Rules proposed by the Consumer Financial Protection Bureau in August to revamp servicing practices prompted widely varied reactions from servicers, individual consumers and community banks. Servicers largely sought to keep current servicing rules unchanged while borrowers asked for greater protections and community banks requested an exemption from the proposal. The CFPB said the proposed rules are aimed at ending “surprises and runarounds” for borrowers. The proposed rules incorporated a number of provisions included in the national servicing settlement and consent orders between servicers and federal regulators. Some of those provisions were required by the Dodd-Frank Act. Servicers largely suggested that the CFPB should not implement servicing rules beyond those specifically required by the DFA. However, the Consumer Mortgage Coalition, whose members include the servicers complying with the settlement and consent orders, called...

Ocwen Financial is set to become the eighth largest mortgage servicer with its pending acquisition of Homeward Residential, according to an analysis by Inside Mortgage Finance. While the combined servicing portfolio will largely consist of nonprime mortgages, Ocwen is also looking to benefit from Homeward’s relatively new wholesale origination platform, which has produced a significant amount of agency mortgages this year. Ocwen announced last week that it plans to acquire Homeward and its servicing portfolio of more than $77.0 billion for $588 million in cash and $162 million in Ocwen stock. On a combined basis, including subservicing, the two companies serviced $202.0 billion in mortgages as of the end of the second quarter of 2012. “We are...

Investors in vintage non-agency MBS have seen strong returns in recent months, particularly in August. Industry analysts suggest that returns are likely to remain elevated as there are few remaining risks for non-agency MBS and supply is limited. “Despite increased profit taking on this year’s impressive performance, bonds continue to trade well,” according to analysts at Bank of America Merrill Lynch. “While demand for non-agency bonds will likely grow as home prices recover, it will not be met with more new supply as is seen in the broader high-yield bond universe. This is a very strong backdrop for further price appreciation.” From the beginning of June through the end of September, pricing on the ABX index that tracks subprime MBS has...

The Federal Housing Finance Agency this week announced a second winning bidder of its pilot program to move GSE real estate-owned properties from money-losing foreclosures to money-making rentals and eventually off the books entirely. The FHFA announced that New York-based Cogsville Group LLC was the winning bidder of 94 Fannie Mae-owned properties as part of the FHFA’s REO pilot initiative. The firm paid $2.1 million for a share in a joint venture with Fannie, resulting in an estimated transaction value to the GSE of $11.8 million or 86.2 percent of the properties’ estimated value, according to the transaction summary.

Declining interest rates forced mortgage bankers to lower the fair market value of their mortgage servicing rights during the second quarter, according to a new analysis of bank call-report data by Inside Mortgage Trends. Banks reported a total of $5.607 trillion of mortgage servicing for others as of the end of June, a 3.1 percent decline from the previous quarter. That represented about 81.8 percent of the total mortgage servicing outstanding that was tied to agency and non-agency ... [Includes one data chart]

In an effort related to the national mortgage servicing settlement, Bank of America announced last week that it has pre-qualified 150,000 borrowers to receive full extinguishments of their second-lien mortgages. Banks have been slow to modify second liens because their performance remains relatively strong even as borrowers struggle with first liens and negative equity. BofA said the full balance of second liens owned and serviced by the bank will be forgiven and the bank’s lien on the corresponding property ...

Servicers have seen increasing success with loan modification efforts in recent quarters, according to an Inside Mortgage Trends analysis of data released last week by the Office of the Comptroller of the Currency. While mod characteristics and performance vary widely, re-default rates largely appear to be tied to reductions in borrowers’ monthly payments. Re-default rates on mods completed in the past year are well below comparable rates for mods completed in 2008 and 2009. Some 44.7 percent of loans modified ...

Special servicers are set to receive more than $300.0 billion in distressed agency mortgages, according to industry analysts. The projections come after positive reviews of Fannie Mae’s controversial purchase and transfer of $73.0 billion in mortgage servicing rights from Bank of America in 2011. The Federal Housing Finance Agency and the FHFA Office of Inspector General each determined that Fannie paid a premium for BofA’s mortgage servicing rights, but significant savings will be recognized due ...

Wells Fargo and Morgan Stanley last week received notices from non-agency mortgage-backed security investors represented by the law firm of Gibbs & Bruns, which helped negotiate the pending $8.5 billion non-agency MBS settlement with Bank of America. Industry analysts suggest that the notices of non-performance could prompt settlements from Wells and Morgan Stanley, though the circumstances differ from the BofA case. The notices identify covenants in pooling and servicing agreements that the servicers ...

The major servicers handling non-agency mortgages under the Home Affordable Modification Program have made significant improvements, according to new assessments released by the Treasury Department. None of the nine largest non-agency HAMP servicers were in danger of having incentive payments withheld as of the end of the second quarter of 2012. “Servicers continue to focus attention on areas identified in previous program reviews and, as a result, are demonstrating considerable improvement in ...