The Department of Housing and Urban Development’s Mortgagee Review Board has collected $1.9 million from Oct. 1, 2012, through June 30, 2013, from actions taken against FHA lenders. The MRB actions involved 30 lenders, of whom 15 agreed to settle and seven agreed to indemnify HUD for its losses, according to the board’s latest data. The indemnification agreement covered 166 FHA-insured loans, and 11 lenders lost their authority to participate in the FHA single-family mortgage program. Cases heard by the MRB involved infractions, such as failure to implement and maintain a quality control plan and to review early payment default loans, which resulted in ...

Wells Fargo claimed partial victory after a Manhattan federal district court judge dismissed certain claims against it in a government lawsuit alleging the bank lied about the quality of defaulted mortgages insured by the FHA. District Court Judge Jesse Furman ruled that legal injury claims based on events that happened prior to June 2009 were time-barred and that the government had waited too long to file a lawsuit. He also threw out claims of negligence and unjust enrichment. On the other hand, Furman let stand claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which the ...

HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

The FHA and the Department of Housing and Urban Development have already slipped into somewhat of a “power save” mode since substantial parts of the federal government were shut down early this week. The FHA will continue to endorse new loans under what it calls a “multi-year appropriation authority.” FHA Commissioner Carol Galante said the agency will continue to guarantee single-family loans during the shutdown, refuting earlier news accounts that were based on erroneous materials included in HUD’s shutdown contingency plan. “I do want to clear up any confusion about what this means for FHA single-family home borrowers. FHA will be able to endorse single-family loans during the shutdown,” Galante said. “A very limited number of staff will be available to endorse new loans.” Galante warned...

Large banks and some smaller shops continue to test the servicing sales market this fall, with bulk offerings from Citigroup and Flagstar garnering attention from investors. Industry advisors who track the market say Flagstar recently wrapped up bidding on a $12 billion package of mortgage servicing rights on newly originated loans. “These were pristine quality receivables, stuff that was funded over the past few months,” said one observer who saw the bid package. This summer, Flagstar – in an effort to capture the value of MSRs held on its balance sheet – sold...

The Federal Reserve’s relentless acquisition of agency MBS has been the biggest factor in the changing complexion of the MBS investor picture, far outstripping the tortoise-like pace at which the market has expanded this year. The Fed increased its agency MBS holdings by 12.8 percent during the second quarter of 2013, according to a new Inside MBS & ABS profile of investor classes in the mortgage securities market. The central bank added $137.2 billion to its agency MBS holdings during the quarter, and its gross acquisitions totaled $466.6 billion since the beginning of the year. That represented...[Includes two data charts]

Moody’s Investors Service this week warned of increasing complexity in the structures of new jumbo MBS. However, losses on the deals will only occur in “low probability scenarios” and issuers have yet to bring back all of the non-agency MBS features seen before the financial crisis. Moody’s said complex cash-flow structures in new jumbo MBS can increase risks on senior bonds in the event of high mortgage losses. The features include super-senior support bonds, exchangeable securities, principal-only bonds, and pool interest-only bonds. “These securities pose...

Investors are eager to get their hands on upcoming risk-sharing deals from Fannie Mae and Freddie Mac even though Freddie’s recent deal was unrated. According to interviews with investors in Freddie’s $500 million Structured Agency Credit Risk bond, 50 different companies bought into the deal with “at least 20 different investors in each tranche,” according to confidential research on the transaction supplied to Inside MBS & ABS. “Word has gotten around...

Rising prices for mortgage servicing rights in the second quarter of 2013 helped lure sellers to a market that continues to see a decline in available product and improving fundamentals. The Federal Reserve this week reported that the long, steady decline in home mortgage debt outstanding – a streak that has now run six and a half years – continued through the midway point in 2013. As of the end of June, home mortgage debt outstanding was down to $9.833 trillion, a 0.4 percent drop from March and a hefty 12.9 percent decline from the all-time high ($11.287 trillion) set back in March 2008. A new Inside Mortgage Finance analysis reveals...[Includes two data charts]

The Federal Home Loan Bank of Chicago has announced a partnership with Ginnie Mae to issue securities guaranteed by the secondary market agency and backed by home loans originated by member financial institutions. The new conduit product, “MPF Government Mortgage-Backed Securities,” provides another secondary mortgage market outlet for lenders originating mortgages insured by the FHA or guaranteed by the VA or the Rural Housing Service. Low-volume lenders that currently lack direct access to the secondary market are expected to benefit from the new FHLBank program. MPF GMBS would allow lenders to ... [1 chart]