Turning profits by investing in distressed mortgages has become increasingly difficult, according to distressed asset investors. Many investors cannot get the internal rate of return necessary to invest in this space, according to Steven Grundleger, executive vice president of capital markets at FNC. Grundleger and other market participants detailed the state of the distressed asset sector at the recent secondary market conference hosted by the Mortgage Bankers Association. Some 47.7 percent of home sales completed in April involved distressed borrowers, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, a monthly measure of...

Redwood Trust plans to issue two more jumbo mortgage-backed securities this year, the real-estate investment trust announced this month. Martin Hughes, president and CEO of the firm, said officials hope to issue a total of $800 million to $1.0 billion in jumbo MBS in 2011, including the $290.0 million security issued earlier this year. Officials at the REIT said they hope to issue their next jumbo security in the third quarter. At the end of April, Redwood had $87.0 million in loans purchased and held on balance sheet for future securitization along with a $200.0 million pipeline. Redwood is seeing strong demand from correspondent lenders looking to...

FHA loans in Pennsylvania, New Jersey and Delaware performed better in 2008 and in 2009 than in 2006 and 2007 as credit quality became stronger, according to a new study by the Federal Reserve Bank of Philadelphia. The findings should allay concerns of policymakers in Washington, DC, that FHA defaults have risen during the housing crisis and may put the federal mortgage insurance fund in peril, the study said. Home Mortgage Disclosure Act data, one of the data sources used by Fed analysts, indicate that overall lending patterns in the Third District states have ...

Consumer advocates called on Congress to extend national mortgage servicing standards to all servicers, including those of government-insured home loans. Testifying before the Senate Banking Subcommittee on Housing, Transportation and Community Development recently, Diane Thompson, of counsel to the National Consumer Law Center, said loans made by the FHA, the VA and the Rural Housing Services are generally aimed at ...

FHA endorsements fell 22.1 percent from the fourth quarter as the refinancing wave of 2010 ended, as did production in other channels in the first quarter of 2011. The FHA endorsed $57.6 billion in 1-4 family mortgage loans in the first quarter, including reverse mortgages, down from $74.0 billion the previous quarter. It lost some market share to VA, whose total originations were up 26.2 percent from the first quarter of last year. The agency reported a 33.8 percent increase in applications in March ... [includes one data chart and one graph]

Accounting for the FHAs single-family mortgage insurance program using the current methodology spelled out in the Federal Credit Reform Act or an alternative fair value approach will yield opposing results that could mean "savings" or potentially significant losses for the government and taxpayers, according to the Congressional Budget Office. In a recent study, the CBO estimated that, using the FCRA methodology, the FHA program would produce budgetary savings of $4.4 billion in fiscal year 2012. In contrast, a fair-value approach would result in ...

Industry attorneys are warning FHA lenders and other users of federal funding to carefully screen loans they originate, or risk a government lawsuit for violation of the False Claims Act. First enacted during the Civil War against government contractors gouging the Union Army, the FCA has expanded beyond defense contractors and health care providers and is now being used aggressively to challenge improper FHA lending practices, according to panelists on a recent webinar hosted by the Washington law firm BuckleySandler. With government insurance increasingly on the hook, federal enforcement along the lines of the recent Department of Justice lawsuit against ...

Staff at the Federal Reserve Bank of New York and other legal professionals are scrutinizing the fundamental questions the foreclosure crisis has raised about the adequacy of the legal framework for modern mortgage note transactions, especially when it comes to transferring and enforcing notes and mortgages, and how best to resolve them. The role of the Mortgage Electronic Registration System is a part of the discussion. To date, they are relying upon a number of issues that have been identified in a draft discussion document prepared recently by the Permanent Editorial Board of the Uniform Commercial Code, in conjunction with...

High-touch servicer Nationstar Mortgage announced this week that it plans to raise up to $400.0 million via an initial public offering. The servicer - owned by Fortress Investment Group - primarily focuses on defaulted agency mortgages. Nationstar serviced a $64.2 billion portfolio as of the end of 2010, with subprime mortgages accounting for a 14.6 percent share. Reps. Gary Miller, R-CA and Brad Sherman, D-CA, recently introduced legislation to permanently increase the conforming loan limits. Few analysts believe that H.R. 1754, "the Preserving Equal Access to Mortgage Finance Programs Act," will gain much traction considering...

Industry participants warn that federal regulators' recently proposed definition for qualified residential mortgages is too stringent and will unnecessarily limit lending to prime jumbo borrowers. If the rule is adopted as proposed, many warn that issuance of non-agency mortgage-backed securities will be limited or non-existent. "While the rules do a good job of addressing and deterring abuses of subprime securitization structures, they are overly and unnecessarily harsh when applied to prime securitization structures," said Martin Hughes, president and CEO of Redwood Trust. Chris Flanagan, a managing director at Bank of America Merrill Lynch, added that...