action by the Department of Housing and Urban Development against an FHA lender alleging violation of FHA branch rules and the Real Estate Settlement Procedures Act. A recent settlement agreement between HUD and Prospect Mortgage of Sherman Oaks, CA, could be the wake-up call for other mortgage companies that use a series limited liability company, or a “series LLC,” to originate FHA-insured loans, according to compliance experts. Lenders may have to decide whether to ...

The Office of the Comptroller of the Currency made significant changes to a controversial proposed regulation it issued back in May to implement revised federal preemption standards regarding state mortgage and other consumer protection laws. The OCC’s proposed rule to conform to Dodd-Frank Act preemption provisions was met with significant opposition from state regulators, consumer advocates, members of Congress and even the Department of Treasury, within which the agency functions as an independent bureau. One of the key disputes focused on the OCC’s proposal to use a ...

Without clear, early implementation guidance from the Department of Housing and Urban Development, FHA mortgage lenders could start underwriting to the lower loan limits before the Oct. 1 effective date, limiting the origination of FHA loans, warned two real estate industry groups. Providing guidance to mortgage lenders on how to manage the transition from the current top-end amount of $729,750 to $625,500 for high-cost areas without disrupting FHA lending is critical, the Mortgage Bankers Association and the National Association of Home Builders wrote to HUD. Lenders manage their pipelines based on ...