The use of premium pricing to induce more borrowers to opt for FHA streamline refinancing may be a boon for FHA borrowers but clearly a bane for investors in Ginnie Mae mortgage-backed securities, according to Barclays Research analysts. There are indications that more FHA lenders are resorting to premium pricing, in which borrowers pay a higher mortgage rate in return for lowering the cost of obtaining the loan. Its use seems to be increasing, which also raises the risk of Ginnie Mae prepayments, said ...

Mortgage companies are starting to use predictive modeling and better data and analytics to target homeowners who are moving with the right message at the right time in the move cycle. With the use of direct mail, companies can reach movers before they purchase a new mortgage, the thinking goes. Data and analytics company Target Data, a privately held firm based in Chicago, uses proprietary technology to aggregate housing data (more than 70 million records a week), which it uses to predict if ...

Roughly 1.2 million U.S. homes were in some stage of foreclosure during February, a 21 decline from the same period in 2011, and that spells trouble for bottom feeders looking to buy real estate owned properties from banks and auction companies. According to interviews with investors, servicing executives and mortgage bankers, some buyers are turning to the nonperforming loan market as a “back door” way to buy properties. “Investors that are buying NPLs in this fashion are looking to foreclose so they ...

The Internal Revenue Service issued an opinion this month stating that real estate owned costs do not need to be capitalized. Lawyers at Shumaker, Loop & Kendrick said IRS memorandum AM2013-001 appears to reverse an IRS opinion issued last year which stated that costs associated with REOs must be capitalized. “Historically, many banks have deducted expenses associated with other REO property currently rather than capitalizing them,” Shumaker, Loop & Kendrick said. However, in the last few years ...

Despite a sharp increase in mortgage originations last year, the number of state-licensed loan originators increased by just 2.7 percent compared to 2011, according to data from the Nationwide Mortgage Licensing System analyzed by Inside Mortgage Trends. A total of 519,428 loan originators were either licensed by the states or registered as staff of a bank, thrift or credit union. The highest concentration of these LOs was in California, where 15.3 percent of the industry ... [Includes one data chart]

Bank and thrift holdings of first-lien mortgages increased in 2012 even as major banks sold sig-nificant amounts of troubled loans. The growth was driven by Wells Fargo and a number of mid-sized banks, holding certain conforming loans in portfolio along with non-agency originations.

FHFA's plan for a single MBS platform that would be managed by a new government entity separate from Fannie Mae and Freddie Mac does not mean the agency is contemplating consolidating the two GSEs at this time.

Nomura recently made a $78.0 million make-whole payment on one of its non-agency MBS deals that was enough to completely pay off the class A notes and reverse substantial realized losses on the class M1 and M2 securities, according to Barclays Capital. Such loan-level repurchases have been uncommon since topping out at about $6.0 billion in payments in 2007.

Banks and rating services have strong concerns regarding proposed revisions to the Basel securitization framework that would impact capital requirements for securities holdings. They warn that the proposal would discourage banks from participating in the securitization markets.In December, the Basel Committee on Banking Supervision proposed a revised securitization framework it said would make capital requirements more prudent and risk sensitive, mitigate reliance on external credit ratings and reduce the so-called cliff effects in capital requirements. The BCBS proposed two possible hierarchies for assigning capital, enhancements to current ratings-based approaches, and new approaches.

A federal judge in Los Angeles last week denied a motion by Bank of America’s Countrywide Financial unit to dismiss securities fraud claims by the Federal Housing Finance Agency on behalf of Fannie Mae and Freddie Mac for toxic MBS purchased by the government-sponsored enterprises.The FHFA’s complaint alleges that Fannie and Freddie purchased approximately $26.6 billion in residential MBS that Countrywide sold from Aug. 30, 2005, to Jan. 23, 2008. The agency alleges negligent misrepresentations and fraud related to the offerings of Countrywide MBS.