With his home state of Nevada leading the nation in foreclosures, Republican Sen. Dean Heller has introduced legislation that seeks to simplify and speed up the short-sale process via an amendment to the Truth in Lending Act. Heller has recently introduced SB 3177, the Stopping Ongoing Lender Delays Act (or SOLD Act). His legislation would require each servicer of a home mortgage to respond in writing within 30 calendar days to a mortgagor of a residential mortgage loan who has requested in writing a short sale of the dwelling or residential real property that is subject to the mortgage...

Improved subprime performance and a lack of new originations have prompted major nonbank firms involved in subprime servicing to expand their portfolios with acquisitions of nonperforming agency mortgages. Ocwen Financial, Nationstar Mortgage and Walter Investment Management, among others, have all recently acquired large volumes of nonperforming agency mortgages. An estimated $525.0 billion in subprime mortgages were outstanding as of the end of the first quarter of 2012, according to an Inside Nonconforming Markets analysis ... [Includes one data chart]

Residential Capital’s bankruptcy filing last week was part of an effort to settle repurchase claims sought by non-agency mortgage-backed security investors. In conjunction with the bankruptcy, 17 institutional investors agreed to an $8.7 billion claim that will need approval by the court and is unsecured, suggesting that the final settlement payout could be much lower. ResCap is a subsidiary of Ally Financial. Michael Carpenter, CEO of Ally, said the bankruptcy gives Ally further distance from “very large” rep and warrant claims ...

While non-agency mortgage-backed security investors did not file a formal challenge to the $25.0 billion servicing settlement, they remain concerned with the implementation of principal forgiveness loan modifications. The latest qualms were raised last week in a letter to Shaun Donovan, secretary of the Department of Housing and Urban Development, from Sens. Sherrod Brown, D-OH, and Bob Corker, R-TN. “Because any settlement could dramatically affect [pension funds and retirement funds], their managers should ...

The still-developing market for real estate-owned property rentals is starting to get crowded. A number of firms have formed in recent weeks hoping to benefit from low prices on REO properties. Homebuilder Beazer Homes announced this month that it formed a private real estate investment trust to acquire, refurbish and lease single-family homes on a large scale in select markets. Beazer Pre-Owned Rental Homes was arranged by affiliates of Kohlberg Kravis Roberts & Co. and has approximately $85 million in funding ...

Although mortgage delinquency rates have improved in recent quarters, industry participants say there are still plenty of opportunities to buy and sell distressed mortgages. Some $400 billion in nonperforming residential mortgages remain on U.S. banks’ balance sheets, according to estimates by officials at PennyMac Mortgage Investment Trust. “I don’t think we’ve come near working through this,” said Kevin Lahr, director of valuation services at Digital Risk. “We’re halfway through this, maybe.” Speaking at ...

Among non-agency mortgages, jumbo loans benefit the most from short sales, according to new research by Barclays Capital. The use of short sales is also increasing across non-agency mortgages as investors and borrowers tend to benefit from the liquidation technique.Barclays said the loan amount plays a major factor in a servicer’s liquidation decision. “A servicer is more likely to be focused on utilizing a short sale to reduce the severity on a $500,000 loan by 5 percent, for a $25,000 benefit, than to ...

The Department of Housing and Urban Development has expressed concern over the “lack of alignment” between FHA’s credit underwriting standards and credit overlays – a probable explanation for the apparent increase in FHA lending to non-traditional FHA borrowers. Responding to an Inside FHA Lending inquiry, FHA Deputy Assistant Secretary Charles Coulter said HUD will look at lenders’ compare ratio as a potential driver for overlays and will work to improve clarity in FHA manual underwriting. In recent remarks at the Mortgage Bankers Association’s National Secondary Market Conference in New York, Coulter said ...

Real estate industry groups are urging the FHA to align a forthcoming proposed rule for private transfer fees with a final rule recently adopted by the Federal Housing Finance Agency. In a joint letter to Acting FHA Commissioner Carol Galante, the National Association of Realtors and the Institute of Real Estate Management expressed support for the FHFA rule on transfer-fee covenants and asked that a mortgagee’s compliance with the FHFA rule be deemed as compliance with the FHA’s own rule regarding such covenants. The two groups urged the FHA to ...

FHA-approved reverse mortgage lenders conducting any new financial assessments of elderly borrowers should not be overly restrictive to ensure that the Home Equity Conversion Mortgage program remains a viable option for cash-poor seniors, according to the National Council on Aging. The NCA, an advocacy group for elderly Americans, noted that lender assessments of borrowers’ ability to repay a HECM loan may be tough seniors with modest income who could not qualify for a conventional home loan would be left with fewer alternatives to tap home equity. The FHA does not have specific income requirements for HECM borrowers. However, policymakers are ...