A whopping 75.0 percent of eligible non-agency borrowers entering the Home Affordable Modification Program in September received principal reduction with their loan modification, according to the Treasury Department. The increased activity was prompted by higher incentive payments along with the $25.0 billion national servicing settlement, according to Treasury officials. Borrowers who meet general HAMP requirements and have a loan-to-value ratio greater than 115 percent are eligible for principal reduction ...

The five banks participating in the $25.0 billion national servicing settlement are on track to meet their obligations under the settlement – some two years ahead of the 2015 deadline – according to a report this week from the settlement’s monitor. Loss mitigation activity is focused on portfolio loans, though Bank of America has completed significant principal forgiveness on mortgages in non-agency mortgage-backed securities. The settlement requires $19.11 billion in consumer relief, and the participating servicers ...

Ocwen Financial’s agreement in October to purchase reverse mortgage lender Genworth Financial Home Equity Access was the latest in an effort by special servicers to diversify their portfolios with reverse mortgages. Nationstar Mortgage burst onto the scene at the beginning of the year to become the largest reverse mortgage servicer and Walter Investment Management recently purchased Reverse Mortgage Solutions. Servicing reverse mortgages is much different than dealing with the ...

Reactions were mixed in the mortgage industry and on Capitol Hill on the heels of an independent actuarial study that projected a deficit of $16.3 billion in the FHA insurance fund and a negative1.44 percent capital reserve ratio. The FY2012 annual actuarial report to Congress on the condition of the Mutual Mortgage Insurance Fund reignited the debate on whether the FHA’s solvency issues may be resolved without a taxpayer bailout. The capital reserve ratio dropped from 0.24 percent at the end of FY2011, which is already way below the ...

The Department of Housing and Urban Development is taking aggressive actions to mitigate the negative impact of future Home Equity Conversion Mortgage books of business on the FHA Mutual Mortgage Insurance Fund. HUD said changes in borrower use of the HECM program, particularly among younger users, and the modeling changes in the FY2012 actuarial review of the MMI Fund show substantial stress in the HECM program. Besides softening the impact of HECM losses on the fund, the department wants to ensure that consumers are better protected and able to sustain their reverse mortgages. While the MMI Fund’s economic value fell to ... [1 chart]

The Department of Housing and Urban Development has announced changes to existing loss mitigation options to reduce the number of claims against the FHA Mutual Mortgage Insurance Fund.The changes will benefit qualified, distressed FHA borrowers, who will be able to qualify for FHA loss mitigation interventions and get more help than what was allowed under previous guidelines. HUD has issued a mortgagee letter to amend existing FHA Home Affordable Modification Program guidelines, the definition of “special forbearance,” and loss mitigation-priority guidelines. Specifically, HUD eliminated the ...

FHA Loan Delinquencies Drop in 3Q. The number of delinquent loans with FHA insurance has dropped 75 basis points to 11.14 percent in the third quarter of 2012 from the previous quarter, according to the Mortgage Bankers Association’s latest delinquency and foreclosure rates survey. Foreclosure starts and the percentage of loans in foreclosure fell after a spike in the second quarter when some larger servicers restarted the foreclosure process after being stalled for more than a year by the “robo-signing” investigations and subsequent negotiations. Both rates, however, remain ...

The mortgage lending industry won a couple of key legal challenges recently, including an unusual claim brought under the Racketeer Influenced and Corrupt Organizations Act. In Cabrera v. Countrywide Financial, the U.S. District Court for the Northern District of California recently dismissed, without prejudice, most of the complaint brought by two borrowers who accused the mortgage lender of engaging in fraudulent loan practices in violation of the RICO Act. In July 2007, Manuel Cabrera received...

Wells Fargo is contesting a complaint filed by the federal government that alleges the bank falsely certified loans under the FHA’s Direct Endorsement Lender Program in violation of the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act. The Department of Justice and the Department of Housing and Urban Development are asserting that from May 2001 through October 2005, Wells regularly and knowingly participated in the reckless origination and underwriting of FHA loans...

CFPB Director Richard Cordray seemed to suggest recently the bureau is open to tightening restrictions on the mortgage servicing industry’s practice of “dual tracking,” by which servicers move forward with foreclosure proceedings while simultaneously evaluating a homeowner for possible loss mitigation alternatives. Appearing before attendees at a recent National Consumer Law Center Conference, Cordray conceded that the bureau has received pointed criticism from consumer advocates about its mortgage...