A California mortgage lender that recently reached a settlement agreement with the Department of Housing and Urban Development over branch issues could land before HUD’s Mortgagee Review Board for branch-related loan quality issues. HUD’s Office of the Inspector General said an audit of Prospect Mortgage’s branches uncovered high default rates due to numerous violations of HUD underwriting and quality control requirements. The OIG recommended requiring Prospect to reimburse HUD $344,326 for ...

Some federally supervised depository institutions with FHA businesses are in danger of missing the July 29 deadline for registering with the Nationwide Mortgage Licensing System and Registry and could be sanctioned. The delay in registration is apparently due to confusion and uncertainty as to whether certain employees meet the definition of a “mortgage loan originator” (MLO) and should be registered as required by the Secure and Fair Enforcement for Mortgage Licensing Act, said compliance experts. The mortgage-related activities of such employees do not clearly meet the MLO definition and they include ...

The Federal Reserve fined Wells Fargo $85 million last week over high-pressure compensation policies in the firm’s finance company that allegedly led to steering of prime borrowers to more lucrative non-prime mortgages. The $85 million fine is the largest ever levied by the Federal Reserve in a consumer enforcement case. Wells has since shut down Wells Fargo Financial, its subprime subsidiary that was the focus of the Fed’s charges. CEO John Stump said in a statement the “alleged actions” were “committed by a relatively small group of team members.” The Fed said Wells Fargo Financial’s incentive compensation and sales quota programs fostered ... [includes one data chart]

Residential mortgage lending fell sharply in the second quarter, sinking to levels not seen since the depth of the financial market meltdown in late 2008. Lenders originated an estimated $265.0 billion in 1-4 family mortgages during the second quarter, down 18.5 percent from the first three months of the year. Production barely topped the $260.0 billion in mortgage originations posted in the fourth quarter of 2008, which was the lowest quarterly out-put since early 2000. Third-quarter production appears to be ... [includes two data charts]

Regulators of MBS markets should use a variety of tools to address inverse incentives in securitization, encourage markets to improve transparency and increase document standardization, according to a report released by the Joint Forum of the Bank for International Settlements. In its “Report on Securitization Incentives,” BIS said incentives in securities markets were misaligned in the crisis and still are today. “The major incentives at play for originators/sponsors included funding diversification, funding cost, risk transfer ...

Bank of America’s staggering $13.2 billion net loss on its mortgage banking operations overwhelmed fairly stable performance by the rest of the industry during the second quarter, according to a new analysis of earnings reports from 13 lenders by Inside Mortgage Trends. Including BofA’s huge loss, the group posted an aggregate loss of $9.8 billion for the second quarter, drowning out a modest $2.9 billion profit during the first three months of the year. The landmine in BofA’s second quarter results was a $14.0 billion provision for ... [includes one data chart and one graph]

Purchase-mortgage lending has been in a slump since the housing market crashed three years ago, but a downturn in refinance activity is pushing lenders across the country to push financing for homebuyers with special deals and incentives. Last week, Fifth Third Mortgage Company, a subsidiary of Fifth Third Bank and the 13th largest mortgage originator according to Inside Mortgage Finance, announced reduced interest rates for purchase-money borrowers. During the first quarter, only 22 percent of the company’s production came from purchase mortgages, below ...

Closing and origination costs on a sample $200,000 purchase mortgage rose by almost 9 percent in 2011 nationwide, according to a survey by Bankrate, an online aggregator of financial rate information. In its annual closing cost survey, the group found that nationwide closing costs averaged $4,070, up from $3,741 last year. New York’s closing costs were highest at $6,183, followed by Texas at $4,944 and Utah at $4,906 on the same size mortgage. Arkansas had the lowest closing costs with $3,378, followed by ...

Without clear, early implementation guidance from the Department of Housing and Urban Development, FHA mortgage lenders could start underwriting to the lower loan limits before the Oct. 1 effective date, limiting the origination of FHA loans, warned two real estate industry groups. Providing guidance to mortgage lenders on how to manage the transition from the current top-end amount of $729,750 to $625,500 for high-cost areas without disrupting FHA lending is critical, the Mortgage Bankers Association and the National Association of Home Builders wrote to HUD. Lenders manage their pipelines based on ...

The Department of Housing and Urban Development announced settlements last week with two mortgage lending-related entities over alleged violations of the Real Estate Settlement Procedures Act having to do with affiliates and fees. In one case, HUD alleged that title company Fidelity National Financial Inc., through its subsidiaries, paid fees for the referral of settlement service business in violation of Section 8 of RESPA...