The Obama administration is seeking ideas from stakeholders on how to thin out the FHA’s inventory of foreclosed homes, including turning the homes into rental properties to meet the growing need for affordable housing. In addition to addressing the FHA’s real estate-owned, or REO, problem, the Federal Housing Finance Agency, the Department of the Treasury and the Department of Housing and Urban Development are also calling for recommendations for similar home rental programs for REO properties held by Fannie Mae and Freddie Mac. The agencies’ request is aimed at finding the best alternative for “maximizing value to taxpayers and increasing private investment in the housing market, including ...

The Department of Housing and Urban Development’s Office of the Inspector General called for improvements in the servicing of Home Equity Conversion Mortgage loans, particularly in detecting and reporting fraud, after auditors discovered certain advance payments that were made after the borrowers were reported to have died. Although most of the suspicious payments were due to posting errors, some transactions raised red flags, the IG report said. There was no evidence that servicers had sent those potentially fraudulent cases to HUD for further action, it added. The anomalies were found during a routine OIG audit of the HECM program, which insures ...

The Department of Housing and Urban Development has developed a new Web-based tool which allows FHA, Fannie Mae and Freddie Mac to map all foreclosed properties for viewing by potential investors and homebuyers. The new mapping tool displays the location of all foreclosed homes in the agencies’ inventories, which account for nearly half of all real estate-owned or REO properties in the U.S. Communities with high foreclosure rates that are participating in HUD’s Neighborhood Stabilization Program (NSP) will find the REO portal useful in targeting federal funds to acquire, rehabilitate or demolish these REO properties, according to department officials. The map’s consolidated graphic listing enables ...

Bank of America and Wells Fargo continued to be the dominant FHA mortgage servicers in a market continuously plagued by high default rates. As of the 2011 midyear mark, the megabanks held 3.86 million in FHA-insured loans in their combined portfolios, giving them a commanding 54.9 percent share of the FHA servicing market, according to Inside FHA Lending’s latest analysis of Neighborhood Watch data. Including BofA and Wells Fargo, the top 50 FHA servicers accounted for 97.3 percent of the market or a total of 6.83 million FHA loans as of June 30. The total for FHA servicing was 7.02 million over the six-month period. The percentage of FHA loans that were 30-60 days delinquent was ... [Includes one data chart]

Mortgage servicing turned more profitable during the second quarter of 2011, according to a new analysis by Inside Mortgage Trends. The story is less clear on the production side of the business because of the mammoth loss reported by Bank of America. Net servicing profits for a group of nine major lenders rose 20.2 percent from the first quarter, reaching $2.08 billion. While that was a significant improvement over the $1.73 billion they earned on servicing in the first three months of the year, it was the second ... [contains one data chart]

Allowing investors to purchase distressed properties in bulk will help ease the bloated housing inventory, stabilize home prices, increase affordable housing and reinvigorate the sagging housing market, according to a recent Morgan Stanley report. Bulk sales, along with lease-back programs and other incentives, can help avert a growing crisis in housing triggered by the worst financial collapse since the Great Depression, concluded Morgan Stanley’s housing analysts. Strict underwriting has tightened mortgage credit, making home purchases more ...

The consensus among mortgage market watchers is that the downgrade earlier this month of the GSEs by Standard & Poor’s will have no immediate, detrimental impact even as Fitch Ratings this week said it is keeping Fannie Mae and Freddie Mac’s “AAA” rating.Fitch this week also said its outlook for Fannie and Freddie’s ratings remained “stable.” The move was in concert with Fitch’s decision to keep its rating on U.S. debt at the highest grade.“A key element of the explicit support is the guarantee by the U.S. Treasury to inject funds into Fannie Mae and Freddie Mac, so that each firm can avoid being considered technically insolvent by their regulator,” said the rating agency.

Fannie Mae, Freddie Mac and three federal agencies are cranking up existing efforts to dispose of the GSEs’ ample real estate owned inventory of homes into overdrive by seeking investors’ ideas for converting thousands of REO properties into rentals.Last week, the Federal Housing Finance Agency, the Treasury Department and the Department of Housing and Urban Development put out a “request for information” on how best to sell GSE and FHA-owned REO properties.

A report issued late last week by the Federal Housing Finance Agency Office of Inspector General has concluded that the FHFA did nothing to subvert its role as Fannie Mae and Freddie Mac’s regulator when the agency negotiated the GSEs’ administrative responsibilities under the Treasury Department’s Home Affordable Modification Program.However, the FHFA-OIG noted there was ample room for improvement in the Finance Agency’s oversight of the GSEs’ financial agency agreement (FAA) with Treasury, which resulted in poor communication and differing expectations as to the payment and scope of the HAMP-related work that the GSEs performed.

One of the most important issues for mortgage lenders and homebuyers alike in the whole qualified mortgage/risk-retention/ability-to-repay debate is how much legal liability lenders will have over the mortgages they originate in the Dodd-Frank era. For policymakers, one of the biggest decisions they will have to make to bring certainty to that question is which legal standard to impose, a “rebuttable presumption” or a “safe harbor.” …