In an effort related to the national mortgage servicing settlement, Bank of America announced last week that it has pre-qualified 150,000 borrowers to receive full extinguishments of their second-lien mortgages. Banks have been slow to modify second liens because their performance remains relatively strong even as borrowers struggle with first liens and negative equity. BofA said the full balance of second liens owned and serviced by the bank will be forgiven and the bank’s lien on the corresponding property ...

Servicers have seen increasing success with loan modification efforts in recent quarters, according to an Inside Mortgage Trends analysis of data released last week by the Office of the Comptroller of the Currency. While mod characteristics and performance vary widely, re-default rates largely appear to be tied to reductions in borrowers’ monthly payments. Re-default rates on mods completed in the past year are well below comparable rates for mods completed in 2008 and 2009. Some 44.7 percent of loans modified ...

The unrelenting pressure to comply with industry regulations and standards is the greatest factor impacting eMortgage and paperless mortgage initiatives, according to a survey by Xerox Mortgage Services. Xerox’s eighth annual Path to Paperless survey found that an ample 86 percent of industry respondents looked to a technological solution to avoid being caught on the wrong side of regulatory enforcement. Mortgage laws, regulations and standards continue to evolve in a direction toward ...

The question whether the mortgage interest deduction is worth keeping elicited mixed reactions from economists and housing market experts during a recent discussion about how to bring private capital back into the mortgage market. Participants in a panel discussion hosted by the Progressive Policy Institute and the American Action Forum took up the issue after Republican presidential candidate Mitt Romney, the day before, suggested cutting the mortgage interest deduction as part of an overall plan to equalize tax ...

First-lien mortgages held in bank and thrift portfolios increased by 4.1 percent at the end of the second quarter of 2012 compared with the same period in 2011, according to an Inside Nonconforming Markets analysis of bank call report data. The strong increase comes as banks actively sell poorly performing legacy mortgages and suggests that lenders have increased their non-agency portfolio originations. Of the 21 banks and thrifts with at least $10.0 billion in first-lien holdings as of the ... [Includes one data chart]

Thomas Hoenig, a director at the Federal Deposit Insurance Corp., last week called for changes to impending Basel III capital standards. Industry analysts have warned that the rules will discourage origination of nontraditional mortgages. “In private discussions I find a good deal of uneasiness about Basel III’s ability to be more effective than previous Basel efforts; however, there is a sense that we cannot go back,” Hoenig said in a speech. “I suggest that we not only can go back, we must.” ...

New temporary guidelines for approving FHA financing for condominium projects should boost sales of condo units across the country and improve current housing market conditions, according to industry stakeholders. The Department of Housing and Urban Development announced the guideline changes on Sept. 13 after extensive consultations with industry participants. Effective for all condo project approvals and recertifications, the revised guidelines will apply until Aug. 31, 2014, unless extended by the FHA. Stakeholders are confident that the changes, though temporary, will be ...

The antiquated backbone of the FHA’s Home Equity Conversion Mortgage program will soon be history with the official launch of HERMIT on Oct. 9. HERMIT, or the Home Equity Reverse Mortgage Information Technology, is a second generation, web-based automated system, designed to improve the Department of Housing and Urban Development’s ability to track and monitor its HECM portfolio in real time. The system also automates the payments of insurance claims while increasing efficiency and mitigating risks to the FHA insurance fund. HERMIT consists of a servicing module and an accounting module to ...

Fixed-rate mortgages comprised most of August’s FHA production, which totaled $22.1 billion, up 13.2 percent from July and 37.9 percent from a year ago, according to an Inside FHA Lending analysis of FHA data. FRMs accounted for 98.9 percent of new loans with FHA insurance in August. In-house originations made up 79.6 percent of new endorsements while purchase loans accounted for 56.1 percent of FHA originations during the month. Wells Fargo is the only top FHA lender to exceed the billion-dollar mark. In fact, the bank reported $2.2 billion in new FHA originations, 76.0 percent of which were produced in-house. The purchase mortgage share of Well’s total FHA originations was ... [2 charts]

The FHA Short Sale program may have cost the Department of Housing and Urban Development more than $1 billion in ineligible claims but only a portion may actually be recovered, according to a report from HUD’s Office of the Inspector General. A HUD OIG audit estimated that the department paid $1.06 billion in claims for 11,693 preforeclosure sales that did not meet FHA’s criteria for participation in the program. The OIG said it began a nationwide review of the short sale program after finding significant deficiencies in borrower qualifications during an audit of CitiMortgage’s preforeclosure sale claims last year. Auditors found ...