Wells Fargo continued to climb toward the $2 trillion servicing mark – a place only one other firm has been – while its nearest competitors in the mortgage servicing business did not originate enough new business to replenish their runoff during the second quarter. Wells reported $1.863 trillion in mortgage servicing at the end of June, up 1.2 percent from the previous quarter. While the company has fine-tuned its origination strategy, including a recent decision to quit the wholesale broker market, it has consistently generated more than enough new business to grow its servicing portfolio at a time when new house prices have tumbled, the cash-out refinance market has evaporated and originations have been under pressure. According to a new Inside Mortgage Finance ranking and analysis, Wells has increased...[Includes one data chart]

A large-scale refinance program proposed by Sen. Jeff Merkley, D-OR, would rely on a “risk transfer fee” for lenders and require participating lenders to consider all potential borrowers for the program. The “Rebuilding American Homeownership” program has support from the Obama administration, though analysts suggest approval from Congress is unlikely. Merkley recently proposed the RAH program to help “virtually all” non-delinquent borrowers with negative equity to refinance into a mortgage with a lower interest rate. The program could be based on a one-time federally-backed structure, similar to the Home Owners’ Loan Corp. established by the federal government during the Great Depression. The RAH trust would sell...

A group of San Francisco-area homeowners has filed a federal RICO class-action lawsuit against JPMorgan Chase, alleging the company charges inflated fees to homeowners who go into default. In a suit filed last week in the U.S. District Court, Northern District of California, the three named plaintiffs, Diana Ellis, James Schillinger and Ronald Lazar, accuse JPMorgan of violating California business standards law. The suit also says JPMorgan’s use of mail and wire communications to perpetuate its fraud against homeowners violates the federal Racketeer Influenced and Corrupt Organizations Act. The homeowners contend that JPMorgan is using...

The American Securitization Forum opposes the notion of revising the federal bankruptcy code to enable overburdened student loan borrowers to lighten their debt loads, one of the suggestions in a new report on the state of private student loans that was released by the Consumer Financial Protection Bureau and the U.S. Department of Education. “The ASF continues to support strong underwriting standards and fully transparent disclosure to borrowers. At the same time, the ASF opposes reopening the bankruptcy code to allow borrowers to reduce or eliminate their student loan debt,” said ASF Executive Director Tom Deutsch. “Such action would eliminate educational opportunities for a broad swath of borrowers, as lenders would be less willing to offer loans, thereby curtailing credit availability.” Currently, consumers generally cannot discharge...

There appear to be no immediate plans to move the GSEs beyond conservatorship status but news this week that the Federal Housing Finance Agency is actively investigating the possibilities of receivership may be designed to attract the attention of thus far indifferent policymakers and snap official Washington into action, say industry experts. The FHFA this week confirmed that it has commissioned the consulting firm PricewaterhouseCoopers to create contingency plans for taking Fannie Mae, Freddie Mac and the Federal Home Loan Banks into receivership. A Finance Agency spokesman said the hiring of PwC, which was not officially announced, is just one of a number of “ordinary regulatory activities” that the FHFA is authorized and obligated to pursue under the authority granted the agency by the Housing and Economic Recovery Act of 2008.

The Federal Home Loan Bank system is one of three potential hosts for a proposed new refinance program unveiled this week by a Senate Democrat aimed at rescuing underwater homeowners without direct federal assistance. Oregon Sen. Jeff Merkley’s proposal – spelled out in a white paper titled “The 4% Mortgage: Rebuilding American Homeownership” – would create a temporary government-backed trust to purchase eligible mortgages issued by private lenders. The RAH Trust would be funded by the federal government’s sale of bonds to investors. The plan would allow underwater borrowers who are current on their mortgages to refinance at a lower interest rate.

A bill introduced in the House earlier this month would allow privately-insured credit unions access to the Federal Home Loan Bank system for the first time. H.R. 6105, introduced by Rep. Steve Stivers, R-OH, would amend the Federal Home Loan Bank Act to allow non-federally-insured credit unions to become members of one of the 12 FHLBanks. Currently, only federally insured credit unions can access the FHLBanks’ low-cost, secured funds, and certain requirements must be met.

The one-time funding vehicle of defunct and disgraced mortgage servicer Taylor, Bean & Whitaker Mortgage Corp. has asked a bankruptcy court for permission to investigate Freddie Mac and its regulator, the Federal Housing Finance Agency. According to documents filed earlier this month in U.S. Bankruptcy Court in Jacksonville, FL, Ocala Funding LLC wants to examine an $805 million transfer made to Freddie by TBW executives before the servicer collapsed with the goal of recovering assets for its creditors. TBW imploded in 2009 after federal authorities discovered that Taylor Bean defrauded Freddie, among others, to the tune of $3.0 billion. A number of TBW executives were convicted and sent to jail for their part in the fraud scheme, including former owner and CEO Lee Farkas, who was sentenced to 30-years in prison last year.

Fannie Mae is immune from punitive damage claims brought by a former staffer in her wrongful termination suit against the company as long as the GSE is under the conservatorship of the Federal Housing Finance Agency, a federal judge ruled last week. The ruling in the U.S. District Court for the District of Columbia is a major setback for Caroline Herron, a former Fannie vice president who left in 2007 but returned as a consultant in 2009. Herron filed suit against the GSE in June 2010, claiming she was wrongly fired for reporting what she said was Fannie’s mismanagement of the Obama administration’s housing rescue initiatives and grossly wasting public funds.

California remains the top source of new single-family mortgages for Fannie and Freddie, even as Fannie remains the dominant GSE in terms of production through the first half of the year, according to an Inside The GSEs analysis. A total of $132.2 billion of home loans on Golden State properties were securitized by the two GSEs during the first six months of 2012, accounting for 22.9 percent of their total business for the half year. That was up 46.7 percent from total California production during the first six months of 2011 as the overall GSE market rose 38.8 percent from a year ago.