Commercial banks and savings institutions gently nudged their valuations of mortgage servicing rights slightly higher in the third quarter as higher interest rates reduced prepayment expectations. A new Inside Mortgage Trends analysis of call reports shows banks put a fair market value of $36.17 billion on their MSR assets at the end of the third quarter. That works out to 0.93 percent of the principal balance of $3.879 trillion of loans serviced for others, up from ... [Includes one data chart]

Two pending mortgage lawsuits involving the Federal Housing Finance Agency, spawned by the housing crisis, have been winding down in recent weeks. One includes a win for Bank of America and the other includes oral arguments in an appeal by Nomura Holdings and the Royal Bank of Scotland. The Department of Justice had until Nov. 21 to appeal an earlier ruling in which BofA, defending practices of Countrywide Financial, got out of having to pay more than $1 billion in penalties to the FHFA. Instead of appealing to the Supreme Court, the DOJ quietly let the deadline slip away. In 2014, a federal judge ordered the bank to pay $1.2 billion in civil penalties.

DU Day 1 Certainty Begins. On Dec.10 components of Fannie Mae’s Day 1 Certainty initiative become effective. Day 1, announced in October, gives customers freedom from representation and warranties on key aspects of the mortgage origination process through Fannie’s Desktop Underwriter platform. Asset and employment validation as well as Collateral Underwriter freedom from reps and warrants for appraisals begins Dec. 10. Fannie Prices Latest CAS CRT Deal. Last week, Fannie Mae priced its latest credit risk sharing transaction under its Connecticut Avenue Securities program. CAS Series 2016-C07, a $701.7 million note offering, was scheduled to settle on Dec. 8, 2016.

The loans funded by Sterling and Lendsure entailed the use of bank statements to verify borrower income.

Then there’s the case of Bill Dallas, the industry veteran who runs Skyline Home Loans in Calabasas, CA. “Winter is coming,” he said in a brief email exchange with Inside Mortgage Finance.

With rates rising almost 75 basis points since the election, more MSR packages should hit the market in the next few weeks.

Of the three reverse mortgage firms, American Advisors Group was fined the most: $400,000...

Have any of the GSE stock speculators that bought on the cheap cashed out of their gains?

The one weak spot in the mortgage market during the third quarter was in traditional jumbo originations, a trend that was reinforced by a significant increase in production of agency mortgages in high-cost markets that exceeded $417,000. An estimated $101.0 billion of non-agency jumbo home loans were originated during the third quarter, down 1.9 percent from the previous quarter. At the same time, production of conforming-jumbo mortgages – loans greater than $417,000 that were securitized by Fannie Mae, Freddie Mac and Ginnie Mae – jumped 27.7 percent from the second to the third quarter. Some of the disparity is...[Includes three data tables]

Despite higher interest rates, publicly traded mortgage stocks have been rising since the election, but market watchers are cautious that recent gains could evaporate quickly. “Two things are going on here,” said Henry Coffey, an equities analyst at Wedbush Securities. “We’ve had a massive market rally, especially in financial stocks. But the general consensus is that the new administration is going to be less punitive than the current one.” Coffey added...[Includes one data table]