A decline in high-cost conforming loan limits come October will either destabilize the mortgage markets or have a negligible impact on borrowers, depending on who is talking. Legislation to maintain temporarily elevated loan limits was recently introduced in the Senate, leading some non-agency players to fear that an extension is more likely. Sens. Robert Menendez, D-NJ, and Johnny Isakson, R-GA, last week introduced S. 1508, “the Homeownership Affordability Act of 2011.” The bill would extend high-cost conforming loan limits of up to $729,750 until ...

Carrington Mortgage Services announced last week that it is expanding into nonconforming wholesale lending with the acquisition of certain assets of American Home Equity Corp. Carrington and AHE each offer a variety of agency and non-agency mortgages, including jumbos of up to $1 million. “This addition will provide Carrington with an immediate proven foundation to launch our wholesale origination model on a nationwide basis,” said Steve Patton, executive vice president of mortgage lending at Carrington. AHE was founded in 2001 and originated more than ...

Mortgage industry veteran Lewis Ranieri says big banks will easily dodge the risk-retention requirements for mortgage securitizers that have been proposed by federal regulators. Issuers of non-agency mortgage securities that aren’t backed by “qualified residential mortgages” would have to retain a 5 percent interest in the transaction. In a joint comment letter submitted by Ranieri and Kenneth Rosen, chairman of Rosen Consulting Group, a real estate research firm, the pair warned that risk retention as proposed will benefit ...

Rules proposed by federal regulators to establish “qualified mortgage” and ability-to-repay standards would severely limit the originations of alternative mortgages, including certain ARMs, according to lenders. Consumer advocates, meanwhile, are calling for even more restrictive underwriting standards than those proposed by the Federal Reserve. In April, the Fed proposed strong ability-to-repay requirements that expand upon existing rules for higher-priced mortgages, include stringent penalties for violations, and would apply to ...

Wells Fargo agreed last week to settle with disgruntled Wachovia shareholders regarding Wachovia’s option ARM portfolio. Wachovia and its affiliated entities agreed to pay $590 million and KPMG, Wachovia’s auditor, agreed to pay an additional $37 million. The settlement is subject to approval by the U.S. District Court for the Southern District of New York. The claims asserted by government-run pension and retirement funds were largely based on allegations that Wachovia misrepresented and/or omitted material facts regarding the quality of the ...

The National Credit Union Administration filed a lawsuit against Goldman Sachs this week, marking the fourth non-agency buyback lawsuit filed by the federal regulator in recent months. The action seeks damages in excess of $491 million from Goldman Sachs, bringing the total sought by the NCUA to nearly $2 billion.The lawsuits claim the sellers and underwriters of “questionable” non-agency mortgage-backed securities made numerous material misrepresentations in the deals’ offering documents. The NCUA claims the misrepresentations caused ...

Wells Fargo Bank and Bank of America dominated the FHA jumbo market during the first six months of 2011, accounting for a third of total jumbo loan originations during the period, according to Inside FHA Lending’s latest analysis of the sector. The two financial institutions outdistanced their competitors by producing a total of $3.04 billion in FHA-insured mortgage loans, nearly a third of the $10.2 billion of government-insured jumbo loans originated during the first half of the year. Top-ranked Wells Fargo generated $1.90 billion in FHA loans exceeding $417,000 for an 18.7 percent market share, while BofA claimed... [Includes two data charts]

The Department of Housing and Urban Development said it expects to issue guidance by the end of the month clarifying which mortgage loans would qualify for the higher loan limits. A department spokesman said the guidance is in its last phase of departmental clearance and contains detailed information on which loans are eligible for the higher loan limits as well as additional requirements for using the higher loan limits. Unless Congress intervenes, the current high-cost area loan limit, which is set temporarily at 125 percent of the median house price in each area up to a maximum of $729,750, will be replaced on Oct. 1 by a...

Two Harbors Investment Corp. said this week it is “impressed with the investment opportunities” in the non-agency MBS sector, particularly over the next year and beyond and is pushing forward with its plans to begin a securitization program. Thomas Siering, president and CEO of the New York-based real estate investment trust, said during a conference call to discuss the firm’s second quarter earnings that despite the “challenging” non-agency environment in June, there is tremendous opportunity to profit from non-agency MBS issuance throughout the rest of this year into 2012. “The recent pullback in the non-agency market has created...

Serious delinquency rates on home-equity loans held by banks and thrifts continued to decline in the first quarter of 2011, according to the Inside Mortgage Finance Bank Mortgage Database. However, the improved performance was led by home-equity lines of credit as the non-accrual rate on closed-end seconds increased compared with the previous quarter. The HEL serious delinquency rate (90+ days late plus non-accrual) and net charge off rates for combined HELOC and closed-end second portfolios was 2.09 percent at the end of the first quarter of 2011. That was down ... [includes one data chart]