While new regulations have been costly for servicers to implement, they have helped improve borrower satisfaction, according to J.D. Power’s latest primary servicer satisfaction study. “The fact that satisfaction continues to increase seems to indicate that changes being made in response to these new regulations are having a positive impact on the experience of customers,” said Craig Martin, director of investment services at J.D. Power. He cited regulations from the Consumer Financial Protection Bureau ...

Negative home equity is not an important barrier for a homeowner to decide to move elsewhere for a better job, although underwater homeowners are probably more likely to move than borrowers with equity in their homes, according to researchers at the Federal Reserve Bank of Cleveland. The study presents evidence debunking the theory that homes with underwater mortgages deter unemployed people from moving to get new jobs. The “lock-in” theory holds that unemployed people with negative equity could ...

Wells Fargo increased its residential servicing portfolio by a meager 2 percent in the second quarter but marked up the asset value of its mortgage servicing rights by a mouth-watering 18 percent, a clear sign that it feels comfortable about both improving delinquencies and higher interest rates. The nation’s largest lender/servicer was hardly alone among the nation’s megabanks, all of which reported higher market values on MSR remaining principal balances that were mostly unchanged. Bank of America reported...

The recent sharp increase in mortgage interest rates has priced some borrowers out of the market and motivated others to complete home purchases, according to industry participants. If interest rates stay near current levels, home affordability is expected to remain strong, encouraging home purchases. The market for non-distressed properties is still healthy, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Average time on market for non-distressed properties is declining, the average number of offers is increasing and sales-to-list price ratios are at elevated levels. The trends have been driven...

Mortgage company owners hoping to go public or tap the capital markets for another round of equity financing may have to temper their expectations in the new interest rate environment. But that doesn’t mean initial public offerings are out of favor with investors. According to industry experts, it’s a matter of expectations. “Some people are saying these deals won’t happen now,” said Paul Miller, a top analyst at FBR Capital Markets. “But I’m not in that camp. Any deal that is priced correctly will sell.” Miller told...

Beginning Jan. 1, capital requirements for bank holdings of certain non-agency mortgage-backed securities will begin to increase. The changes were included in the Basel III reforms approved by federal banking regulators last week. The Basel III final rule includes the simplified supervisory formula approach in lieu of the use of credit ratings to determine capital requirements for holdings of non-agency MBS. The SSFA relies on the 90+ delinquency rate, risk weights of the underlying exposures ...

The Department of Veterans Affairs has urged holders and servicers of home loans with a VA guaranty to consider principal reduction when evaluating a distressed loan for possible modification. In a recent circular, the VA noted that it is not able to reimburse any principal reduction because a VA claim is payable only upon termination of a loan, and any forgiven amount is no longer part of the borrower’s mortgage debt. However, principal reduction in a loan modification may produce a higher expected return for a servicer than termination of the loan, the VA said. This is especially true when the sum of the ...

The Department of Housing and Urban Development is adopting the mortgage banking industry’s data standards format for the FHA’s TOTAL Mortgage Scorecard, which HUD uses to evaluate the credit risk of FHA loans that are submitted through an automated underwriting system. The standards were developed by the Mortgage Industry Standard Maintenance Organization (MISMO), a nonprofit subsidiary of the Mortgage Bankers Association. MISMO is an open data standards group that promotes consistency among mortgage transaction participants to reduce loan processing costs, increase transparency, and ultimately ...

Ginnie Mae guaranteed more than $216.9 billion in mortgage-backed securities during the first half of 2013, up 18.8 percent from the same period last year. Issuance was also up 8.0 percent in the second quarter from the first quarter, according to an Inside FHA Lending analysis of Ginnie Mae data. Not surprisingly, a significant share – $132.8 billion – of Ginnie Mae MBS issuances over the six-month period were backed by FHA loans. VA accounted for $72.1 billion while Rural Housing Service loans totaled $10.5 billion. Ginnie Mae issuances dropped during the first quarter but surged in the second quarter as ... [1 chart]

The mortgage banking industry recently declared victory in the wake of a federal appeals court decision to overturn a previous court ruling, which had upheld a 2010 administrative interpretation by the Department of Labor that mortgage loan officers are entitled to overtime pay. In Mortgage Bankers Association v. Seth D. Harris, acting secretary of U.S. Department of Labor, a three-judge panel from the U.S. Court of Appeals for the District of Columbia reversed a lower court’s decision denying the MBA’s motion for summary judgment. At the same time, the appellate court remanded the case to the district court with instructions to vacate the DOL’s 2010 interpretation of the administrative exemption under the Fair Labor Standards Act (FLSA). The court, however, left...