The Department of Housing and Urban Development is working in tandem with the Consumer Financial Protection Bureau to align servicing standards for both FHA and non-FHA mortgage loans. In a statement issued after the CFPB’s recent issuance of proposed national mortgage servicing standards, HUD underscored the importance of uniform servicing standards. “Given CFPB’s rulemaking, HUD does think it is important to not revise its servicing rules in a vacuum but to consider the work being done by the CFPB,” he said. “To that end, HUD is in communication with the CFPB and reviewing their materials.” The department is collaborating with an ...

The recent enactment of the Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012 includes a number of changes to the Department of Veterans Affairs’ Loan Guaranty program, including reverting to the VA’s previous method of calculating maximum guaranty. The restoration of the previous method used to derive VA loan limits has resulted in the increase of some loan limits, according to guidance issued by the agency last week. While VA does not have a maximum loan amount, “county limits” must be used to calculate the maximum VA guaranty for a particular county. The maximum VA loan limit for 2012 in high-cost areas is ...

The rising delinquency rates for FHA-insured mortgage loans could spell trouble down the road for the FHA as it struggles to shore up its dwindling loss reserves, according to a new Fitch Ratings analysis. But the chief economist for the Mortgage Bankers Association has a slightly different take on that issue. Fitch analyst Brian Bertsch said a growing gap between seriously delinquent (90-day past due) guaranteed and non-guaranteed loans could presage future losses that could prompt the FHA to restrict loss claims and force banks to buy back defaulted loans. This could be the scenario ...

Ocwen Financial Corp. and joint venture partner Altisource will soon be buying FHA-insured loans from lenders through a special vehicle, Correspondent One, for future securitization. In its second quarter filing with the Securities and Exchange Commission, Ocwen said it expects Correspondent One will be able to use its relationship with Lenders One to grow its volume substantially. “Correspondent One has seen significant, positive environmental changes in the correspondent lending market, [and] there has been a contraction in correspondent lending,” Ocwen said, alluding to ...

Standard & Poor’s proposed rating criteria for commercial MBS would not impact three-quarters of conduit deals but could result in upgrades for some securities and downgrades for others, according to the rating agency. Whether the proposed criteria enhancements would restore CMBS issuers’ confidence in S&P ratings is unclear, but observers say that the potential for higher ratings for some securities could pave the way for S&P to regain its exalted spot in the CMBS market. Last year, S&P shocked the market when it refused...

As the “shadow” banking sector has grown and evolved since the 1970s, questions have arisen as to the extent to which traditional banks may have been displaced by other financial institutions, insurance companies and entities as alternate sources of financing and the credit enhancement to securitization transactions. However, three economists at the New York Federal Reserve Bank recently found that, contrary to the notion that banks are being eclipsed by other institutions, banks have held their own against insurance companies involved in the enhancement business, despite their underdog status. “The first thing to note is that enhancements by insurance companies outnumber...

A recent Congressional report confirms there’s been a jump in the drop-out rates for students at for-profit colleges, and that’s bad news for investors in the securitizations backed by loans to these students, according to market analysts. “A two-year investigation by the Senate Committee on Health, Education, Labor and Pensions demonstrated that federal taxpayers are investing billions of dollars a year – $32 billion in the most recent year – in companies that operate for-profit colleges,” said a report by the committee. “Yet, more than half of the students who enrolled in those colleges in 2008-09 left without a degree or diploma within a median of four months. That compares with 46 percent in a study by the Department of Education of a 2003-04 cohort, which itself reflected...

Standard and Poor’s Rating Services has corrected its long-term issuer credit rating on the Federal Home Loan Bank of Seattle by lowering it from ‘AA+’ to ‘AA,’ S&P announced last week. “The rating reflects FHLB Seattle’s unchanged stand-alone credit profile of ‘A+’, plus two notches of uplift to reflect expected extraordinary government support if needed, according to our government-related entity criteria,” said the rating agency. “The S&P outlook on the bank remains negative and this correction did not affect the Seattle bank’s short-term ‘A-1+’ rating or the ratings on the consolidated obligations of the Federal Home Loan Bank System.”

Sales and purchases of vintage non-agency MBS have been well above average levels in recent weeks as investors see value in the sector with the housing market recovering. The purchases are being made by traditional buyers such as money managers and insurance companies as well as by banks, according to industry analysts. Daily trading volume of non-agency MBS has averaged about $3.0 billion in recent weeks, based on an analysis of TRACE data by Barclays Capital. During the past six to 12 months, daily non-agency MBS trading averaged $1.7 billion to $2.0 billion. Some $1.09 trillion in non-agency MBS was...

Chicago, Suffolk County, NY, and Berkley, CA, have joined the ranks of local governments considering the controversial notion of using eminent domain to seize performing underwater mortgages, restructure their terms and repackage them for sale to other private investors. “Given the size of the foreclosure epidemic in Chicago, the city should explore every possible avenue to keep families in their homes and reduce the number of vacant properties that breed crime and erode the stability of our neighborhoods,” Alderman Edward Burke, chairman of the city’s finance committee, said last week. In March 2012, nearly 667,000 Chicago-area homeowners were...