Competing special servicers Ocwen Financial and Walter Investment Management worked together this week to outbid Nationstar Mortgage to acquire Residential Capital’s mortgage servicing rights and origination platform at a bankruptcy auction. And Berkshire Hathaway won a separate auction for ResCap’s whole-loan portfolio. After approval by the bankruptcy court, Ocwen would handle 86.5 percent of the $374.0 billion ResCap MSRs with Walter acquiring $50.4 billion in Fannie Mae MSRs along with ResCap’s ...

Supporters of a controversial plan to use eminent domain to seize underwater mortgages from non-agency MBS pools, write down their balances, refinance them into the FHA program and repackage them for sale to other investors are facing fresh challenges. In California, where the eminent domain plan was first introduced, the Joint Powers Authority formed by the County of San Bernardino and two of its cities, Ontario and Fontana, announced that its next meeting, which was scheduled for Thursday, Oct. 25, 2012, had been cancelled. The only business before the JPA is...

Rep. David Schweikert, R-AZ, said this week that in the coming months he will introduce bipartisan legislation to establish a regulatory framework for prime non-agency MBS. “I’ve spent the last two years trying to figure out what the box will look like,” he said. Non-agency MBS participants continue to debate whether reform of the government-sponsored enterprises is necessary before the non-agency MBS market can return in a meaningful manner. At the ABS East conference sponsored by Information Management Network this week in Miami, Schweikert said a functioning non-agency MBS market is necessary before members of Congress can be convinced to move forward with GSE reform. “I need to have...

Investors are still a major hurdle for industry efforts to put Fannie Mae and Freddie Mac MBS on a more level playing field, while Ginnie Mae is beginning to weigh its options to address a major shift in the profile of its MBS business. Freddie’s share of new MBS production by the two government-sponsored enterprises has dropped significantly over the past few years. The company typically accounted for 42 percent to 45 percent of GSE issuance up until 2008, when it fell to 39.8 percent. Last year, Freddie captured just 35.4 percent of the GSE market, and in the first nine months of 2012 it’s down to 34.2 percent. Steven Abrahams, a managing director at Deutsche Bank, said...

Recent efforts by the government-sponsored enterprises and the Federal Housing Finance Agency to offer clarity and consistency about repurchase demands may or may not bear fruit as neither agency officials nor industry observers can speak confidently as to its ultimate effectiveness. According to participants at an Inside Mortgage Finance webinar this week, the GSE representation and warranty framework unveiled by the FHFA last month and the GSEs’ new quality control guidelines announced last week are steps in the right direction but there are a lot of moving parts to take into account. “We tried the best we could to address...

The U.S. Attorney for the Southern District of New York opened a new battlefront in intense warfare over losses taken by investors and others in the collapse of the housing market. The government this week filed charges against Bank of America, as the party left liable for activities at Countrywide Home Loans, based on the False Claims Act, a federal law that provides for hefty treble damages and penalties. The FCA has been used in recent mortgage-related charges involving FHA loans, but the new filing attempts to expand the law to loans sold to Fannie Mae and Freddie Mac. In its filing, the government contends...

The Federal Housing Finance Agency’s internal watchdog said Fannie Mae and Freddie Mac could mitigate more losses if they recover mortgage deficiencies from borrowers more efficiently. An FHFA Office of Inspector General report found weaknesses in the ability of the government-sponsored enterprises to collect shortfalls from borrowers from post-foreclosure sales. In 2011, the GSEs recovered only a small fraction of the deficiencies they pursued, an estimated $4.7 million collected out of $2.1 billion pursued, the IG reported. The IG blames this on the FHFA’s lack of guidance and oversight of the GSEs’ deficiency recovery efforts. While the FHFA has an opportunity to provide...

Congress will act on a bipartisan basis after the November elections to approve legislative changes to the Home Affordable Refinance Program, a well-connected industry participant predicted, although some Republicans in Congress remain opposed to a bill crafted by Senate Democrats Robert Menendez, NJ, and Barbara Boxer, CA. Lewis Ranieri, chairman and founding partner of Ranieri Partners, said this week that he fully expects Congress to approve S. 3522, the “Responsible Homeowner Refinancing Act,” after the upcoming elections. He suggested that Republicans have been unwilling to pass the bill due to fears that approving an Obama administration proposal could hurt their re-election efforts. Ranieri made...

It increasingly appears that the Consumer Financial Protection Bureau will come out with a qualified mortgage/ability-to-repay rule that will include a legal “safe harbor” for most mortgages – and a “rebuttable presumption” for the rest. Industry attorneys, lobbyists and consumer advocates indicate the CFPB is leaning towards granting a safe harbor for what will be defined as “prime” mortgages – presumably most of the loans that are backed by the federal government. “What we’re hearing is there could be...

The Mortgage Insurance Companies of America urged U.S. banking regulators not to exclude private mortgage insurance as they consider the proposed Basel III risk-based capital framework for the nation’s banks. Commenting on the proposed rules this week, MICA urged regulators to acknowledge the crucial role private mortgage insurance plays in the single-family residential market and recognize it in the proposed capital rules “with a reduced capital charge.” “Exclusion of private mortgage insurance in the proposed rules is a departure from accepted banking practices and would have ‘unintended adverse consequences on housing finance and the broader U.S. economy,’” said Suzanne Hutchinson, MICA executive vice president. Under the proposed U.S. implementation of Basel III, conventional residential mortgages with loan-to-value ratios in excess of 80 percent, regardless of the presence of private mortgage insurance, could trigger...