Bank and thrift holdings of home-equity loans continue to decline, particularly holdings of closed-end second liens. Even though performance on the loans currently remains strong, industry analysts warn that these assets could cause major losses. Banks and thrifts held $1.18 trillion in home-equity lines of credit, unused HELOC commitments and closed-end seconds at the end of 2011, according to the Inside Mortgage Finance Bank Mortgage Database. That was down 1.5 percent from the third quarter of 2011 and down 8.8 percent from the end of 2010 ... [Includes one data chart]

Subprime lending standards appear to be loosening across numerous asset classes, including home loans, but it is still difficult for borrowers to get a subprime mortgage. Equifax recently reported that subprime originations have grown as of the end of 2011 compared with the end of 2010. The company’s National Consumer Credit Trends Report was produced with Moody’s Analytics, and included details on credit cards, auto finance, consumer finance, retail credit and student loans. “The evidence of increased lending to subprime consumers demonstrates banks’ ongoing efforts to ...

A conflict-of-interest provision in the $25 billion robo-signing settlement approved by the court last week could make it harder for independent settlement monitor Joseph Smith to organize an oversight monitoring team within the agreement’s timeline. Smith, North Carolina’s former commissioner of banks, may have to issue or seek clarifying guidelines that would allow him to recruit attorneys and other professionals for his monitoring team and begin a phased implementation of the settlement’s servicing standards and mandatory relief requirements, according to an industry attorney. Last week...

Fannie Mae and Freddie Mac could end up on the hook for millions of dollars in unpaid property taxes as well as the targets of numerous legal complaints following a Michigan federal judge’s ruling that could force the GSEs to open their coffers to a plethora of revenue-starved local governments. Two weeks ago, U.S. District Court Judge Victoria Roberts granted Oakland County, MI, summary judgment in its lawsuit against Fannie and Freddie because the two GSEs failed to pay the transfer tax on deeds recorded by the state Register of Deeds Office, as required by Michigan law.

President Obama this week signed into law a measure that, among other things, kills big bonus payments to Fannie Mae and Freddie Mac executives for as long as the GSEs are subsidized by taxpayers. After nearly two months and some legislative positioning, Congress passed the Stop Trading on Congressional Knowledge Act of 2012. Primarily, the STOCK Act bars House and Senate members and their staff from using non-public, inside information for personal benefit.However, an amendment to the bill which was passed on an overwhelmingly bipartisan margin in both houses of Congress prohibits the payment of bonuses over and above a GSE executive’s salary compensation while Fannie and Freddie remain in government conservatorship.

Roughly one out of every 14 banks in the country suffered significant investment losses following the September 2008 government takeover of Fannie Mae and Freddie Mac, according to a new Federal Reserve discussion paper. The paper, When Good Investments Go Bad: The Constriction in Community Bank Lending After the 2008 GSE Takeover, details how financial institutions took a bath when the two companies were placed into conservatorship and dividend payments on common and preferred shares were suspended.

Mortgage banking operations reported stronger earnings in both loan production and servicing operations during the fourth quarter of 2011, according to a new Inside Mortgage Trends analysis. A group of nine institutions reported a total of $2.73 billion in earnings from mortgage production activity during the fourth quarter. That was up 20.8 percent from the third quarter. All but one company in the group, which includes most of the top lenders in the industry, reported positive results on loan production activities, which typically include secondary marketing results. The...(Includes one data chart)

Mortgage bankers reported stronger corporate income during the fourth quarter of 2011, but profitability was generally lower on a per-loan basis, according to the most recent performance report released by the Mortgage Bankers Association this week. Based on a survey of some 310 mortgage bankers, the study found average pretax income of $1.51 million per company in the fourth quarter, up 34.8 percent from the third quarter of last year. That brought the average pretax income for the year to $3.69 million, down 14.2 percent from 2010. Average profits per loan were generally down in the fourth quarter, even...

The risk of fraud in property valuation, occupancy and identity has seen its highs and lows in 2011 but the rising trend of employment and income fraud in mortgage loan applications over the last two years is cause for concern, according to Interthinx’s 2011 Mortgage Fraud Risk Report. According to the annual report, the employment/income fraud risk index rose 14 percent in 2011 and has been on an upward trend for more than two years. Over that period, the index has increased more than 45 percent, it said. The report said the increase may have been the result of the larger decline in the income of working...

American International Group, which at times has seemed reluctant to admit that it owned a private mortgage insurance business, is now considering using the MI subsidiary to expand its footprint in the mortgage business. In an interview with the Financial Times, AIG Chief Executive Robert Benmosche said that the company is considering purchasing the mortgages it insures, though it is still working on hammering out the program’s details. Citing the fact that AIG is still in the planning stages, a company spokesperson declined to comment further on the program, specifically on what kind of loans AIG will...