The Department of Housing and Urban Development warned of tougher enforcement against servicers who do not make full use of HUD’s loss mitigation tools, as it announced the implementation of a newly revised tiered servicer ranking system. The new system, Tiered Ranking System II, features a new scoring mechanism that would help HUD determine which lenders get higher reimbursement rates on claim expenses based on their servicing performance.

Approximately 48 percent of FHA loans that underwent post-endorsement review by the FHA in the third quarter of 2013 received an “unacceptable” rating – a commonly high percentage of deficient FHA-insured loans that lenders could lower through mitigation. The FHA reviewed 6,692 FHA-insured loans between July 1 and Sept. 30, 70 percent of which were home-purchase loans, 25 percent streamline refinancings, and 5 percent rate and term refis. Of the total loans analyzed, 36 percent had certain deficiencies, 19 percent showed early payment default (EPD), and only 16 percent met FHA underwriting standards, according to the agency’s latest report on loan-file review findings.

FHA and VA loans backing Ginnie Mae pools in 2013 showed an average mid-range FICO score of 693, lower debt-to-income ratio and an average loan size of $187,268, confirming strict underwriting in both government programs, according to an Inside FHA Lending analysis of Ginnie Mae loan-level disclosures. Issuers securitized $370.4 billion of mortgages with first payment date in 2013 through November. Loan characteristics exclude loans with no information reported.

The Department of Housing and Urban Development has delayed the implementation of a new requirement to assess the financial condition of borrowers seeking a Home Equity Conversion Mortgage loan, which was to take effect on Jan. 13. HUD’s decision to delay responds to an industry concern that the initial effective date does not give lenders sufficient time to customize appropriate software, hire and train new underwriters and complete other critical implementation tasks. It would take at least three months to do all these things, lenders said.

During the next 12 months, investors will have to navigate through numerous uncertainties, including all forms of policy risk: monetary, fiscal, economic and the fate of the GSEs.

In the latest year-end closeout of buyback deals before the ball drops on 2013, Flagstar Bancorp announced late Monday that it has entered into an agreement with Freddie Mac to “resolve substantially” claims that the bank sold faulty mortgage loans to the GSE between 2000 and 2008.

Ratings on servicer advance asset-backed securities issued by Home Loan Servicing Solutions and Nationstar Mortgage could be downgraded due to a change in rating criteria by Standard & Poor’s that was implemented after the ABS were issued.

Two Harbors' recent move to gain access to the Federal Home Loan Bank of Des Moines through an insurance affiliate “will add a dedicated funding source for Two Harbors, and while limitations and restrictions will apply, it should alleviate some market concern regarding the potential for declining liquidity in the repo market.”

Year-over-year through October 2013, the CoreLogic House Price Index appreciated more than 12 percent nationwide, with prices nationally now 16 percent above the low in the fourth quarter 2011, according to CoreLogic’s December MarketPulse report released Monday.

What's ahead for residential lenders and servicers in 2014? You might be surprised at some of our predictions. Hint: The servicing market looks good, at least.