The performance of large mortgage servicers of non-agency residential MBS, including their ability to prevent or cure loan delinquencies, varied widely during the 12 months ending in June 2011, due in no small part to foreclosure moratoria imposed on some, but not all, servicers, according to Moody’s Investors Service. The company’s inaugural Servicer Dashboard report found that during the June 2010 to June 2011 period, JPMorgan Chase and Bank of America exhibited overall poor servicing performance in contrast to CitiMortgage, GMAC and Ocwen. A major impediment to Chase and BofA’s servicing performance, Moody’s noted, was the fact that...

Bexil American Mortgage, a newly formed originator, plans to originate non-agency mortgages and sell them to Citi, Wells Fargo and PennyMac. John Robbins, president of Bexil American Mortgage, said the stagnant non-agency securitization market has not completely stopped sales of jumbo mortgages. “There are active investors for those products today,” he said last week on a call with investors. ...

In a somewhat unusual announcement last week, Walter Investment Management said it was servicing approximately 910,000 loans representing approximately $59.0 billion of unpaid principal balance as of the end of the third quarter of 2011. The announcement was unusual because that was the extent of the statement. “We believe the major increase in the servicing portfolio could be due to Walter being allocated a portion of the servicing rights related to the Fannie Mae/Bank of America deal, whereby Bank of America sold the servicing rights to 400,000 loans to Fannie Mae,” said analysts at FBR Capital Markets. ...

Significant declines in jumbo mortgage-backed security prices tracked by the PrimeX index in recent weeks were due to investor panic, not collateral fundamentals, according to industry analysts. The sell-off began earlier this month after Fitch Ratings downgraded a number of jumbo securities and warned of negative equity, prompting fears of strategic defaults. Prices on the usually steady PrimeX index fell by as much as 10.0 percent from the beginning of October. Some of the sub-indices even fell below par for the first time. ... [includes one data chart]

Bank of America’s proposed $8.5 billion settlement with non-agency mortgage-backed security investors was officially moved to federal court this week. The change of venue from state court – requested by a group of investors known as Walnut Place – will likely lengthen the amount of time it takes the settlement to close and could lead to the settlement being renegotiated with better terms for investors. ... [includes six briefs]

Several large banks and mortgage companies are accused of cheating military veterans and taxpayers out of millions of dollars by hiding illegal fees in VA refinance transactions and of deliberately misleading the government to obtain guarantees for the refinanced loans. Three law firms – Butler Wooten & Fryhofer and Wilbanks & Bridges in Atlanta and Phillips & Cohen in Washington, D.C. – have teamed up to pursue the “qui tam” or whistleblower lawsuit on behalf of two mortgage brokers and the U.S. government. The brokers, Victor Bibby and Brian Donnelly, brought the lawsuit under the False Claims Act, a federal law that goes back to the Civil War when it was used to ...

The Department of Veterans Affairs has issued guidance explaining the confusion in the last couple of weeks caused by conflicting VA regulations and legislation. The latest guidance from the VA, Circular 26-11-16, updates the method for calculating funding fees based on a provision in H.R. 2646, the Veterans Health Facilities Capital Improvement Act of 2011, which President Obama signed into law on Oct. 5. H.R. 2646, which sets funding for the construction of various VA medical facilities, also provides for higher funding fees for VA loans, contrary to funding fee changes announced by the VA on Sept. 8. Previous VA guidance notes ...

The House of Representatives has passed legislation that would give surviving spouses of fully disabled veterans access to VA home loans. The bill, H.R. 120, the Disabled Veterans’ Surviving Spouses Home Loans Act, is part of H.R. 2433, the Veterans Opportunity to Work Act, which the House overwhelmingly approved on Oct. 12 by a vote of 418 to 6. H.R. 2433 contains six pieces of veteran legislation designed to address veteran unemployment. Introduced by Rep. Virginia Foxx, R-NC, H.R. 120 aims to allay concerns of veterans with permanent and total disabilities about where their surviving spouses would live should the veteran die of causes unrelated to their military service. Under current law, a surviving spouse may qualify for a VA home loan only if the service member’s death is determined to be related to service disabilities. Otherwise, the surviving spouse qualifies only for ...

The Department of Housing and Urban Development is a step closer to leveling the playing field for FHA lenders but there is more to be done, according to a recent analysis by K&L Gates. Recent changes announced by HUD are a good start to setting right the unintended adverse effects of last year’s changes to FHA’s lender-approval requirements, but HUD needs to do more to implement these changes fully, concludes the analysis. Authors Krista Cooley, Holly Spencer Bunting and Kathryn Baugher, all attorneys with K&L Gates, said future pronouncements from HUD should provide additional guidance on how to address the inequities between third-party originators and FHA-approved lenders with regards to ...

The Department of Housing and Urban Development has suspended a former president of Lend America from doing any business with the agency following his admission that he engaged in a mortgage fraud scheme against the FHA in 2009. Michael Primeau, the former executive, had pled guilty to charges he directed employees of Lend America, a former FHA-approved lender, to divert mortgage funds intended to pay off borrowers’ first mortgages at refinance closings in order to pay company-operating expenses. Two years ago, HUD and the U.S. Attorney for the Eastern District of New York filed a civil complaint against Ideal Mortgage Bankers, doing business as Lend America, in federal district court. The complaint sought ...