Although some changes under the revised Home Affordable Refinance Program will take effect as early as next month, key features such as automated underwriting and new securitization executions will not be available until well into 2012. Observers found no surprises in the HARP 2.0 seller-servicer bulletins issued this week by Fannie Mae and Freddie Mac, and most expect only a modest expansion in program activity. In many cases, the new rules reflect a standardization of the existing programs offered by the government-sponsored enterprises. Among the new changes are a lifting of the existing 125 percent...

Recent non-agency mortgage loan modifications are showing better results compared to earlier private-label modifications despite a continued slowdown in new modification activity, according to a new Fitch Ratings analysis. While the number of completed modifications dropped, transactions completed in the past 18-24 months have improved slightly over earlier programs as a result of standardized guidelines, the recent Fitch report said. Patterned on the Home Affordable Modification Program, the standardized guidelines helped to focus attention on creating more sustainable modifications. These features included...

The Federal Housing Finance Agency and its wards, Fannie Mae and Freddie Mac, want to change servicer compensation to provide more resources for addressing nonperforming loans and try to reduce consolidation in the market, but MBS analysts remain concerned that fiddling with the current system could derail the to-be-announced market. “A big concern is that the TBA market for mortgages is very fragile,” said Jim Gross, vice president of financial reporting and public policy at the Mortgage Bankers Association. “Making radical changes could further rock the market.” The more radical proposal outlined by the...

A bill that would create a legislative framework for a covered bond market in the U.S., as well as a potential competitor for the Federal Home Loan Bank system, was introduced this week in the Senate, a counterpart to a long-standing covered bond bill awaiting final approval in the House.The United States Covered Bond Act, S. 1835, sponsored by Sens. Kay Hagan, D-NC, and Bob Corker, R-TN, is nearly identical to a House bill of the same name sponsored by Rep. Scott Garrett, R-NJ, and Carolyn Maloney, D-NY, H.R. 940.

Many mortgage lenders are concerned about a new fee-for-service compensation plan proposed by Fannie Mae, Freddie Mac and their federal regulator – including a change in how servicers get their fees. Under the current minimum servicing fee system, servicers take their slice of compensation out of the interest payments being passed through from borrowers to the government-sponsored enterprises. Under the proposed fee-for-service plan, servicers would pass through the entire consumer payment and then get their compensation from the GSEs. Beyond the economics of the proposed change – servicers would get a flat fee, perhaps...

The Obama administration’s refinance program for underwater mortgages got a much-publicized jolt of expanded guidelines that could stimulate new business, but the older Home Affordable Modification Program appears to be slowing down. An Inside Mortgage Finance analysis of recently released HAMP data reveals that only 74,630 new trial mods were started under the program during the third quarter. That was down 7.1 percent from the second quarter and represented the lowest number since the program began. Although there was an 11.8 percent increase in...(Includes one data chart)

Despite its fairly impressive success rate in fending off hostile litigation, MERSCorp and its Mortgage Electronic Registration Systems remain popular targets. This time around, it’s Delaware Attorney General Beau Biden filing suit in Delaware Chancery Court against them, alleging repeated violations of the state’s Deceptive Trade Practices Act. “Since at least the 1600s, real property rights have been a cornerstone of our society,” said AG Biden. “MERS has raised serious questions about who owns what in America. A man or woman’s home is not just his or her largest investment, it’s their castle. Rules matter. A homeowner has the obligation to pay the mortgage on time, and lenders must follow the rules if they are seeking to take away someone’s house through foreclosure. The honor system won’t work.”

The nation’s five largest mortgage servicing companies now face a tab of $25 billion to bring to a conclusion the long-running negotiations with the state attorneys general over industry foreclosure practices, according to published reports of the latest behind-the-scenes developments. The deal with the big five servicers – Ally Financial Inc., Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. – is now said to include $5 billion in cash penalties, along with the requirement to produce $3 billion in mortgage refinances. Other aspects of the settlement are said to include principal reductions and other forms of aids to struggling homeowners. The top servicers would be released from certain claims having to do with loan servicing and origination, according to the reports – but to what extent exactly remains unclear. And there would be no release from claims related to mortgage securitization.

Last week, the 14 mortgage servicers covered by the enforcement actions taken by the banking regulators in April 2011 began mailing letters to eligible borrowers that explain how to request a review of their case if they believe they suffered financial injury as a result of errors, misrepresentations or other deficiencies in foreclosure proceedings related to their primary residence between Jan. 1, 2009, and Dec. 31, 2010. Borrowers may also visit www.IndependentForeclosureReview.com for more information about the review and claim process. Assistance with requesting a review and answers to questions about the process are available. Requests for review by the servicers’ independent consultants must be received by April 30, 2012. As part of the enforcement actions taken by the Federal Reserve, the Office of the Comptroller of the Currency and the Office of Thrift Supervision, the servicers had to correct deficiencies in their servicing and foreclosure processes and to enlist independent firms to conduct a multi-faceted independent review of foreclosure actions taken during 2009 and 2010.

The Federal Housing Finance Agency late last month announced a number of changes to the federal government’s Home Affordable Refinance Program for underwater borrowers with mortgages from Fannie Mae and Freddie Mac. But one important little detail that escaped the attention of many has to do with the borrower loss of non-recourse loan protections for borrowers who refinance. Millions of Americans live in states that have such protections that could keep them from being personally liable in the event of a default. But in many of these states, refinancing removes those protections – enabling a lender to pursue tens or hundreds of thousands of dollars more than they would legally have been entitled to without the refinance.