Bank of America’s commitment to set aside $20.4 billion to address a big chunk of its exposure to the mortgage debacle it acquired when it bought Countrywide Financial may point toward evolving new servicing standards for the industry at large. But officials acknowledge that it’s hard to estimate the risk of future buyback costs, especially as the policies of Fannie Mae and Freddie Mac continue to change and other litigation – including nego-tiations with state attorneys general – is still pending. BofA agreed to pay $8.5 billion to settle representations and warranties claims and ...

The home purchase mortgage market remained anemic in May as many would-be homebuyers remained on the sidelines for the start of the historically stronger summer home purchase season. And to make matters worse, a combination of tough mortgage underwriting and a high level of distressed properties continued to push up cash sales. According to new numbers released by the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, cash sales accounted for 31.3 percent of the home purchase transactions in May. That was up from 30.1 percent in April and represented the ... [includes one graph]

The challenges confronting the recovery of the non-agency MBS market are many, but legacy issues, such as representations and warranties, are the cause of huge frustration in the industry, according to panelists at the American Securitization Forum this week. “Some of these legacy issues have very far-reaching tentacles,” observed Mani Sabapathi, principal at Prudential Fixed Income. The housing finance world has been bracing for the coming risk-retention rule with great apprehension, he said, raising the possibility that reps and warrants could be included as a part of it. “I think it can be an important aspect to the extent that if you have these loans that don’t meet...

Mortgage servicers are being squeezed by inadequate compensation, intense scrutiny and a surge of new regulation, but Fannie Mae and the Treasury Department say they are trying to even the score. Servicers no longer see their job as financially rewarding and have been leaving their positions accordingly, claimed Diane Pendley, managing director of Fitch Ratings, during a panel session at this week’s annual meeting of the American Securitization Forum. “We’re seeing them fighting – they’re coming out swinging, just really to get some balance,” echoed Gwen Muse-Evans, vice president and chief risk officer at Fannie Mae. “There’s definitely a perception that...

Earnings reports from nine mortgage banking operations suggest that servicing operations played a major part in the industry’s sharp downturn in profitability during the first quarter. But a new Inside Mortgage Trends analysis also identifies weakness in loan production operations and declining origination volume as key factors. The nine lenders, including the three largest firms and seven of the top 10 originators, posted a combined $1.726 billion in net servicing income during the first quarter of this year. That was down ... [includes one data chart]

Purchasers of distressed mortgages or residuals seeking to service their own portfolio but not wanting to build or buy a servicing platform may take advantage of Ocwen Financial’s new product, PlatformPlus. PlatformPlus is a turnkey servicing operation specially designed for investors in nonperforming mortgages or residuals of non-agency securities that want to get more value from their loans. In discussions with hedge funds and other investors in distressed assets, Ocwen Financial found a desire among these entities for special servicing technology and expertise without having to ...

Fannie Mae is loosening its loan modification requirements regarding “imminent default” by changing its requirements for evaluating a borrower’s financial condition for consideration of a loan modification.According to Announcement SVC-2011-06, the GSE’s revised policy would make the Home Affordable Modification Program less stringent by including non-HAMP modification evaluations for borrowers who are either current or in default but less than 60 days delinquent.

A federal judge in Washington dismissed a class action lawsuit over the Home Affordable Modification Program this week, ruling that a group of New York homeowners lacked the standing to sue their mortgage servicer, as well as Fannie Mae and the Treasury Department.

In an apparent victory for the mortgage industry, the Senate has set aside amendments to an economic development bill that would have established national standards for mortgage servicers and changed the way the FHA collects interest payments on prepaid FHA-insured mortgage loans. The Mortgage Bankers Association and the American Bankers Association warned legislators that adoption of the amendments would be...

Nearly a year after the Dodd-Frank Act authorized $1 billion in funding, the Department of Housing and Urban Development announced the start of the Emergency Homeowners’ Loan Program this week, offering mortgage aid to unemployed homeowners in 28 U.S. states and Puerto Rico. The EHLP is to aid homeowners who, due to a reduction in income, are unemployed or underemployed and at risk of foreclosure. The program is administered...