The FHA will continue to play a critical role in the nation’s housing markets in 2012 even as it tries to balance the need to extend credit while reducing its market share to open the way for private capital to return to the mortgage market, according to industry observers. That means walking a tightrope in trying to keep the Mutual Mortgage Insurance Fund actuarially sound while trying to avoid piling on more fees and additional restrictions, which could hamper housing recovery, observers said. “We can’t have an economic recovery without a housing recovery,” said Brian Chappelle, a mortgage industry consultant. “The philosophical debate about the role of government in housing should be ...

The supply of outstanding single-family MBS in the market fell 0.6 percent during the third quarter of 2011, according to a new analysis by Inside MBS & ABS. There was a total of $6.544 trillion of single-family MBS outstanding at the end of September, the lowest level since the third quarter of 2007. Although MBS supplies have been declining steadily over the past four years, securitized loans actually represent a historically high 63.3 percent of total home loan debt outstanding as of the end of the third quarter. The steepest decline is in non-agency MBS, a...(Includes one data chart)

Reform of the government-sponsored enterprises is seen as an essential step toward the widespread resumption of non-agency securitization. However, industry analysts suggest that significant action on GSE reform will not begin until after the November 2012 elections. “We are still nowhere close to any legislation that has a realistic possibility of even being enacted,” said Lawrence White, a professor of economics at New York University, at a seminar this week hosted by the American Securitization Forum. “The can will continue to get kicked down the road until after November 2012.” ...

Servicing and delinquency issues in recent years have prompted three of the four major bank portfolio lenders to decrease their focus on portfolio originations. Meanwhile, Wells Fargo has indicated that it is willing to continue to increase its first-lien portfolio holdings, seeing attractive returns relative to other investing options. Bank of America and JPMorgan Chase decreased their first-lien mortgage portfolio holdings in the third quarter of 2011 compared with the previous quarter, according to the Inside Mortgage Finance Bank Mortgage Database. The banks ranked first and third, respectively ... [Includes one data chart]

Federal regulators have offered few clues on what is next for proposed qualified residential mortgage regulations, and the uncertainty in the marketplace has been cited as an impediment to the resumption of non-agency securitization. “The agencies are carefully evaluating all of the comments received and are now actively engaged in considering the many issues raised as we determine how best to proceed with the risk-retention rulemaking,” Acting Comptroller of the Currency John Walsh said last week. The extended comment period on the proposed rule closed in August ...

Non-bank servicers have received a reprieve from scrutiny by the Consumer Financial Protection Bureau due to a heated political fight in Congress. Despite a major push last week by the Obama administration, Senate Republicans blocked an attempted vote to confirm former Ohio Attorney General Richard Cordray as director of the CFPB. Last week, the Senate voted 53-45 on a motion to consider Cordray as director of the CFPB. At least 60 votes were needed to end a Republican filibuster. Scott Brown, R-MA, was the only Republican to vote in favor of the motion ...

The Treasury Department increased its threats against non-agency servicers regarding Home Affordable Modification Program performance. In a report released last week, the Treasury was highly critical of JPMorgan Chase and a number of other non-agency servicers remain on notice. Freddie Mac, acting as the Treasury’s compliance agent for the Making Home Affordable program, conducts quarterly assessments of HAMP servicers. In the third quarter of 2011, Chase was deemed to be in need of “substantial improvement” in compliance with MHA guidelines, the third quarter in a row for the servicer ...

The Federal Housing Finance Agency’s proposal to shift the handling of nonperforming loans to special servicers would not benefit most servicers and borrowers, according to the Mortgage Bankers Association. The proposal could also hinder efforts to shift activity to the non-agency market. In September, the FHFA proposed a fee-for-service compensation model for the government-sponsored enterprises and suggested it could also be applied to the non-agency market. According to the FHFA’s discussion paper, Fannie Mae or Freddie Mac would pay a set dollar fee per performing loan – $10 was cited as an example. For non-performing loans ...

United Wholesale Mortgage last week announced its “The Big and Easy” wholesale jumbo program, claiming it can close loans in two weeks. “Gone are the days when an originator has to tell a borrower how difficult it is to close a jumbo loan,” said Jaime Hunt, an account executive at UWM. The loans are available for amounts up to $2.5 million for principal residences as well as second homes, for purchase or refinance. UWM is looking for borrowers with credit scores of at least 720 and loan-to-value ratios of no more than 80 percent ...

American Home Mortgage Servicing agreed this week to settle a lawsuit brought by the Ohio attorney general in 2009. The subprime servicer did not agree to pay any penalties or complete principal-reduction loan modifications but did agree to specific servicing guidelines in the state. In 2009, Ohio’s attorney general filed a lawsuit claiming American Home violated consumer law by providing inadequate services to consumers seeking loan modifications. ... [Includes one brief]