Chicago is the latest municipality to consider using eminent domain to seize mortgages from non-agency mortgage-backed securities in an effort to help borrowers with negative equity. Meanwhile, the conservator of two of the largest holders of non-agency MBS joined other investors in raising concerns about the plan and industry analysts suggest the plan has serious defects. Chicago will hold hearings to consider the eminent domain plan proposed by Mortgage Resolution Partners. In June, San Bernardino ...

A proposal by Sen. Jeff Merkley, D-OR, to help refinance non-agency borrowers with negative equity has support from the Obama administration and could begin tests without action from Congress. The proposed “Rebuilding American Homeownership” has been characterized as a Home Affordable Refinance Program for non-agency mortgages. “I think the policy is very good; it’s very well designed,” Treasury Department Secretary Timothy Geithner said in testimony last week before the Senate Committee on Banking, Housing and Urban Affairs ...

Performance data from mortgages serviced for the government-sponsored enterprises would be included in non-agency servicer ratings under a proposal by Moody’s Investors Service. In July, the rating service proposed a major overhaul of its servicer rating process. Loan-level data submitted to Moody’s as part of the “Servicer Quality Assessment” rating process would be supplemented with data from securitization trusts, as well as GSE performance data “as needed.” The data from securitization trusts – which Moody’s noted ...

The Securities and Exchange Commission published interpretive guidance last week regarding references in federal regulations to ratings of mortgage-backed securities. Even though the Dodd-Frank Act mandated that such references be changed by July 20, the SEC’s guidance will keep the references intact until the federal regulator and others can establish new standards of creditworthiness. The Office of the Comptroller of the Currency and the National Credit Union Administration have also ... [Includes three briefs]

Revised VA HAMP. The Department of Veterans Affairs has updated the instructions for modifying mortgage loans with a VA guarantee. Changes include clarification concerning occupancy status, an updated reference to another VA guidance on prior approval procedures and extension of the applicability of the said guidance. The changes were announced in Circular 26-10-6. New VA REO Management and Servicing Contractor. The Department of Veterans Affairs has provided details for transferring VA property management (real estate-owned) and portfolio loan servicing contracts for the VA home loan guaranty program from ...

Portfolio lenders as well as those looking to issue non-agency mortgage-backed securities cautioned the Consumer Financial Protection Bureau against setting specific thresholds for debt-to-income ratios on “qualified mortgages.” Some non-agency MBS investors countered that a bright line DTI ratio would be useful. In June, the CFPB reopened the comment period on the pending ability-to-repay rule, with an emphasis on data relating to DTI ratios. The deadline for comments was last week. The Clearing House Association ...

Servicing rules previewed by the Consumer Financial Protection Bureau in April are flawed, overreaching and need to be adjusted, according to four trade groups representing servicers and lenders. The CFPB said it plans to propose disclosures this month for servicers to send to borrowers as well as servicing procedures, some of which are required by the Dodd-Frank Act. The DFA requires a notice to be sent to hybrid ARM borrowers six months before the initial interest rate reset. The CFPB said it is considering expanding ...

The Consumer Financial Protection Bureau last week released its long-pending proposal for combined mortgage disclosures, with an emphasis on characteristics common in nonconforming mortgages. “In particular, explanations of how rates and payments can change over time are not always made clear [from current disclosures],” said Richard Cordray, director of the CFPB. Currently, the Real Estate Settlement Procedures Act and the Truth in Lending Act require different disclosures for borrowers. As directed by the Dodd-Frank Act ...

The vast majority of repurchase requests on mortgages in non-agency mortgage-backed securities were in dispute in the first quarter of 2012, according to an Inside Nonconforming Markets analysis of Securities and Exchange Commission 15Ga disclosures. However, industry analysts expect settlements to increase during the second half of this year. Securitizers reported $29.03 billion in mortgages in non-agency MBS with repurchase demands in the first quarter of 2012, with 98.6 percent of the volume classified as in dispute ... [Includes one chart]

Principal reduction loan modifications completed by five major banks as part of the national servicing settlement have not been applied disproportionately to mortgages in non-agency mortgage-backed securities, according to Fitch Ratings. Non-agency MBS investors have raised concerns that servicers that agreed to the recent $25.0 billion settlement will complete their mandated principal reduction mods on non-agency MBS instead of on portfolio loans. “Although still early, there has been no evidence of ...