A year and a half after the $25 billion national servicing settlement took effect, attorneys general and the settlement’s monitor turned up the heat this week on the five banks participating in the settlement. Wells Fargo faces a new lawsuit, Bank of America settled similar claims, and all five servicers face additional testing standards and procedures, with BofA and Wells agreeing to even more stringent process improvements. New York Attorney General Eric Schneiderman, D, announced a lawsuit against Wells. He said consumer advocates have documented hundreds of violations to the settlement by Wells, including delays, lost paperwork and wrongful denials. BofA avoided...

Citadel Loan Servicing, which specializes in non-agency loans, has increased its maximum loan-to-value ratio to 80 percent from 75 percent. The change, which came about a week ago, is for fully documented loans.The privately held nonbank made the switch in response to borrower demand. “The phones are ringing like a son-of-a-gun,” said Citadel CEO Dan Perl. The Irvine, CA-based firm originates...

The Department of Housing and Urban Development this week proposed its own “qualified mortgage” rule for FHA-insured mortgage loans that builds off the existing QM rule finalized by the Consumer Financial Protection Bureau earlier this year. The proposed rule aligns with the ability-to-repay criteria in the Truth in Lending Act as required by the Dodd-Frank Act. Once the proposal becomes final and takes effect, it would replace the CFPB’s rule for FHA loans. The DFA has set a seven-year timetable for FHA, the VA and the Rural Housing Service to promulgate their own QM rules. HUD’s proposed QM rule would ...

Overall FHA production saw little change in the second quarter of 2013 from the previous quarter, with the fixed-rate, 30-year product, refinances and jumbos weakening somewhat during the period, according to Inside FHA Lending’s analysis of FHA data. FHA endorsements dropped 0.7 percent to $63.2 billion from $63.7 billion on a quarter-to-quarter basis. It is also the second time the numbers have slipped since the fourth quarter, when new endorsements totaled $64.0 billion. During the quarter, the top FHA lenders saw their total production drop by ... [2 charts]

Redwood Trust and Credit Suisse, the jumbo MBS sector’s two biggest players, slowed their securities issuance during the third quarter.

The home-equity market has been down so long it doesn’t take much to make it look like it’s looking up. Firming house prices in 2013 may be leading to a revival. The outstanding balance of home-equity loans, including home-equity lines of credit and closed-end second mortgages, continued to decline during the second quarter, dropping another 2.3 percent, according to the Federal Reserve. Since the end of 2007, the home-equity market has shrunk by 35.5 percent. Depository institutions hold...[Includes three data charts]

Critics contend that jumbo MBS investors don’t have access to mortgage documents.

The Federal Reserve is pointing its finger at both loan officers and applicants for the misreporting of borrower income.

As the government shutdown continues and many federal workers go without pay checks, there’s a growing concern that these potential borrowers will see their credit scores get dinged.

Sources contend that other pending jumbo deals could be reduced in size until the market improves.