Overlooking investor overlays in mortgage loan underwriting can be quite costly and could expose lenders to regulatory risk and liability. iServe Residential Lending, a retail mortgage banker in San Diego, believes it has found the ultimate solution to its underwriting problems, especially with regards to investor overlays, including FHA, VA, Fannie Mae, Freddie Mac and Ginnie Mae. iServe, which originates conventional, government and jumbo loans, recently implemented PriceMyLoan, an automated underwriting and loan pricing tool from Insight Lending Solutions, the same folks who created TOTAL Scorecard for FHA. “PriceMyLoan is the only system that...

A new Inside Mortgage Finance analysis reveals that the proposed qualified residential mortgage standard drafted earlier this year by federal regulators would affect individual mortgage originators in dramatically different ways. As the regulators acknowledged in their proposed rule, a significant share of Fannie Mae and Freddie Mac loans originated through 2009 would not meet new standards for loan-to-value ratios, borrower credit history, debt-to-income ratio and other factors. Most loans being sold to the government-sponsored enterprises under today’s pristine underwriting and pricing policies also would fail to meet the... [Includes one data chart]

High-risk mortgages securitized by Fannie Mae and Freddie Mac continued to drag down earnings for the government-sponsored enterprises in the first quarter of 2011, forcing the two GSEs to go deeper into debt to the federal government. Fannie and Freddie lost a combined $13.0 billion on their mortgage-backed security guarantee programs during the first quarter, a significant deterioration from the $6.6 billion the GSEs lost during the previous quarter, according to the Federal Housing Finance Agency’s latest conservatorship report. Since the beginning of 2008 through the first quarter of 2011, Fannie and Freddie have burned through...

Residential mortgage securitization activity fell sharply during the second quarter of 2011, reaching its lowest level since the low point in the financial market meltdown of 2008. A new analysis by Inside MBS & ABS reveals that only $245.9 billion of single-family MBS were issued during the second quarter of this year, a sharp 31.0 percent downturn from the first three months of 2011. Second quarter MBS issuance wasn’t much stronger than the $222.3 billion of MBS issued back in the fourth quarter of 2008, and to find a lower quarterly issuance volume you have to go ... [includes one data chart]

Although 22 large investors and Bank of America think they reached a reasonable deal to resolve massive buyback claims on some $221 billion of outstanding Countrywide non-agency MBS, some outside analysts and other investors aren’t so sure. The pending agreement, which has to be approved by the court, requires Bank of America to pay $8.5 billion that would be distributed according to the deals that suffered the biggest losses. In return, the bank would get significant ...

The Consumer Financial Protection Bureau is ready to take mortgage servicing by the lapels when it formally opens on July 21, according to an official testifying at a House Financial Services Committee hearing this week – calling the initiative a “priority” for the new agency that faces a heavy load of new duties and authorities. One of the flaws in the regulatory structure is the lack of federal servicing standards, said Raj Date, associate director of depositor and consumer protection at the new agency. Servicing has been a key issue in some MBS investor lawsuits, and many have ...

Fitch Ratings has updated its criteria for non-agency MBS, making changes to its standards for representations and warranties, due diligence and originator reviews to better determine credit risk for new issues. Three separate reports released last week revise existing criteria the rating agency created in 2008. “Originator reviews, loan-level due diligence results, and the quality of representations and war-ranties to a transaction are key elements of ...

Ally Financial, Inc., a major mortgage and automotive lender, said it expects to take a second-quarter charge of approximately $100 million for mortgage losses incurred by certain securitization trusts even as it disclosed new investigations by the Securities and Exchange Commission and the Department of Justice. Ally made the disclosures in an amended prospectus filed with the SEC recently proposing the sale of $100 million shares of the company’s common stock. According to the disclosure, $152 million was paid to the trusts during the second quarter to cover ...

Washington Mutual and its former officers, directors, underwriters and auditor late last week agreed to a $208.5 million settlement on one of the largest class-action lawsuits stemming from the financial crisis, according to court documents. In exchange, the plaintiffs would dismiss all claims against the defendants. The lead plaintiff and lead counsel said that this proposed settlement represents “an excellent result and are in the best interests of the class,” according to court documents. The case was consolidated from about 20 plaintiffs who claimed the bank quietly reduced lending standards to inflate home-price appraisals and was not open with customers when loans began to fail

Fannie Mae and Freddie Mac issued $154.95 billion in single-family mortgage-backed securities during the second quarter of 2011, a 40.6 percent drop from the first three months of the year.The recent April-June cycle represented the second straight quarterly decline in business volume since the fourth quarter 2010 surge when the two GSEs issued $331.5 billion in MBS.