Berkshire Hathaway and other new bidders are circling around the assets of Residential Capital, setting the stage for a showdown at the Southern District of New York Bankruptcy Court after the court approved the current way the mortgage unit is operating in bankruptcy. In a turn of events that has shaken the stability of ResCap’s initial bankruptcy plan that includes $8.7 billion to settle MBS investor lawsuits, Berkshire Hathaway objected to the current sale procedures in place, which have yet to be approved in court, in lieu of its own offer. The Nebraska-based conglomerate set the wheels in motion...

Mortgage companies reported strong gains in income from loan production and secondary marketing activity during the first quarter of 2012, according to a new Inside Mortgage Trends analysis of earnings reports filed by nine major lenders. Although the servicing business remained profitable during early 2012, income was down slightly from the fourth quarter of last year. All nine companies reported increased earnings on loan production and secondary marketing. As a group, they generated $4.84 billion in income from these activities, up 76.9 percent from...(Includes one data chart)

Banks reported higher fair market values on their mortgage servicing rights assets during the first quarter of 2012, according to a new Inside Mortgage Trends analysis of call report data. Financial institutions filing bank call reports said they serviced $5.786 trillion of single-family mortgages for other investors – mostly through mortgage securitization activities – as of the end of March. They put a fair market value on these MSR assets of $48.69 billion, or 0.841 percent of the unpaid principal balance. At the end of December, the ratio of MSR fair value to mortgages...(Includes one data chart)

The three federal banking agencies over the past week released proposed rules to implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act that many observers predict will influence bank participation in the mortgage market. The proposed changes would increase bank capital requirements and re-calibrate risk-based capital charges. One of the key changes stemming from the Basel III accord reached by international bank regulators would limit the amount of mortgage servicing rights, along with investments in certain non-consolidated entities and deferred taxes, to no more...

The agency mortgage servicing market continued to grow during the first three months of 2012, although there is some evidence that banks are beginning to pull back from the sector. The Federal Reserve late last week reported that the total supply of home mortgage debt outstanding fell by 0.9 percent during the first quarter. It marked the 16th consecutive quarterly decline since the first quarter of 2008, when the housing market began to crater. The agency estimated that $10.179 trillion of home loans were outstanding at the end of March, the lowest level since...(Includes three data charts)

Mortgage industry officials are anxious about the Consumer Financial Protection Bureau’s upcoming rulemaking on mortgage servicing and have provided some empirical data and a number of principles they think the bureau ought to follow. The American Bankers Association recently provided the CFPB with excerpts from its annual real estate survey to influence the CFPB’s determination as to whether it should exempt, in whole or in part, certain categories of servicers or servicing arrangements from the bureau’s upcoming servicing requirements. Of the 186 banks that participated, roughly 86 percent had assets of...

In the case of Brisbin v. Aurora Loan Services LLC, the U.S. Court of Appeals for the Eighth Circuit has ruled that a lender’s oral promise to postpone foreclosure is unenforceable; that is, that such a promise is a credit agreement that has to be in writing if it is to be enforceable. Borrower Alison Brisbin filed this lawsuit in Minnesota state court against Aurora Loan Services LLC, Mortgage Electronic Registration Systems Inc. and Freddie Mac, seeking legal and equitable relief from the foreclosure and sale of her home. She alleged three legal theories for invalidation of the...

Non-agency mortgage-backed security investors and politicians on both sides of the aisle were critical this week of the recent $25.0 billion servicing settlement. The settlement requires principal reduction loan modifications on mortgages held in five banks’ portfolios and allows the servicers to receive credit for reducing principal on mortgages in non-agency MBS. Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, noted that the Association of Mortgage Investors is not opposed to principal reduction mods ...

Most major non-agency servicers met the June 1 deadline for the start of Tier 2 of the Home Affordable Modification Program, according to the Treasury Department. While overall HAMP performance has improved, some non-agency servicers have more improvements to make. HAMP Tier 2 was designed to help borrowers with debt-to-income ratios below 31 percent as well as those with rental properties. The Treasury this week revealed the HAMP Tier 2 progress for 18 servicers. Bank of America, Green Tree Servicing and ...

BDO Consulting wa selected this week to serve as the primary professional firm to help oversee the recent $25.0 billion servicing settlement. More than 30 BDO professionals will work with the settlement’s monitor to oversee the settlement. BDO is a professional services firm providing assurance, tax, financial advisory and consulting services. The company has worked with large retail mortgage lenders and financial institutions, and conducted related assessments and investigations ... [Includes four briefs]