AIG and its mortgage insurance subsidiary United Guaranty Corp. are combining their investment expertise and knowledge of the mortgage market to purchase residential whole loan mortgages as investments. The initiative is in a pilot phase and limited in scope, according to UGC executives. Closed loans will be purchased individually from correspondent lenders and held in portfolio. There are no plans for direct lending or securitization, executives added. Loans targeted for purchase will be subject to ...

Private mortgage insurers lost a little collective market share to the FHA and VA during the first quarter, although that may have been simply a timing distortion, according to a new market analysis and ranking by Inside Mortgage Finance. The more groundbreaking news is that the surviving private MIs, as a group, probably turned a profit during the first quarter of 2013. The four publicly traded companies reported a combined loss on their domestic MI business of just $14.6 million during the first quarter of 2013. Essent Guaranty, the fifth-largest MI in terms of new business, is...

Most mortgage industry observers expect the Federal Housing Finance Agency to raise Fannie Mae and Freddie Mac guaranty fees by about 20 basis points this year, but many are convinced that the impact on market practices may be bigger than the magnetic effect on private capital. The FHFA has said it wants to raise g-fees to the point that private capital comes into the market, according to Paul Mullins, a senior vice president and interim head of single-family at Freddie Mac. During remarks at the secondary market conference sponsored by the Mortgage Bankers Association this week, he said “The odds are reasonably good you will see higher guaranty fees.” Already around 50 bps and twice their historic level, the fees charged...

The mortgage industry has a window of opportunity to improve the secondary market without having to wait years for Congress to deal with Fannie Mae and Freddie Mac, according to the leadership of the Mortgage Bankers Association, which this week announced a three-prong agenda that doesn’t depend on new legislation. The conservatorships of the two government-sponsored enterprises, which will be five years old in October, were intended to be a short “time out,” and there is still no endgame in sight or any plan for transition, said MBA President and CEO David Stevens, during the group’s secondary market conference in New York this week. Stevens outlined...

The three percent points-and-fees cap for qualified mortgages under the Consumer Financial Protection Bureau’s ability-to-repay rule is likely to push the private mortgage insurance industry away from products that emphasize upfront premiums and towards products built on monthly premiums. As the rule stands now, borrower-paid, non-refundable upfront MI premiums would be included in the points-and-fee calculation, but borrower-paid monthly MI premiums would not. There are two caveats: lenders may also exclude...

Overall FHA loan production dropped a tad during the first quarter of 2013 even as refinancing volume remained elevated, according to an Inside FHA Lending analysis of agency data. FHA lenders produced a total of $63.7 billion in new FHA-insured loans during the quarter, down 0.6 percent from the previous quarter but up 27.4 percent from the same period last year. FHA streamline refinancing rose 8.4 percent to $31.0 billion in the first quarter from the prior period. That was also up a whopping 97.8 percent from the same period last year. In a new report to Congress, the ... [2 charts]

The FHA paid out more in claims than it had collected in premiums and note and property sales as of Sept. 30, 2012, according to the Department of Housing and Urban Development’s quarterly report to Congress on the FHA Mutual Mortgage Insurance Fund. FHA disbursed $19.5 billion at the end of the third quarter last year mostly to pay claims and booked $16.7 billion in collections, resulting in an outflow of $2.8 billion, the report stated. Cash flows from operations over the last year covered 80 percent of default losses, the report noted. Premiums collected over four quarters ending Sept. 30, 2012, totaled ...

Wells Fargo will reportedly appeal a federal judge’s decision that a $25 billion agreement Wells and four other banks made with federal agencies and 49 state attorneys general last year to settle allegations of servicing malpractices does not make the banks immune to future claims under the False Claims Act. The Feb. 12 decision by Judge Rosemary Collyer of the U.S. District Court for the District of Columbia said that the landmark settlement she had approved in April 2012 does not release the from future False Claims Act claims the government may bring. Dating back to the U.S. Civil War, the FCA provides for treble damages for fraud that results in ...

The Department of Housing and Urban Development this week issued more detailed guidance to changes in the FHA Lender Insurance Program based on a final rule published in the Federal Register in January 2012. Under the LI program, high-performing direct endorsement lenders have the authority to conduct pre-endorsement reviews and endorse loans. Mortgagee Letter 2013-12 supersedes guidance HUD issued last month and provides additional details on initial and continuing eligibility for Lender Insurance. It also talks about HUD monitoring of program participants as well indemnification procedures, which were discussed in ...

Wall Street has unveiled policy proposals calling for premium and guaranty fee adjustments and reduced loan limits for FHA and the government-sponsored enterprises to jump start the return of private capital to the U.S. housing market. The American Securitization Forum said the current level of government activity in the mortgage market is neither sustainable nor advisable. The government, through FHA, Fannie Mae and Freddie Mac, directly or indirectly guarantees 90 to 95 percent of new mortgage originations in the country, the trade association said. While everyone agrees the government’s role in housing should be reduced over the long term, there is ...