Goldman Sachs has been ordered to retain an independent consultant to review foreclosure proceedings initiated by its former subsidiary, Litton Loan Servicing LP, under a formal enforcement action announced by the Federal Reserve Board last week. The firm was also required to provide financial remediation to affected borrowers. Additional monetary penalties are likely to be announced shortly. The Fed said it was acting against Goldman Sachs “to address a pattern of misconduct and negligence relating to deficient practices in residential mortgage loan servicing and foreclosure processing” involving Litton. Goldman sold...

The Department of Housing and Urban Development is pondering its next move after discussing with mortgage industry representatives their concerns about extending the current forbearance period for unemployed homeowners to a maximum of 12 months. HUD and FHA officials met recently with the Mortgage Bankers Association and several small mortgage servicers, which took issue with FHA’s recently revised forbearance policy. HUD declined to discuss the outcome of the meeting, saying it was more about understanding the industry’s concerns and discussing solutions. “No decision has been made as to whether we can or will make any changes, but we are looking into the issues they have raised,” said a HUD spokesman. On July 7, the FHA announced ...

Recent changes to Ginnie Mae’s repurchase policy are getting positive reviews from analysts. Announced on Aug. 26, the revised loan buyout policy will make it easier for servicers and issuers to buy delinquent home loans out of Ginnie Mae pools without having to wait 90 days for the loan to become eligible for repurchase. Before the change, pool repurchases were allowed only if a borrower missed three consecutive mortgage payments. Under the revised policy, issuers can buy delinquent loans out of the pool while the borrower is making partial payments under an FHA or VA trial payment plan as a prerequisite for a permanent modification. On the surface, the revised policy would appear ...

As part of a new jobs and economic growth plan to be announced this week, the White House is expected to include a bid to invigorate a mortgage refinance effort that has failed to live up to expectations. Most observers think the Obama administration will opt for targeted changes to the Home Affordable Refinance Program. In a speech last week, Federal Reserve Board Governor Elizabeth Duke said HARP has been only marginally effective despite Fed estimates that as many as 4 million borrowers meet HARP’s basic eligibility requirements. Through the end of June, some 830,552 borrowers had refinanced their home loans under HARP, which allows... [Includes one data chart]

Despite a continuing glut of distressed properties in the housing market, investors have started dialing back their purchase activity. And the primary reason appears to be a shifting business model that is forcing investors – at least for the time being – to rent rather than flip properties. That’s one of the major findings of the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which found that the investor share of home purchase transactions slipped to 19.6 percent in July. That was not only down from 21.3 percent in June but also the lowest investor market share recorded in a year. The inability of most investors to...

Iowa Attorney General Tom Miller this week sought to allay concerns of the New York congressional delegation, denying that Empire State’s attorney general was ousted from an executive committee negotiating a nationwide foreclosure settlement with major banks to silence legitimate opposition. Responding to a letter from NY House Democrats, Miller said New York AG Eric Schneiderman was invited to join the core negotiating team of state AGs in June but refused. Miller, who is leading the negotiations, said Schneiderman “voluntarily” walked away from the negotiating table to “pursue another path.” Miller said Schneiderman was asked to...

Any modified FHA or VA loan can now be repurchased from a Ginnie Mae MBS if the borrower successfully completes a three-month trial period under a policy shift to align with the FHA version of the Home Affordable Modification Program. Ginnie made the announcement on Aug. 26, effective immediately. Before the policy change, loans had to have missed three full payments before qualifying for a repurchase. Issuers can buy out loans that have remained in pools while borrowers made partial payments for at least three consecutive months under an FHA or VA trial payment plan that is a condition to a permanent modification, Ginnie explained. “Until the loan has been...

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 financial crisis and the housing meltdown have cast unprecedented doubt about the virtue of homeownership, and many experts at a conference sponsored this week by the Federal Reserve acknowledged that homeownership has lost its universal appeal. “For low-income households I do think it’s more risky because it’s such a large share of their assets, such a large share of the wealth, so a price decline has a disproportionate effect,” explained Karen Pence, assistant director of the division of research and statistics for the Fed. “I think it’s more risky for low-income households just because it’s such a big part of their portfolio. I think it’s...

Default technology provider Commerce Velocity, based in Irvine, CA, recently upgraded its Optimizer solution to help servicer clients achieve the new requirements for Fannie Mae’s Quality Right Party Contact initiative. The original version of Optimizer enabled servicers to maximize cash flows from delinquencies, and enforce workout consistency throughout the default management process. By applying net present value calculations, cash flow projections, valuation models, and comprehensive workout guidelines, the technology provides “the most intelligent outcomes possible,” the company said. The Optimal Outcome module monitors...