Although mortgage market watchers cautiously expect President Obama and the lame-duck session of the 112th Congress to come up with at least a stop-gap deal to avoid the looming “fiscal cliff” at year’s end, building uncertainty among homeowners and potential borrowers as to whether important mortgage tax deductions will exist in 2013 threatens to thwart housing’s fragile recovery. Unless Congress and the president create and sign new legislation to change existing law before Jan. 1, 2013, taxpayers are poised to be hit with a massive combination of expiring tax breaks, tax hikes and deep, automatic federal spending cuts. A report last week by the Congressional Budget Office concluded that a failure to avoid the cliff would push the economy back into recession with the unemployment rate shooting up to 9.1 percent by next fall. Fitch Ratings warns...

Redwood Trust late last week reported net income of $40.0 million for the third quarter of 2012, including $3.0 million in net gains on the $372.0 million of non-agency MBS issuance and whole loan sales the real estate investment trust completed during the period. Redwood officials said the company is well-positioned for growth in non-agency MBS issuance, commercial MBS issuance and soon agency origination activity. In a quarterly review, company officials noted that some have called the REIT “crazy” for resuming issuance of non-agency MBS after the financial crisis of 2007. Redwood has issued eight non-agency MBS since April 2010 totaling $2.6 billion. The REIT said...

The ACLU is calling for changes to federal anti-discrimination statutes to deter secondary mortgage market participants from engaging in business practices that might have a discriminatory impact on certain protected classes of borrowers. In a recent analysis of mortgage foreclosures, the ACLU said the origination and securitization of subprime and other high-risk mortgage products have hurt minority families and caused the loss of 3.5 million homes to foreclosure. The ACLU believes...

After winning multiple bids to acquire mortgage servicing rights and subservicing on nonprime loans and agency mortgages, nonbank servicers were outbid last week for the latest major agency MSR acquisition. Industry analysts suggest that the somewhat unexpected competition from banks could hinder planned expansion by Ocwen Financial, Nationstar Mortgage and Walter Investment Management. JPMorgan Chase Bank is set to acquire $70.0 billion in agency MSRs from MetLife. “The acquisition of this ...

If implemented as proposed, Basel III capital requirements would force major changes for bank lenders and servicers, according to industry participants. Originations of non-agency mortgages would remain limited, mortgage holdings would be sold and borrowers would face additional costs. Rules to implement Basel III were proposed in June by the Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency. Comments were due in October and some industry ...

There is substantial risk that the FHA may end up with a negative net worth, which would require congressional appropriations for the mortgage insurance fund and passage of legislation reforming the FHA, said a former top official at the Department of Housing and Urban Development. In remarks this week at the Urban Institute, John Weicher, former assistant secretary for housing and FHA commissioner in 2001-2005, said it is very unlikely in this weak economic recovery to see ...

The volume of loans guaranteed by the Department of Veterans Affairs rose 4.0 percent in the third quarter of 2012, reflecting an upward trend that the agency attributes to strong underwriting. A production increased to $33.3 billion from $32.0 billion in the second quarter and $28.3 billion in the first quarter. The agency reported $93.6 billion in total originations over the nine-month period, with refinancing accounting for 51.8 percent of guaranteed loans. “VA has had the best performing loans in the industry for quite some time, with the ... [1 chart]

Banks that say they were less likely to approve an application for an FHA-insured mortgage cited a higher risk of putback of delinquent mortgages by the FHA as an important reason for the change, according to the Federal Reserve’s latest survey of bank lending practices. Responding to a special question on FHA lending, 14 of the respondents (36.8 percent) ranked putbacks as a “very important” issue, nine banks (23.7 percent) thought it was the “most important” while an equal number said it was “somewhat important.” Nine of the 14 respondents were ...

Hurricane Sandy homeowners with FHA and VA mortgages have been given temporary relief, including a 90-day suspension on foreclosures and as much as 100 percent financing for victims who have lost their homes. The Department of Housing and Urban Development and the Department of Veterans Affairs have announced federal disaster assistance to hard-hit areas in Connecticut, New York and New Jersey. Both agencies announced a three-month freeze on foreclosures in the affected areas as well as forbearance on foreclosures of FHA and VA home loans. The VA advised its lenders that careful counseling should ...

GSEs, Private MIs Agree to Drop Pre-Approval Requirements. Fannie Mae and Freddie Mac and the private mortgage insurance industry have agreed to eliminate pre-approval requirements for foreclosure alternatives, such as short sales and deeds-in-lieu of foreclosure. The separate agreements with MIs should help distressed homeowners avoid foreclosure by doing away with costly, time-consuming MI reviews that delay foreclosure-prevention transactions, according to the government-sponsored enterprises. WIMC Fully Acquires Reverse Mortgage Solutions. Walter Investment Management Corp. has completed its $120 million acquisition of ...