Lenders clamoring for a hand hold around the slippery issue of “strategic defaulters” do have options in the form of technology and legal leverage to tackle the issue even as the problem may not be as pronounced as first thought, say experts. The problem of borrowers who otherwise have the capacity to make their mortgage payments but instead opt to walk away from the loan was once a fringe issue in the industry. But strategic default became a bigger concern as more and more borrowers found they owed more on their home than the house was worth, according to Brent Taggart, senior vice president at Green River Capital, a Utah-based real estate owned management and...

Credit card giant Discover Financial Services is adding mortgages to its menu of financial products and services with the acquisition of Home Loan Center, a subsidiary of Tree.com. The sale price for Home Loan Center, which operates as LendingTree Loans, is up to $56.0 million. LendingTree, a correspondent lender, originates and processes home loans in all 50 states and the District of Columbia. The acquisition includes substantially all of HLC’s operating and related assets as well as LendingTree’s lead-generation system, adding a residential mortgage origination component to Discover’s direct lending system. Discover, a direct banking and...

Nationstar Mortgage Holdings aims to raise $400 million through the sale of common stock to finance new growth opportunities in subservicing delinquent home loans, as well as in originating and securitizing new mortgages. Texas-based Nationstar, the home finance unit of Fortress Investment Group, announced the filing of an initial public offering with the Securities and Exchange Commission. Nationstar said it sees opportunities in the current residential mortgage market for non-bank servicers to grow their portfolios by acquiring mortgage servicing rights, entering into subservicing contracts and by assuming responsibilities for...

Pending inter-agency proposals to implement risk-retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act could undermine the return of private capital to the housing finance market, warned industry participants. Testifying this week during a House subcommittee hearing, the Mortgage Bankers Association and other critics of risk retention said that a narrow definition of a “qualified residential mortgage” and overemphasis on higher downpayment may have an adverse impact on credit availability. MBA Chairman Michael Berman told members of the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity that while...

Facing significant penalties from investigations by the Securities and Exchange Commission, Wall Street banks are bracing for investigations of their securitization activities by the influential New York attorney general’s office and other state regulators. NY Attorney General Eric Schneiderman has reportedly launched an investigation into the securitization processes of Bank of America, Morgan Stanley, Goldman Sachs, JPMorgan Chase, UBS and Deutsche Bank. All the parties declined to comment, but reports say that the AG is looking into how the banks securitized mortgage loans, as well as their other practices handling mortgage loans. Specific concerns have...

A trio of housing trade associations went to bat for the role of government-sponsored enterprises this week, but not necessarily for Fannie Mae and Freddie Mac, arguing that GSEs, as well as the government itself has a role in the reform of the housing finance system. During testimony this week before the Senate Banking, Housing and Urban Affairs Committee, representatives from the National Association of Realtors, the National Association of Home Builders and the National Multi Housing Council/National Apartment Association warned lawmakers that the current efforts to wind down Fannie and Freddie must not disrupt the already fragile housing and...

Savings institutions reported a total of $200.9 billion of residential MBS in their retained portfolios at the end of the first quarter of 2011, up marginally from the end of the previous year. But the heart of the industry – firms regulated by the Office of Thrift Supervision – actually posted a small decline in their MBS holdings during the period. The OTS itself is being phased out as a separate federal regulator, although the savings association charter will continue under the supervision of a dedicated unit in the Office of the Comptroller of the Currency. OTS-regulated thrifts held $157.6 billion of MBS in their portfolios at the end of... [Includes two data charts]

The legacy of toxic subprime and Alt A MBS from Countrywide Financial continued to spread last week, with a California appeals court deciding to allow a class action involving a number of pension funds and other institutional investors against the lender to proceed. The plaintiffs allege that Countrywide and a number of its subsidiaries, officers and U.S. investment banks violated the Securities Act of 1933 by making materially false and misleading statements in over 450 prospectus supplements relating to the issuance of more than $300 billion in subprime and Alt A securities. Specifically, plaintiffs allege the defendants misrepresented the quality of...

California Attorney General Kamala Harris this week announced a new mortgage-fraud investigating force to monitor and prosecute deviations from the mortgage processes required by law. The new group, called the California Attorney General’s Mortgage Fraud Strike Force, will be composed of attorneys and investigators from the state Department of Justice (both civil and criminal), and will oversee processes such as mortgage loan origination and the way mortgage-backed securities are marketed to investors. “We will work to safeguard the homeowner at every step of the process – from origination of a loan to its securitization – and we will...

Industry representatives are making headway in obtaining clarification from the Federal Reserve on various aspects of the agency’s controversial regulation on loan originator compensation. But there are a number of key questions that still have to be addressed, and until they are, lenders need to proceed carefully, according to a top official at one of the nation’s largest mortgage lenders. One area in which the industry needs clarification has to do with compensation based on “time spent” as it pertains to different loan programs and products, and whether compensation can be established on a loan-by-loan basis or by...