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 ...

The FHA’s seriously delinquent rates and early payment defaults went virtually unchanged in the second quarter of 2012 from the previous quarter, according to the Department of Housing and Urban Development’s latest report on single-family programs covered by the FHA insurance fund. FHA data showed that the seriously delinquent rate for insured single-family mortgages (excluding streamline refinances) held at last quarter’s level of 9.4 percent, which is 1.4 percent higher than this period a year ago. The report attributed the elevated level to two factors. The first is the persistency of loans in 90-day delinquency as lenders try ...

Fixed-rate mortgages comprised most of August’s FHA production, which totaled $22.1 billion, up 13.2 percent from July and 37.9 percent from a year ago, according to an Inside FHA Lending analysis of FHA data. FRMs accounted for 98.9 percent of new loans with FHA insurance in August. In-house originations made up 79.6 percent of new endorsements while purchase loans accounted for 56.1 percent of FHA originations during the month. Wells Fargo is the only top FHA lender to exceed the billion-dollar mark. In fact, the bank reported $2.2 billion in new FHA originations, 76.0 percent of which were produced in-house. The purchase mortgage share of Well’s total FHA originations was ... [2 charts]

The FHA Short Sale program may have cost the Department of Housing and Urban Development more than $1 billion in ineligible claims but only a portion may actually be recovered, according to a report from HUD’s Office of the Inspector General. A HUD OIG audit estimated that the department paid $1.06 billion in claims for 11,693 preforeclosure sales that did not meet FHA’s criteria for participation in the program. The OIG said it began a nationwide review of the short sale program after finding significant deficiencies in borrower qualifications during an audit of CitiMortgage’s preforeclosure sale claims last year. Auditors found ...

The proposal by Fannie Mae’s and Freddie Mac’s regulator to levy extra guaranty fee charges on government-sponsored enterprise mortgages originated in five states that have unusually slow foreclosure timelines not only adds to the problems faced by small lenders but it’s also less than clear that it would be an effective part of the solution, say industry executives. If implemented as proposed, the Federal Housing Finance Agency would target five states – Connecticut, Florida, Illinois, New Jersey and New York – for an additional, one-shot guaranty fee of between 15 and 30 basis points that would take effect in 2013. “The size of the fee adjustments are intended...

The single-family mortgage market continued to shrink during the first half of 2012, registering the 13th consecutive quarterly decline in mortgage debt outstanding since early 2008. The Federal Reserve reported late last week that there were $10.028 trillion of single-family mortgages outstanding at the end of June. That was down 0.5 percent from the previous quarter and represented a cumulative 10.3 percent drop since March 2008. The supply of home mortgage debt fell to its lowest level since the midway point in 2006. There are two growth sectors, however. The supply of Ginnie Mae single-family servicing surged...[Includes one data chart]

Bank of America and its home loan servicing unit were accused of maintaining and marketing foreclosed homes in white neighborhoods in a much better manner than in African-American and Latino neighborhoods, in a complaint filed this week by the National Fair Housing Alliance. The investigation of 373 foreclosed homes owned or managed by BofA found the company “has engaged in a systemic practice of maintaining and marketing its foreclosed, bank-owned properties in a state of disrepair in communities of color while maintaining and marketing REO properties in predominantly white communities in a far superior manner,” the NFHA said. The complaint was filed with the Department of Housing and Urban Development by the NFHA and five other groups. The housing advocacy groups reviewed...

Fannie Mae’s High Touch Servicing Program, an initiative that utilizes specialty servicers to deal with at-risk borrowers to help reduce the number of defaults, is basically sound, but there are some issues with controls and cost savings, a new inspector general’s report found. “An internal audit conducted by Fannie Mae raised questions about the controls surrounding the High Touch Servicing Program, as well as the likelihood that it would achieve the projected savings,” the Federal Housing Finance Agency Office of Inspector General said in a report issued this week. “Fannie Mae relied...

Servicers take lower losses and area home prices take less of a hit when real estate owned properties are quickly liquidated, according to new research by analysts at the Federal Reserve and Fannie Mae. “Our results suggest that the key to minimizing the costs of foreclosure is to minimize the time that properties spend in serious delinquency and in REO,” the authors said in “Foreclosure Externalities: Some New Evidence,” a working paper published this month by the National Bureau of Economic Research ...