The Department of Housing and Urban Development has reportedly offered to release major servicers from some liability related to FHA mortgages as part of a pending settlement related to foreclosure problems. While the offer may sweeten the deal for banks to settle with state attorneys general and federal regulators, observers say it’s not a total game changer. The complex negotiations have lasted more than a year, stemming from servicing practices that include robo-signing of foreclosure documents and poor communication with borrowers. A key sticking point has been...

The Federal Housing Finance Agency this week issued a final rule that would establish the conditions and procedures for Federal Home Loan Banks to merge, but experts say it’s unlikely any of the FHLBanks will do so voluntarily. The final rule, published in the Nov. 28 Federal Register, was based on governance practices common under corporate law, disclosure practices required under federal securities laws and merger approval standards in federal banking laws, the FHFA said. Although the Housing and Economic Recovery Act of 2008 allowed for FHLBank mergers, until...

Documenting mortgage lender and broker compliance with the Federal Reserve’s loan originator compensation rule will be just as important as actually complying with it, according to top industry attorneys and state regulators. “Compliance policies and procedures are really not enough” to satisfy the LO comp rule, Richard Andreano, a partner in the Washington, DC, office of the Patton Boggs law firm, told participants in a webinar sponsored this week by Inside Mortgage Finance. “The ability to document compliance will be very important, and people will need to maintain very...

Most of the impressive increase in new mortgage originations during the third quarter was in conventional home loans, including the non-agency jumbo market, according to a new market analysis and ranking by Inside Mortgage Finance. An estimated $212 billion in conventional conforming loans were originated during the third quarter, a gain of 29.3 percent from the previous three-month period. That boosted the conventional conforming share of the market to 65.2 percent for the period, up from just 60.7 percent in the second quarter of 2011. The non-agency jumbo market was... (Includes two data charts)

Private mortgage insurers are moving to adopt policies to fit with the recently expanded Home Affordable Refinance Program offered by Fannie Mae, Freddie Mac and the Federal Housing Finance Agency. Genworth Financial said that it’s all in, announcing last week that its U.S. mortgage insurance business is making changes so it can fully support HARP 2.0. The upgraded changes to HARP from the two government-sponsored enterprises are designed to enable more underwater borrowers to refinance their residential mortgages at today’s record-low interest rates. Genworth says the changes...

California’s Attorney General has reportedly issued subpoenas to Fannie Mae and Freddie Mac seeking details of the government-sponsored enterprises’ mortgage lending and foreclosure practices, possibly as a way to cajole the Federal Housing Finance Agency to overcome its resistance to principal reductions for GSE loans. The subpoenas seek information about how Fannie and Freddie are handling thousands of foreclosed properties, as well as details about the GSEs’ mortgage-servicing and home-repossession practices. According to published reports, State AG Kamala Harris, a Democrat, also is looking into how...

Housing finance and real estate groups are hailing the enactment this week of legislation raising the size of mortgage loans insured by FHA to $729,750 or 125 percent of area median home prices over objections by conservatives and most Republicans. The reinstated loan limit formula and maximum cap for FHA-insured home loans are good through 2013. The loan limits for Fannie Mae and Freddie Mac will remain at 115 percent of local area median home price, up to $625,500. The FHA floor will remain at $271,050 while the floor for loans purchased by the government-sponsored enterprises will still be $417,000. Last month...

The Department of Housing and Urban Development is pondering its next move after a federal district court judge in Houston reversed a suspension order against Allied Home Mortgage Corp., an authorized FHA lender, and its chief executive officer, last week. In a Nov. 15 ruling, U.S. District Court Judge Melinda Harmon granted a motion by the Houston-based mortgage banker and its CEO, James Hodge, to temporarily stop HUD from enforcing a suspension of the plaintiffs’ authority to underwrite and originate FHA loans until a related lawsuit is resolved. On Nov. 1, the government intervened in a False...

Most major mortgage servicers reported slight increases in the number of loans in distress during the third quarter of 2011, according to the Inside Mortgage Finance Large Servicer Delinquency Index. Servicers handling over $7 trillion in mortgage loans reported a combined 10.70 percent delinquency/foreclosure rate as of the end of September. That was up 12 basis points from the previous quarter. Of the 17 servicers included in the index, only six reported improved mortgage performance data compared to June. The problem was focused squarely on more...(Includes two data charts)

Major mortgage servicers are widely expected to agree to principal reduction for some struggling homeowners as part of the price of settling complaints over foreclosure practices brought by state attorneys general. That idea doesn’t sit well with some MBS investors, who are concerned that they will end up paying some of the cost of reducing principal as a way to keep distressed borrowers in their homes. The Association of Mortgage Investors warns that principal reduction of securitized loans would be akin to forcing the middle class to bear the settlement’s burden. In a statement, the AMI warned that principal reductions could...