Mortgage servicing, particularly by non-banks, will be a top priority for the Consumer Financial Protection Bureau, according to officials at the new regulator. The CFPB will take over authority to administer federal consumer financial protection laws on July 21. About half of the top 20 subprime servicers, and two of the top five – Ocwen Financial and American Home Mortgage Servicing – are non-banks. At a joint hearing last week by two subcommittees of the House Financial Services Committee, Raj Date, associate director of research, markets and regulations at the CFPB, said the agency “will use ...

While industry participants continue to debate the merits of high downpayment standards for qualified residential mortgages, the risk-retention treatment of seasoned securities and loans is also a major concern. In comment letters submitted to federal regulators, the American Securitization Forum and the Securities Industry and Financial Markets Association each called for time limits on the proposed risk retention required for non-QRMs. Under the current risk-retention proposal, SIFMA said financial institutions would be compelled to ...

Servicers have made little progress with three auxiliary programs to the Home Affordable Modification Program, according to newly available data. Activity remains limited in the Principal Reduction Alternative, Second Lien Modification and Home Affordable Foreclosure Alternatives programs. Last week, for the first time, the Treasury Department detailed activity in the non-agency exclusive PRA program. Between the program’s announcement in March 2010 and May 2011, some 21,299 PRA trial mods were started. The activity is relatively low compared with ... [includes one data chart]

Bucking a trend among non-agency players, Walter Investment Management last week ceased operating as a real estate investment trust. While a number of non-agency REITs have formed recently, with more likely going forward, most are focused on investments in non-agency mortgage-backed securities. Walter, meanwhile, emphasizes non-prime third-party servicing. The company dropped its REIT status after its acquisition last week of Green Tree Credit Solutions. Walter officials said the company’s REIT status had put the company at ...

An increasing number of credit unions and other lenders have recently started offering a mortgage that allows borrowers to adjust their interest rates as frequently as every 120 days. While many lenders have avoided alternative mortgages since the collapse of the non-agency market, credit unions have not shied away from offering innovative products. This week, for the first time, a HarmonyLoan borrower executed an interest rate reset without the expense and requirements of the traditional refinancing process. The borrower took out ...

Performance concerns prompted Moody’s Investors Service to downgrade the servicer quality ratings of two non-agency servicers recently and place a third servicer’s ratings on watch for possible downgrade. Last week, Moody’s downgraded the servicer quality ratings of JPMorgan Chase Bank and Chase Home Finance to SQ2 from SQ1 for subprime and prime loans. The rating scale ranges from SQ1 (strong) to SQ5 (weak). The downgrades were mainly due to the deterioration of the company’s collection metrics relative to some of its peers, a deterioration in ...

Peter Wallison, a commissioner on the Financial Crisis Inquiry Commission, violated the FCIC’s ethics guidelines and was extremely difficult to work with, according to an investigation by Democratic staff on the House Committee on Oversight and Government Reform. A report released this week by Rep. Elijah Cummings, D-MD, the ranking member on the committee, also revealed that FCIC staff thoroughly debunked mortgage-related claims made by Edward Pinto, a resident fellow at the American Enterprise Institute. Pinto claimed that the economic crisis of 2007 was caused by ...

The Federal Reserve Bank of New York has not committed to a defined auction schedule for non-agency mortgage-backed securities in the Maiden Lane II portfolio, which analysts warn could serve as a ceiling for prices on subprime MBS.“Not only was June’s auction the largest on record but it was also the least successful with just under 50 percent of the bid list being sold,” said David Austerweil, a director at Fitch Solutions. “Maiden Lane’s subpar auction results have ...

Raising the annual mortgage premium by 25 basis points has resulted in some reduction in FHA lending but not so dramatic as to send lenders reeling from its impact. Industry reaction to premium adjustment has been mixed as the effects were felt in both the 15- and 30-year fixed-rate loan products. “Application levels have gone down as FHA products become more and more costly,” said one FHA lender. The quarter-of-a-percentage point increase became effective for all new 15- and 30-year mortgage loans insured by FHA on or after April 18, 2011. The upfront mortgage insurance premium (MIP) of 1.0 percent remains unchanged. The premium increase does not affect...

Some FHA lenders have been easing off on FICO credit scores to qualify more borrowers but they are also adding other requirements to ensure borrower eligibility and ability to repay. Frost Mortgage Banking Group, a subsidiary of Primary Residential Mortgage Inc., began relaxing its credit score overlays in January and results have been encouraging, said Greg Frost, company president and chief executive officer. The action has so far resulted in a 95 percent approval rate on mortgages sent for a second review to the parent company, PRMI. The approach has had a positive effect on 20 percent to 25 percent of FHA loans that were initially...