The Department of Housing and Urban Development has announced changes to existing loss mitigation options to reduce the number of claims against the FHA Mutual Mortgage Insurance Fund.The changes will benefit qualified, distressed FHA borrowers, who will be able to qualify for FHA loss mitigation interventions and get more help than what was allowed under previous guidelines. HUD has issued a mortgagee letter to amend existing FHA Home Affordable Modification Program guidelines, the definition of “special forbearance,” and loss mitigation-priority guidelines. Specifically, HUD eliminated the ...

Private mortgage insurers have been making a slow comeback and reclaiming market share, thanks in part to policy changes adopted by the FHA, according to MI industry executives. Executives say MI penetration of the market has grown from 2.8 percent in the first quarter of 2012 to anywhere between 8-10 percent in the third quarter, an increase they attributed in part to gaining market share from FHA. Currently, private MI companies account for approximately one-third of loans with loan-to-value ratios of 80 percent or more, which are also ...

Fannie Mae and Freddie Mac each emerged from the third quarter of 2012 with a healthy profit, reporting a combined $4.74 billion in net income, a 41.7 percent decline from the second quarter but still well enough into the black to forgo taxpayer assistance to stay solvent. Fannie’s third quarter net income of $1.81 billion compared to a net loss of $5.1 billion in the same quarter a year ago but much more in line with the $2.72 billion it earned during the first quarter of 2012.

The Federal Housing Finance Agency so far continues to bat 1.000 in court in its multiple lawsuits against non-agency mortgage-backed securities issuers for allegedly misrepresenting deals that were sold to Fannie Mae and Freddie Mac. This week, Judge Denise Cote of the U.S. District Court for the Southern District of Manhattan rejected motions to dismiss by Goldman Sachs Group Inc. and Deutsche Bank, in the defendants’ latest effort to make the FHFA’s massive legal action go away. In separate motions, Judge Cote rejected Deutsche’s and Goldman’s claims that the FHFA’s allegations are inadequate to support the agency’s claims of fraud.

Mortgage bankers posted record profits on their loan origination and secondary market activity during the third quarter of 2012, according to a new Inside Mortgage Trends analysis of earnings reports from a diverse group of 10 lenders. The group, which included the four biggest lenders in the industry and eight of the top 20, reported a combined $5.344 billion in net production income during the third quarter, a record for the group. Production and secondary marketing income ... [Includes one data chart]

The Federal Deposit Insurance Corp. recently filed a lawsuit against the auditors of Colonial Bank alleging that they could have prevented “enormous losses” suffered by the bank due to fraud by Colonial’s largest mortgage banking customer, Taylor Bean & Whitaker Mortgage. The lawsuit is the first by the FDIC post-crisis against the accountants of a failed bank. Colonial was closed in August 2009 by the Alabama State Banking Department and the FDIC was named as receiver and is now ...

Two Harbors Investment and PennyMac Mortgage Investment Trust have seen healthy returns on their previous investments in vintage non-agency mortgage-backed securities but the real estate investment trusts have recently turned to other investments. Two Harbors has concentrated on agency MBS purchases while slowly ramping up jumbo loan purchases with an eye toward issuing its own MBS. PennyMac, meanwhile, shifted away from non-agency MBS purchases to correspondent lending and investing in ...

Community mortgage lenders increasingly anxious about complying with a growing regulatory burden got a strong show of support recently when Federal Reserve Board Governor Elizabeth Duke called for giving them a separate oversight regime that respects their unique differences when compared to their much larger competitors. “I am convinced that the best course for policymakers would be to abandon efforts for a one-size-fits-all approach to mortgage lending,” Duke said during a community bank symposium ...

A commissioned study of Ellie Mae’s Encompass360 has confirmed what the company’s clients have been saying all along: the popular software helps lower the total cost of originating mortgage loans. According to the study conducted by Forrester Consulting, a global research and advisory firm in Cambridge, MA, users of Encompass360 realized benefits in improved compliance and greater efficiency as well as a 57 percent return-on-investment (ROI) based on a three-year, risk-adjusted cash flow. Improved ...

Fannie Mae and Freddie Mac reported a sharp decline in the volume of mortgage repurchases and indemnifications made by lenders during the third quarter, as well as a slowdown in the volume of new buyback demands, according to a new Inside Mortgage Finance analysis of data reported by the two government-sponsored enterprises in financial reports released last week. During the third quarter, lenders repurchased or otherwise indemnified the GSEs for $4.396 billion of mortgages that had been subject to buyback demands, a decline of 26.0 percent from the second quarter. It was the lowest repurchase volume since the first three months of last year. On a year-to-date basis, repurchases are...[Includes one data chart]