PHH Corp. over the last month has felt the pinch of being the largest mortgage banking business not associated with a depository institution as it faced some setbacks in lining up financing for its operations. The company this week priced a $220 million offering of 6.00 percent convertible senior notes that is being co-managed by JPMorgan Securities and BofA Merrill Lynch. That was up from the $150 million offering originally announced, and PHH gave the underwriters the option to purchase an additional $30 million. PHH will use the money to pay off $250 million of 4.00 percent convertible senior...

Mortgage insurer United Guaranty Corp. says it is offering lenders a high-quality, semi-automated independent file review as their first line of defense against rescission and loan buybacks. Dubbed CoverEdge, the product is essentially a second-look tool developed by UG to catch and fix underwriting errors and identify missing documents to avoid denial of payment claims on mortgages gone bad as well as repurchase demands. CoverEdge’s comprehensive credit and documentation analysis at loan origination and post-closing seeks to avoid misrepresentation and fraud. It also provides a repository...

It started last week with an unsolicited white paper outlining “a framework for thinking about certain issues and tradeoffs that policymakers might consider” and blossomed into a coordinated assault by the Federal Reserve on the housing slump that won’t go away. Having purchased over $1 trillion in mortgage securities in an effort to drive mortgage interest rates to all-time lows, the Fed appears to be using its speechmaking and paper-writing powers to try to get the rest of Washington moving on housing. In addition to the policy paper, Fed officials in the past week have made three speeches on...

The securitization market produced $1.182 trillion of new residential MBS in 2011, a sharp 16.6 percent decline from the year before, according to a new Inside MBS & ABS analysis. Despite a strong finish in the fourth quarter, when MBS production rose 33.8 percent from the previous three-month period, mortgage securitization activity fell for the second year in a row and reached the lowest annual output in over a decade. The non-mortgage ABS market was relatively stronger. Total issuance for the year came to $126.8 billion, a 15.7 percent increase over 2010. Most of the...(Includes one data chart)

Fannie Mae and Freddie Mac this week advised lenders that they will increase the guarantee fees they charge on all mortgage products by 10 basis points starting April 1, the result of a money-raising scheme enacted by Congress in the waning hours of the 2011 legislative session. A 10 bps point hike in fees charged by the government-sponsored enterprises may have a nominal effect at first, but the long-term implications are more significant. Politically, the increased fees will not be used to cover losses incurred by Fannie and Freddie – or even to repay the government’s costs incurred to...

Business was booming at Fannie Mae and Freddie Mac during the just-completed fourth quarter of 2011, with total single-family mortgage securitization jumping 47.4 percent from the previous period, according to a new analysis and ranking by Inside Mortgage Finance. The two government-sponsored enterprises pumped out a combined $261.2 billion in single-family mortgage-backed securities during the final three months of the year. That was the highest quarterly production level of the year, but it still came up 21.2 percent short of the volume generated....(Includes three data charts)

There’s a very good chance the final disposition of securities fraud charges leveled by the Securities and Exchange Commission against six former Fannie Mae and Freddie Mac top executives could be determined at trial rather than by a pre-trial settlement, thanks in part to a recent adverse SEC court decision, according to one legal expert. On Dec. 16, the SEC filed suit in the U.S. District Court for the Southern District of New York, alleging that former Fannie and Freddie executives made material misstatements to the public, investors and the media about the two government-sponsored...

The MGIC Investment Corp. has announced a $200 million capital contribution to its principal mortgage insurance provider, Mortgage Guaranty Insurance Corp., to enable it to continue writing new business and meet statutory capital requirements. The cash infusion was made as Fannie Mae’s approval of the MGIC Indemnity Corp. (MIC) as an eligible mortgage insurer expired on Dec. 31. A regulatory waiver of capital requirements issued by the Wisconsin Office of the Commissioner of Insurance (OCI) two years ago also lapsed on the same date. The MIC and the regulatory waivers are part of a strategy to...

There are new signs of life in the market for mortgage servicing rights, where observers suggest real estate investment trusts could become significant buyers and the government-sponsored enterprises are facilitating more transfer activity. Newcastle Investment Corp. recently announced a $44 million investment in excess mortgage servicing rights, done jointly with Nationstar Mortgage, a mortgage special servicer. Both companies are affiliates of Fortress Investment Group, a global investment management firm. Newcastle, a commercial mortgage real estate investment trust, acquired 65 percent...

The one category of distressed loan that the federal government has the most control over – mortgages insured by the FHA and VA – continues to show the worst success rates for loan modifications. After 12 months of post-modification seasoning, over half (51 percent) of government-insured loans were 60 days or more past due, according to a report issued this week by the Office of the Comptroller of the Currency. That compared to an overall 60+ re-default rate of 39 percent. Fannie Mae and Freddie Mac mortgages, along with loans held in the servicer’s portfolio, showed the best...