Ocwen Financial has made a number of adjustments in recent months to better compete with other nonbank servicers. Perhaps most significantly, the special servicer has started to shift to an “equity light” business model. The shift occurred at the end of February when Home Loan Servicing Solutions completed a $186.2 million initial public offering. HLSS said it will use the proceeds to purchase the rights to receive servicing and other related fees, associated servicing advances and other related assets from Ocwen. HLSS was founded by William Erbey, chairman of Ocwen ...

Fannie Mae, Freddie Mac and the FHA accounted for 41.8 percent of the $84.66 billion in lending over the $417,000 threshold in 2011, the lowest share they’ve had since emergency loan limits went into effect in 2008, according to an analysis by affiliated publication Inside Mortgage Finance. The agency share of jumbo production peaked in the second half of 2009 at 53.1 percent.The government-sponsored enterprises and Ginnie Mae financed 36.6 percent of the loans exceeding $417,000 that were originated in the fourth quarter of 2011. That was down from a 42.7 percent agency share of the jumbo market in the third quarter of 2011 ... [Includes three briefs]

The FHA’s total capital resources dipped slightly by $400 million in the last three months of 2011, but things could have been much worse had it not been for lower claims activity, according to the FHA’s quarterly report to Congress on Mutual Mortgage Insurance Fund programs. On balance, the report shows little change and nothing unexpected during the quarter, said industry participants. The much-anticipated changes will come after two FHA premium adjustments become effective on April 1 – an annual mortgage insurance premium increase of 10 basis points and a 75 bps hike in upfront premiums, they said. The upfront premium increase is expected to ...

The Department of Housing and Urban Development has reminded mortgagees and servicers that it is illegal to use mortgage escrow funds for purposes other than those stated in federal regulation. In a recent FHA notice, HUD warned approved lenders and servicers against applying escrow funds to reduce the outstanding balance in the payoff amount of an existing loan. The department said it has not authorized the use of borrower money in escrow accounts for reasons other than making legitimate payments. Escrow funds are borrowers’ funds collected at ...

Banks will receive some release from liability for loan originations in the $25 billion mortgage settlement involving the industry’s five largest servicers, state attorneys general and the federal government, according to experts participating in an Inside Mortgage Finance webinar this week. While the settlement is often described as “landmark,” industry experts note that major components were drawn from a hodgepodge of federal and state initiatives. The detailed servicing standards, for example, are a “synthesized cut-and-paste” from sources including Office of the Comptroller of the Currency...

The mortgage industry told the Consumer Financial Protection Bureau that the recent state attorneys general settlement contains a robust set of consumer protections that ought to be used as the framework for developing national servicing standards. However, industry representatives expressed concern that such an initiative could create additional barriers to entry to the servicing business. “First and foremost, the AG settlement will provide substantial relief to homeowners and will establish significant new homeowner protections for the future,” the Mortgage Bankers Association said in a recent...

The steady decline in home loans outstanding in the market continued for a fourth straight year in 2011, with the total servicing market shrinking to $10.291 trillion. That was down 2.2 percent from the previous year. The only sector that has seen any growth was Ginnie Mae servicing, which increased 14.4 percent last year even though FHA lending has begun to taper off. The total supply of Fannie and Freddie servicing was down 1.1 percent and 4.0 percent, respectively, though they still account for the two largest components in the market, 27.9 and 17.3 percent of the amount...(Includes two data charts)

The recent Servicing Resolution Agreements signed by the nation’s top five mortgage servicers with the federal government and state attorneys general may have been clear on the cost of their key provisions but it is the enormous hidden costs of compliance that could bite the financial institutions in the long run, according to compliance experts. Following the recent announcement of the national servicing settlement, it is impossible to put an accurate dollar amount on the myriad things servicers need to do in order to comply, but experts agree that staffing, training, technological upgrades...

Home-equity lending in 2011 fell to its lowest level in more than 20 years as crumbling house prices and rigid underwriting continued to hammer away at second mortgage lending. Banks, savings institutions and credit unions reported a total of $803.6 billion of home-equity loans in their portfolios at the end of the year, down 7.2 percent from the previous December. Depository institutions accounted for the lion’s share, 92.1 percent, of the $873.0 billion home-equity market. Finance companies were the only other significant player in the market, with $49.0 billion at the...(Includes two data charts)

The settlements reached by five major mortgage servicers with a handful of states over their use of the Mortgage Electronic Registration System has not weakened the legal position of MERSCorp itself, according to industry experts. The new agreements signed by New York Attorney General Eric Schneiderman with Wells Fargo, Bank of America, JPMorgan Chase, Citigroup and Ally Financial has the banks paying a total of $25 million to the state in exchange for a release of further claims regarding the banks’ use of MERS throughout the servicing and foreclosure process and a pledge not to challenge...