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...

High-risk mortgages securitized by Fannie Mae and Freddie Mac continued to drag down earnings for the government-sponsored enterprises in the first quarter of 2011, forcing the two GSEs to go deeper into debt to the federal government. Fannie and Freddie lost a combined $13.0 billion on their mortgage-backed security guarantee programs during the first quarter, a significant deterioration from the $6.6 billion the GSEs lost during the previous quarter, according to the Federal Housing Finance Agency’s latest conservatorship report. Since the beginning of 2008 through the first quarter of 2011, Fannie and Freddie have burned through...

Facing a growing coalition of dissatisfied non-agency mortgage-backed security investors, Bank of America announced this week that it plans to settle a large portion of its non-agency MBS claims related to buybacks and servicing. The action sets a precedent for the sector, making settlements with other non-agency MBS issuers more likely. “Bank of America has charted...[Includes one graph]

At least three lenders are looking to re-establish the market for non-prime lending. Two firms are hoping to attract additional funding and begin non-prime lending shortly, while a smaller player is already offering the loans. Shellpoint Partners has plans to expand the offerings of a recently acquired agency originator, New Penn Financial. Shellpoint is a specialty finance company and joint venture with Ranieri Partners. Lewis Ranieri, a co-founder of Shellpoint, said...

Subprime borrowers in rural areas have been significantly impacted by mandatory escrow requirements on higher-priced mortgages, according to community banks. The Independent Community Bankers of America is leading efforts by banks to limit or remove escrow requirements currently enforced by the Federal Reserve. The minimum period for mandatory escrow accounts for most first-lien higher-priced mortgages would be expanded...

The strength of the non-agency market has become a major point of concern as a diverse coalition of market participants lobbies for changes to a proposed rule for mandatory risk retention. The impact on the non-agency market is second only to the group’s concerns about downpayment requirements in the qualified residential mortgage debate. “The proposed narrow QRM rule discourages...