The Congressionally-mandated increase in the guarantee fees charged by the government-sponsored enterprises and the FHA will not be enough to significantly shift activity to the non-agency market, according to industry analysts. One option for increasing non-agency activity has been an increase in GSE guarantee fees, but the 10 basis point increase approved by Congress in December does not appear to be enough for most products. The argument that it will encourage homeowners to look for non-GSE/FHA loans is pretty silly and hides the foolishness of using housing to pay for payroll tax cuts, said Adam Levitin, an associate professor of law at Georgetown University. ...
The Consumer Financial Protection Bureau announced this week that it will immediately begin supervision of non-bank servicers and lenders. The supervision became possible due to President Obamas controversially executed appointment of Richard Cordray as director of the CFPB. Since most of these businesses are not used to any federal oversight, our new supervision program may be a challenge for them, Cordray said this week of non-banks. But we must establish clear standards of conduct so that all financial providers play by the rules. ...
The group of institutional investors that negotiated a potential $8.5 billion settlement with Bank of America has recently targeted other non-agency mortgage-backed security issuers. The move is the latest development in a number of ongoing claims regarding non-agency MBS. This week, the group led by the law firm of Gibbs & Bruns asked trustees to open investigations on more than $19.0 billion of non-agency MBS issued by Wells Fargo. The investors said they hold more than 25 percent of the voting rights in 48 trusts that issued the non-agency securities between 2005 and 2007. ...
In 2011, high-touch subprime servicer Carrington Mortgage Services significantly decreased its delinquency processing timelines and had its servicer rating confirmed at the end of the year. The servicer also made adjustments after facing criticism from non-agency mortgage-backed security investors who claimed that Carringtons practices improperly favored investments made by the hedge fund that also owns the servicer. Carrington serviced $11.73 billion in subprime mortgages as of the end of the third quarter of 2011, according to estimates by Inside Nonconforming Markets. The servicer received a mid-range rating for subprime and special servicing from Fitch Ratings, with the rating service recently confirming that Carrington demonstrates proficiency in overall servicing ability. ...
Loan modifications with principal reduction have significantly increased in the past year, with servicers seeing improved performance compared with other types of mods. The mods remain concentrated on securitized non-agency mortgages as well as portfolio loans, but performance varies considerably. After falling to a 2.7 percent share in the fourth quarter of 2010, principal reduction mods have accounted for a growing share of bank and thrift mod activity, according to the Office of the Comptroller of the Currency. Principal reduction was used in 7.8 percent of the mods completed by nine major bank and thrift servicers in the third quarter of 2011. ...
Wells Fargo this week agreed to a $940,056 settlement with Marylands attorney general regarding option ARMs. According to the AG, Wachovia and Golden West the lenders that offered the loans, which Wells purchased did not fully explain the loans negative amortization option to borrowers. Wells agreed to modify Maryland borrowers with the loans via the Home Affordable Modification Program if possible or via the servicers proprietary mod program. ... [Includes three briefs]
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 ...
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 ...