Standard & Poor’s last week updated its criteria for ratings on non-agency mortgage-backed securities with collateral originated before 2009. The standards update criteria for credit, cash flows and rating stability and apply immediately. The rating service said the changes will result in more downgrades than upgrades. This week, S&P placed 16,872 ratings from 3,364 securities with a par amount of $253.95 billion on CreditWatch. About 70.0 percent of the ratings are on watch for potential downgrades ... [Includes three briefs]

Chase Home Finance knocked Bank of America off its second-place perch and joined top-ranked Wells Fargo as the dominant Ginnie Mae mortgage-backed securities issuers in 2012, according to the Inside Mortgage Finance Database. Together, Wells Fargo and Chase accounted for 53.3 percent of the $100.6 billion Ginnie Mae MBS market in the second quarter of 2012, which grew 24.4 percent from the first quarter and a whopping 42.2 percent from the same period a year ago. Wells led with $42.6 billion and a commanding 42.2 percent piece of the Ginnie Mae MBS market, thanks to ... ( 2 charts)

A proposed rule that would require a flat fee for originating a mortgage loan with a Department of Veterans Affairs guaranty could do borrowers and lenders more harm than good, warned a coalition of financial services providers. The proposal is part of an upcoming Consumer Financial Protection Bureau rulemaking to implement certain provisions under the Dodd-Frank Act relating to loan originator compensation. The rulemaking raises a number of technical drafting issues that could have unintended consequences, cautioned ...

Both Fannie Mae and Freddie Mac emerged from the second quarter of 2012 firmly in the black with each company posting a free-and-clear profit – only the second time for each GSE since being drafted into government conservatorship nearly four years ago. The period ending June 30, 2012, marks the second consecutive quarter that Fannie will not require taxpayer assistance to keep the company going. Freddie will also not require an additional draw from the U.S. Treasury, the first time since the first quarter of 2011 which was the first time ever either GSE posted a profit since before conservatorship.

The Federal Home Loan Bank Office of Finance announced last week that preliminary combined net income for the FHLBanks dropped 24.7 percent to $552 million in the second quarter of 2012, down from the $733 million in the first quarter but more in line with the $515 million earned in the fourth quarter 2011. The FHLBanks net income for the six months ended June 30, 2012, was $1.285 billion, an increase of $676 million or 111.0 percent compared to the same period in 2011, said the Office of Finance.“The FHLBank system continues to fulfill its mission to make available favorably priced wholesale funding to members while supporting the FHLBank system’s commitment to affordable housing,” said the OF. “In addition, the FHLBanks continue to strengthen the FHLBank system’s capital base through increased retained earnings.”

A mortgage marketing program with a money-back guarantee sounds too good to be true, but participating lenders that reported more than 400 percent return-on-investment can probably attest it is no scam. Mortgage Returns, a provider of customer relationship management and marketing solutions, reported that 35 lenders in its Guaranteed Marketing program averaged a 426 percent ROI after using it. The program revolves around the company’s Five-Touch mortgage refinance campaign. Launched in May, the program generated...

Ocwen Financial is set to reduce its effective tax rate by more than half due to the recent formation of a subsidiary corporation in the U.S. Virgin Islands. The federal corporate income tax rate in the U.S. is 35.0 percent and Ocwen had an effective tax rate of 36.0 percent through two quarters in 2012. “We believe [Ocwen’s effective tax rate] will be mid-to-high single digits,” said Bill Erbey, executive chairman of the servicer, during an earnings presentation last week. He said the lower tax rate could take effect...

Confidence in homeownership is shifting among consumers in the wake of the 2008 collapse of the housing market, but it’s mostly younger homeowners whose faith has been rattled the most, according to some new research. Economists at the Boston Federal Reserve Bank recently surveyed individuals about their attitudes toward renting versus buying a home, about commuting, and about how much to spend on a mortgage. They found that younger respondents are relatively less confident about homeownership after larger price declines, while older respondents are relatively more confident. “People who in 2008 lived in ZIP codes that were hardest hit by the crash in housing prices – as compared to those who resided in areas that were least severely affected – are...

Fannie Mae and Freddie Mac this week both celebrated large second-quarter profits that easily exceeded their installment payments to the U.S. Treasury as the price of government conservatorship, but buried in their earnings report was the hard truth lenders know too well: contentious buyback demands showed no sign of letting up. “Our expectation [is] that the amount of our outstanding repurchase requests to seller/servicers will remain high and that we may be unable to recover on all outstanding loan repurchase obligations resulting from seller/servicers’ breaches of contractual obligations,” Fannie said. As of the end of June, the two government-sponsored enterprises had...[Includes one data chart]

Officials at Ocwen Financial revealed this week that the servicer hired more employees than operationally necessary in an effort to win bids for servicing and subservicing. They said they are now in the process of right-sizing staffing levels through a number of different techniques. “We over-hired to make sure we could hit the cover off the ball on the deals that we knew we had in-hand,” Ron Faris, president and CEO of Ocwen, said during the servicer’s earnings presentation for the second quarter of 2012. Ocwen completed ...