The FHA could be the vehicle of a new refinancing plan offered by Sen. Jeff Merkley, D-OR, to help homeowners who owe more on their mortgage than their homes are now worth. In a proposal called “The 4 Percent Mortgage: Rebuilding American Homeownership,” Merkley explained that his plan will not require taxpayer dollars but would rely on proceeds from the sale of government bonds to investors for funding. The aim, Merkley said, is give underwater homeowners the chance to ...

Total FHA delinquency rates as of June 30 were up for 30-, 60- and 90-day delinquencies as was the foreclosure rate for loans with FHA insurance, an Inside FHA Lending analysis of FHA servicing data found. The latest FHA servicers’ data showed an overall 16.75 percent delinquency rate, up from 16.10 percent as of April 30, the last time we reported FHA delinquency and foreclosure rate trends. Fueling this increase is an uptick in 30-60 days delinquencies, which rose to 7.20 percent from 6.61 percent over the two-month period. At the end of June, serviced FHA-insured loans totaled 7,636,852 loans, of which ... (1 chart)

As the Department of Housing and Urban Development prepares for a planned single-family loan sale in September, questions remain as to how successful the Distressed Asset Stabilization Program will be, given its restrictions and additional certification requirements. Legal experts say that the servicer and investor participation requirements are so onerous that the DASP would seem a little more than a sound bite. The DASP expands an earlier pilot program that allows private investors to purchase pools of nonperforming mortgages at a discount before ...

Revised VA HAMP. The Department of Veterans Affairs has updated the instructions for modifying mortgage loans with a VA guarantee. Changes include clarification concerning occupancy status, an updated reference to another VA guidance on prior approval procedures and extension of the applicability of the said guidance. The changes were announced in Circular 26-10-6. New VA REO Management and Servicing Contractor. The Department of Veterans Affairs has provided details for transferring VA property management (real estate-owned) and portfolio loan servicing contracts for the VA home loan guaranty program from ...

A group of San Francisco-area homeowners has filed a federal RICO class-action lawsuit against JPMorgan Chase, alleging the company charges inflated fees to homeowners who go into default. In a suit filed last week in the U.S. District Court, Northern District of California, the three named plaintiffs, Diana Ellis, James Schillinger and Ronald Lazar, accuse JPMorgan of violating California business standards law. The suit also says JPMorgan’s use of mail and wire communications to perpetuate its fraud against homeowners violates the federal Racketeer Influenced and Corrupt Organizations Act. The homeowners contend that JPMorgan is using...

Subsidiaries of Nationstar Mortgage Holdings announced last week that they intended to sell $100 million in senior notes to help fund future acquisitions and transfers of servicing portfolios, including the potential acquisition of certain servicing assets from Residential Capital. The notes were sold this week in a private placement. The notes are a “follow-on” issue to $275 million in senior notes the company issued in April, due in 2019. Nationstar said the additional notes were issued at an offering price of 105.500 percent, they have an effective yield of 8.396 percent and carry a coupon of 9.625 percent per annum, payable semi-annually in arrears, beginning in November 2012. In May, Nationstar announced that it would pay...

A “bad bank” entity for pooling and standardized restructuring and resecuritization of underwater mortgages may be the best bet for the housing market to pull itself out of the negative equity quagmire of the last several years, according to a proposal by a Georgetown University law professor. In his white paper – Clearing the Mortgage Market Through Principal Reduction: A Bad Bank for Housing RTC 2.0 – Adam Levitin makes the case that the best option for “clearing the market” lies via “negotiated, quasi-voluntary principal reduction” using a privately funded Resolution Trust Corporation-style entity. “Such an RTC 2.0 would provide a framework for implementing ‘quasi-voluntary’ principal reductions in the context of litigation or regulatory settlement or the federal government’s exercise of its secondary market power to exclude...

Fannie Mae and Freddie Mac have adopted a “common language” to improve and help ease lenders’ delivery of loans and appraisals to the government-sponsored enterprises. The GSEs’ full adoption of the Uniform Loan Delivery Dataset (ULDD) on July 23 establishes a common usage and standardizes most of the data required at the time of loan delivery, minimizing differences wherever possible. Freddie Mac hailed the new system as a “critical milestone” of the Uniform Mortgage Data Program, a joint GSE initiative to provide...

The Treasury Department announced harsh penalties this month for fraudulent activity uncovered in the Home Affordable Modification Program. In an unprecedented move for HAMP, the Treasury said that in certain circumstances it will recapture servicer, borrower or investor incentives previously paid. The Treasury said it hired a contractor to look for borrower fraud regarding identity, occupancy requirements, and certain criminal activity that the Dodd-Frank Act determined would make a borrower ineligible for HAMP. If the servicer cannot clear the borrower of the potential HAMP violation, the borrower’s HAMP mod will be rescinded along with any associated incentive payments. Beginning in October, the contractor will review...

Mortgage lending and servicing industry representatives were able to get an advanced look at what the Consumer Financial Protection Bureau is considering imposing on the mortgage servicing sector, and that glimpse has generated a number of significant concerns right out of the box. The American Financial Services Association, the Consumer Mortgage Coalition, the Mortgage Bankers Association and the Residential Servicing Coalition submitted a joint comment letter to the CFPB in response to its April 9 outline of servicing rules...