After growing significantly via the acquisition of portfolios and subservicing, special servicer Walter Investment Management is looking to increase its servicing assets in different ways. Walter is close to establishing delinquency flow programs and will soon increase its agency originations. “The company currently expects to close one delinquency flow program in the second quarter with an additional program to come in the second half of the year,” Walter said this week ...

Two Harbors Investment started acquiring residential properties to offer for rent during the first quarter of 2012, with officials at the real estate investment trust anticipating strong profits from the venture. The final step in establishing an infrastructure for the program was a February agreement with Silver Bay Property Management. “Silver Bay creates the opportunity to bring in institutional excellence to this sector, which heretofore has largely been ...

The Federal Housing Finance Agency’s non-agency mortgage-backed security repurchase claims against UBS can proceed, according to a ruling last week by U.S. District Judge Denise Cote in Manhattan federal court. The decision could also be applied to the other 16 lawsuits the FHFA filed against non-agency MBS issuers. Among other issues, the ruling refuted claims ... [Includes two briefs]

Mortgage servicers could find themselves in a quandary as they implement the national servicing standards outlined in the March foreclosure settlement agreement, especially if they run into conflicting FHA requirements. Compliance experts say that while many of the settlement standards could be carried out within the FHA program without being at odds with existing FHA requirements, conflicts do exist with the guidelines that cannot be resolved. Even when it is technically possible to comply with both FHA guidelines and the settlement standards, it is still going to ...

The FHA and the reverse mortgage industry are working on guidelines that would help lenders in the Home Equity Conversion Mortgage program identify unsuitable borrowers. Financial assessment guidelines that are currently in development would limit the pool of HECM applicants to those who can afford to meet the program’s financial obligations in a timely manner, said Jeffrey Lewis, chairman and chief executive officer of Generation Mortgage in Atlanta. HECM loans account for 90 percent of all reverse mortgages originated in the U.S. Loan volume had contracted in the wake of the financial crisis, down ...

Home Equity Conversion Mortgage loans remain widely available, thanks to the independent lenders that rallied to plug the gaps as major players bolted from the reverse mortgage market, an industry executive told lawmakers this week. In testimony during a House subcommittee hearing on FHA regulation of the HECM market, Jeffrey Lewis, CEO of Generation Mortgage Co., said MetLife’s departure from the market and closure of its traditional mortgage-origination business say nothing about the value of the HECM product to consumers. Lewis said MetLife’s decision was a strategic one and had nothing to do with ... (1 chart)

Option One Mortgage Corp. this week agreed to pay $28.2 million to settle charges brought by the Securities and Exchange Commission over the former subprime lender’s MBS disclosures regarding its ability to cover repurchase demands. Much of the litigation over failed non-agency MBS has focused on alleged misrepresentation about the quality of the loans delivered to securitization trusts, the servicing of those loan pools and the performance of trustees. The Option One settlement stems from the SEC’s contention that the company, one of the leading subprime lenders and securitizers during the heyday of...

Germany’s second largest state-owned bank is looking to the U.S. courts for relief after accusing Deutsche Bank of perpetuating a fraud on it in the sale of over $810 million in toxic residential MBS. Last week, Bayerische Landesbank (BayernLB) filed suit against Deutsche in New York State Supreme Court in Manhattan alleging that Deutsche packaged risky and poor quality loans into securities while simultaneously taking short positions against the securities. According to the complaint, Deutsche officials internally disparaged the quality of the loans underlying the residential MBS even as it...

The four major banks reclassified $6.0 billion in home-equity loans to nonperforming status this month due to guidance from federal regulators. While the holdings have been seen as an impediment to loss mitigation efforts, the banks said the accounting change was essentially cosmetic. Bank of America classified $4.36 billion in HELs as nonperforming as of the end of the first quarter of 2012, up from $2.45 billion at the end of 2011. The increase was due to ...

Invesco liquidated its fund in the Public-Private Investment Program this month, earning a strong 18.2 percent cumulative net internal rate of return on $2.3 billion in capital. “The PPIP program has resuscitated the private-label mortgage-backed securities market and, at least in our case, resulted in a handsome profit to the Treasury Department,” said Wilbur Ross, chairman of the Investment Committee of the fund and chairman and CEO of WL Ross & Co. “We are proud to have participated in it.” Among the seven non-agency public-private investment funds that were participating in the PPIP ... [Includes one data chart]