A federal bankruptcy judge last week ruled against increasing Lehman Brothers’ reserves for residential MBS claims. The ruling by Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District of New York was a setback for investors and trustees who asked the court in August to increase Lehman’s current reserves of $5 billion to $12.1 billion in a bid to force the defunct investment bank to repurchase legacy MBS., according to a Barclay’s Research report. The lawsuit against Lehman alleges...

The number of issuers offering jumbo mortgage-backed securities will increase in 2015, according to analysts at various rating services, but total issuance volume isn’t expected to grow by much compared with this year. Attracting investors willing to purchase AAA tranches of jumbo MBS remains a key obstacle. Some $5.4 billion in jumbo MBS were issued during the first three quarters in 2014, according to Inside Nonconforming Markets, including $3.1 billion in the third quarter ...

The Inspector General of the Department of Housing and Urban Development has announced a $300 million recovery from an earlier settlement between SunTrust Mortgage and the Department of Justice, Consumer Financial Protection Bureau, the HUD Office of the Inspector General, and 50 state attorneys general. The settlement resolved allegations of violations of FHA requirements in a joint complaint filed on June 14, 2014, by federal and state enforcement agencies. The suit against SunTrust alleged misconduct related to the origination and servicing of single-family residential mortgages. The problem loans were uncovered during a routine OIG review of targeted FHA-insured loans. According to the suit, as an FHA direct endorsement lender, SunTrust certified poorly underwritten loans for FHA insurance from January 2006 through March 2012, despite its knowledge of ...

Ocwen Financial’s dry spell of acquiring nonperforming FHA loans out of Ginnie Mae mortgage-backed securities pools ended in early December with the nonbank servicing giant buying $253.1 million of delinquent product. Speculation, however, is mounting that Ocwen may not be long for the Ginnie Mae business, at least as a servicer. Ocwen’s disclosure of the “early” FHA buyouts came 11 days after it sold to an undisclosed buyer. In the first quarter, the company engaged in $646 million of early buyouts (EBO) and followed up with a $490 million EBO deal in the second quarter. However, EBO volume fell to zero in the third quarter. The December acquisition came in one fell swoop raising cautious, short-term expectations at Ocwen. “We expect to execute more such purchases in the next few months, as long as market conditions are favorable,” said Chief Investment Officer John Britti. As fast as it had ...

The Mortgage Bankers Association this week declined to participate in a panel discussion on FHA hosted by the American Enterprise Institute because the trade group did not believe the discussion would be balanced and though it would favor only a certain point of view. The topic was “FHA from 1934 to 1938: Lessons for Wealth Building,” with Ed Pinto, a resident fellow at AEI, and Dave Stevens, MBA president, as presenters. Stevens, however, decided to pull out of the event when he saw the format. In a letter to the AEI organizers, Stevens said he agreed to be a presenter thinking the debate “would be a balanced approach.” “When I first agreed to do this, I did not expect that the format would be 45 minutes of [Ed Pinto] and then no more than 12 minutes for me to respond,” he wrote. “That’s an extremely lopsided approach that did not appear to be ...

The nation’s subservicers, as a whole, reported a modest decline in their business volume during the third quarter, though some firms experienced large declines compared to a year ago, according to exclusive survey figures from Inside Mortgage Finance. The biggest year-over-year decline came at Bank of America, which had just $5 billion in subservicing contracts at Sept. 30, a 78.3 percent drop compared to the same period last year. BofA’s decline in the subservicing sector is...[Includes one data chart]

Lenders are likely to shift some of their business away from the government-sponsored enterprises and into the non-agency market in the coming years, regardless of GSE reform efforts, according to a report released this week by the Congressional Budget Office. “With house prices expected to trend upward, the balance sheets of lenders and investors should improve, as should borrowers’ financial positions,” the nonpartisan provider of analysis for Congress said. “Consequently, CBO projects that private companies will become more willing to make new loans and demand lower fees to compensate for the credit risks they take, which will reduce Fannie Mae and Freddie Mac’s pricing advantage over their private competitors.” If the private sector bears more mortgage credit risk, the CBO said...

Ginnie Mae approved the transfer of $66.06 billion in mortgage servicing rights during fiscal year 2014, a 56.5 percent tumble from the prior year as “mega” MSR transactions hit the skids. In fiscal 2012, just $25.39 billion in Ginnie product changed hands, but the market heated up significantly with $152.22 billion transferred in 2013. As always, transfers can be...[Includes one data chart]

As the share of investors purchasing homes declines, mortgage financing continues to take market share from cash financing for home purchases, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Non-cash financing was used on 72.4 percent of home purchases in November, based on a three-month moving average. That’s up from a 70.7 percent share in November 2013 and a share as low as 66.9 percent in March 2012. Prior to the housing crisis, the non-cash share of total home sales averaged...

President Obama this week signed a comprehensive package of spending bills, providing funding to federal agencies through fiscal 2015 but missing two initiatives that would have toughened FHA enforcement and benefited new homeowners through enhanced housing counseling. The FY 2015 Consolidated and Further Continuing Appropriations Act is comprised of 11 funding bills for all federal agencies, including the Department of Housing and Urban Development. The bill provides...