Legislation to reform the government-sponsored enterprises moved forward in the Senate last week, but industry analysts suggest that complete action by Congress to reform the housing finance system is unlikely until 2017 at the earliest. The Senate Committee on Banking, Housing and Urban Affairs approved S. 1217, the Housing Finance Reform and Taxpayer Protection Act, on a 13-9 vote. The bill pushed by the committee’s leaders, Sens. Tim Johnson, D-SD, and ...

The amount of subprime mortgages outstanding continues to decline, with servicers in the sector focusing on loan modifications. An estimated $380 billion of subprime mortgages were outstanding as of the end of the first quarter of 2014, according to a new ranking by Inside Nonconforming Markets. With few subprime originations in recent years, the amount of subprime mortgages outstanding fell by 17.2 percent compared with the first quarter of 2013 ... [Includes one data chart]

Servicing problems are being addressed “quickly and effectively” by the servicers subject to the $25 billion national servicing settlement, save for Walter Investment Management’s Green Tree Servicing, according to Joseph Smith, the settlement’s monitor. In a report released last week, Smith said Green Tree failed eight metrics tested in the second half of 2013, while Bank of America, Citi, JPMorgan Chase, Ocwen and Wells Fargo passed all of their settlement tests ...

More than two out of three non-agency loan modifications started under the Home Affordable Modification Program eligible for principal reduction have received principal reduction in recent years, according to the Treasury Department. Principal reduction for non-agency mortgages under HAMP is not required, but loan owners receive incentives for allowing principal reduction. HAMP servicers handling non-agency mortgages are required to evaluate ... [Includes one data chart]

After years of losses from holdings of nonprime mortgages, Fannie Mae and Freddie Mac reported significant income relating to subprime mortgages and Alt A loans in the first quarter of 2014. The income was largely tied to settlements of lawsuits filed by the Federal Housing Finance Agency against non-agency mortgage-backed security issuers, and losses from nonprime mortgages were also minimal during the quarter ... [Includes one data chart]

Nonprime lender Citadel Loan Servicing increased its maximum loan size this week to $1.5 million from $1.0 million. Dan Perl, Citadel’s CEO, said the lender is on track to close $14 million in originations in May and $15 million in June. He added that Citadel is close to entering the non-agency mortgage-backed security market. Walter Investment Management revived Ditech Mortgage and the lender will offer jumbos, among other products ... [Includes four briefs]

The advance policies of nonbank servicers have led to disruptions in payments to investors in non-agency MBS following servicing transfers from banks, according to Fitch Ratings. The differences are particularly pronounced on jumbo and Alt A deals, with advance disruptions recently concentrated on MBS previously serviced by Bank of America. “Bank and nonbank servicers for residential MBS transactions typically follow the same general advancing guidelines,” Fitch noted. “However, nonbank servicers generally make the determination to stop advancing earlier than bank servicers.” On average, for jumbo MBS and Alt A MBS, nonbanks advance missed...

Even though the jumbo securitization market continues to struggle, there are signs of life in other non-agency niches, including non-owner-occupied mortgages and non-prime home loans. Five Oaks Investment Corp. recently launched a new product menu, saying it will purchase on a correspondent basis non-owner-occupied mortgages with loan amounts of up to $1.5 million. Company managing director Dave Akre told Inside MBS & ABS that the goal is to securitize. “We are...

Marc Savitt, who runs The Mortgage Center in West Virginia, said he recently worked on a mortgage that had 4.5 points of LLPAs. “It was a cash-out refi,” he noted.

Melvin Watt, director of the Federal Housing Finance Agency, revealed a new strategic plan for the government-sponsored enterprises last week that shifts away from the contraction goal set by previous FHFA Acting Director Ed DeMarco. “I don’t think it’s FHFA’s role to contract the footprint of Fannie Mae and Freddie Mac,” Watt said in remarks at the Brookings Institution. “Our role is to maintain an efficient credit market, and as private capital demonstrates that it will come into this market ...