The Treasury Department this week announced that it is withholding servicer incentive payments for the three largest lenders in the industry following compliance reviews that found them needing significant improvement in their Home Affordable Modification Program activity. The three servicers – Bank of America, JPMorgan Chase and Wells Fargo – each typically collect about $7 million a month in servicer compensation for non-agency mortgages, according to an Inside Mortgage Trends analysis of Treasury data. Treasury found a fourth servicer – Ocwen Financial – was also in need of...[contains one data chart]

Servicers must achieve “quality right-party contact” (QRPC) with borrowers as a means of determining a delinquent homeowner’s willingness and ability to pay his mortgage under new standards Fannie Mae has laid out regarding the management of loans in danger of default.Fannie’s issuance of servicing standards this week is in compliance with the Federal Housing Finance Agency’s Servicing Alignment Initiative announced in late April to establish consistent mortgage loan servicing and management requirements for servicers acting on behalf of Fannie and Freddie Mac.

The states and the federal government continue to rack up some key legal settlements with various mortgage servicers. One such settlement was brought about by the Ohio Attorney General and the state Department of Commerce against Carrington Mortgage Services involving a lawsuit that was filed against the subprime servicer back in 2009. The two Ohio agencies and Carrington agreed to mortgage servicing standards that will apply...

Bank of America and Saxon Mortgage Services last week agreed to separate settlements with the Department of Justice over allegations the firms wrongfully foreclosed on active-duty members of the U.S. military in violation of the Servicemembers Civil Relief Act of 2003.The federal government wants the settlements to function as a compliance model for other servicers addressing foreclosure-related issues involving borrowers actively serving in the military.BAC Home Loans Servicing LP, the former Countrywide Home Loans Servicing LP, agreed to pay $20 million to resolve...

Facing significant penalties from investigations by the Securities and Exchange Commission, Wall Street banks are bracing for investigations of their securitization activities by the influential New York attorney general’s office and other state regulators. NY Attorney General Eric Schneiderman has reportedly launched an investigation into the securitization processes of Bank of America, Morgan Stanley, Goldman Sachs, JPMorgan Chase, UBS and Deutsche Bank. All the parties declined to comment, but reports say that the AG is looking into how the banks securitized mortgage loans, as well as their other practices handling mortgage loans. Specific concerns have...

Nationstar Mortgage Holdings aims to raise $400 million through the sale of common stock to finance new growth opportunities in subservicing delinquent home loans, as well as in originating and securitizing new mortgages. Texas-based Nationstar, the home finance unit of Fortress Investment Group, announced the filing of an initial public offering with the Securities and Exchange Commission. Nationstar said it sees opportunities in the current residential mortgage market for non-bank servicers to grow their portfolios by acquiring mortgage servicing rights, entering into subservicing contracts and by assuming responsibilities for...

Lenders clamoring for a hand hold around the slippery issue of “strategic defaulters” do have options in the form of technology and legal leverage to tackle the issue even as the problem may not be as pronounced as first thought, say experts. The problem of borrowers who otherwise have the capacity to make their mortgage payments but instead opt to walk away from the loan was once a fringe issue in the industry. But strategic default became a bigger concern as more and more borrowers found they owed more on their home than the house was worth, according to Brent Taggart, senior vice president at Green River Capital, a Utah-based real estate owned management and...

Mortgage servicers have made little headway trying to de-bunk the widespread belief that foreclosures are profitable transactions for lenders, but a new Mortgage Bankers Association report tries to explain the impact of defaults on servicing income. Servicing advances are reimbursed when a modification is completed within 45 days, the study notes. Because they occur earlier than a foreclosure, mods limit the amount of money the servicer has to advance to investors on delinquent accounts, the trade group said. “The servicer’s reimbursement is at the top of the waterfall, meaning the servicer’s advances, which may have been from...

Mortgage delinquency rates improved in almost all categories, and although they’re still high, it could signal a positive turning point, according to recent reports. The Inside Mortgage Finance Larger Servicer Delinquency Index showed an overall delinquency rate at 10.27 percent in the first quarter, down from 11.25 percent in 4Q10, and the lowest seen since the 9.39 percent rate in 1Q09. Improvements were seen in every category of delinquency from last quarter. Loans 30-60 days delinquent went from 2.81 percent to 2.41 percent, 60-90 days delinquent from 1.25 percent to 1.01 percent and loans over 90 days delinquent from... [Includes one data chart]

California Attorney General Kamala Harris this week announced a new mortgage-fraud investigating force to monitor and prosecute deviations from the mortgage processes required by law. The new group, called the California Attorney General’s Mortgage Fraud Strike Force, will be composed of attorneys and investigators from the state Department of Justice (both civil and criminal), and will oversee processes such as mortgage loan origination and the way mortgage-backed securities are marketed to investors. “We will work to safeguard the homeowner at every step of the process – from origination of a loan to its securitization – and we will...