Government-insured mortgage programs held up a little better than the overall market during the second quarter of 2011, edging back toward the higher market shares they recorded in late 2009 and early last year, according to a new analysis and ranking by Inside Mortgage Finance. FHA and VA lending accounted for 27.2 percent of new loan originations in the second quarter, despite a 5.3 percent drop in volume. That represented the highest market penetration for the government programs since early 2010, when they accounted for 28.8 percent of new originations. The all-time high market share for FHA and VA was back in the fourth quarter of 2008, at... [Includes two data charts]

Experts agree that the federal government plays too big a role in the housing market, but panelists at a Federal Reserve conference last week said there is little consensus on how to fix it. FHA is “not our silver bullet,” observed Janis Bowdler, a director at the National Council of La Raza. “Surely, it’s stepping in while we are in a tight credit market. But it’s no long-term solution.” One problem with FHA is that lenders aren’t required to offer it, which means entire communities are left “credit-starved,” Bowdler said. “This leaves them in the same vulnerable position to predatory lenders that they were in five or six or 10 years ago,” she...

The average mortgage banking firm reported increased production earnings in the second quarter of 2011 and higher loan production compared to the first three months of the year, according to the Mortgage Bankers Association quarterly performance report. The report, which collected data from 167 companies including many smaller mortgage bankers, found average pretax income fell 60.5 percent to $451,000 during the second quarter. That was the lowest level of profitability since the fourth quarter of 2008, when the average mortgage banking company lost $206,000. The MBA survey suggested that...

The sharp drop in mortgage origination activity during the second quarter had a bigger impact on retail loan production, according to a new Inside Mortgage Finance ranking and analysis. But a much bigger change lies ahead as Bank of America this week announced plans to get out of the wholesale correspondent market. The company was the second largest correspondent lender in the industry during the first half of 2011, acquiring $49.23 billion in production. That represented a significant 8.3 percent of total home mortgage origination over the first six months of the year and nearly a quarter of industry-wide production in the correspondent channel. In a statement, BofA said...[Includes six data charts]

Only about 18 of the 247 “high cost” metropolitan markets will avoid seeing their FHA loan limits lowered at the end of this month, when the emergency loan-limit adjustments for the FHA, Fannie Mae and Freddie Mac are set to expire, according to a new analysis by Inside Mortgage Finance. All 24 metro markets that now have loan limits of $729,750 (or higher in Hawaii) will see their limits dropped to at least $625,500, and some of these areas in California will see...

The Department of Housing and Urban Development has spelled out the conditions under which borrowers must successfully complete a trial payment plan before they can get a permanent standard loan modification under the FHA’s loss mitigation program. A HUD mortgagee letter (ML 2011-28) also specifies the time requirements for completing loan modification and partial claim documents for a servicer to receive an incentive fee. The FHA reported 13,368 loan modifications and 3,082 partial claims paid in June. A total of 119,703 FHA loan modifications were reported from October 2010 through June 2011, and 21,035 foreclosure claims were paid over the same period. Their workout ratios were ...

Wells Fargo Bank and Bank of America dominated the FHA jumbo market during the first six months of 2011, accounting for a third of total jumbo loan originations during the period, according to Inside FHA Lending’s latest analysis of the sector. The two financial institutions outdistanced their competitors by producing a total of $3.04 billion in FHA-insured mortgage loans, nearly a third of the $10.2 billion of government-insured jumbo loans originated during the first half of the year. Top-ranked Wells Fargo generated $1.90 billion in FHA loans exceeding $417,000 for an 18.7 percent market share, while BofA claimed... [Includes two data charts]

MetLife isn’t getting enough bang for its buck out of its depository banking business to justify the amount of regulatory oversight it has to contend with in a highly competitive market. Facing the prospect of even more intensive regulation ahead, the company has decided to look for a purchaser for that line of its operations. But the insurance industry giant plans to keep its mortgage banking business, MetLife Home Loans, most of which was acquired from First Horizon in 2008. The company also picked up EverBank’s reverse mortgage business. Given MetLife’s focus as a global insurance and employee benefits player, the company has decided that...

Pound for pound, mortgage loan officers licensed to do business in California appear to generate a lot more business than their counterparts elsewhere around the country. A new analysis of state mortgage licensing data by Inside Mortgage Trends found that California had a relatively small number of registered mortgage loan officers, or MLOs, compared to the size of the state’s mortgage market. California typically accounts for 20 percent or more of U.S. residential mortgage activity, but its 3,519 registered MLOs represented just 3.5 percent of these individuals tracked in the National Mortgage Licensing System. That appears likely to... [Includes one data chart]

The new Consumer Financial Protection Bureau is making substantial progress on its initiative to meld the mortgage disclosure forms under the Truth in Lending Act and the Real Estate Settlement Procedures Act into one, more simplified disclosure. Still, a number of questions are being raised in the process, not the least of which has to do with what kind of regulation will eventually accompany the forms. “The first issue is that these forms just don’t reflect the regulatory and statutory requirements in many ways,” said Steve Kaplan, a partner with law firm K&L Gates LLP in its Washington, DC, office during a webinar last week sponsored by Inside Mortgage Finance Publications. “So someone who is a practitioner and who’s been dealing with these issues for years will say, ‘What is this form? This is great and dandy but do I get a safe harbor? Do I still violate the statute by providing this form?’” ...