Commercial banks and savings institutions reported a record $9.38 billion in net income from mortgage banking activity during the third quarter of 2012, according to a new ranking and analysis by Inside Mortgage Trends. The call report data underscore what was already apparent in earnings reports from a broad cross-section of lenders: mortgage banking has been exceptionally profitable in 2012. Banks and thrifts generated a whopping $25.25 billion in mortgage banking income over ... [Includes one data chart]

Valuation of mortgage servicing rights has been challenging for many market participants, particularly with the incredible pace of change occurring in the mortgage servicing industry. Hence, it is important for servicers to have the basic building blocks to a solid MSR valuation process and a full understanding of the company for pricing and valuation purposes, suggests a recent study from PricewaterhouseCoopers. PwC noted that MSR valuations for seasoned portfolios have dropped ...

The major servicers use three different models to implement single point of contact requirements, with no clear answer as to which model is the best, according to a new report from the Treasury Department. Servicers report seeing benefits from SPOC requirements though there are also concerns with the new servicing model. A SPOC works with a borrower to determine options throughout the loss mitigation process. The Treasury requires servicers participating in the Home Affordable Modification Program to ...

A law professor says there is no quick solution to the mortgage industry’s foreclosure mess and the resulting legal chaos, but moving to a single electronic note/mortgage transfer system would solve much of what caused the crisis to begin with. “Massive originations of mortgage loans relying on the sell-to-distribute model, followed by massive foreclosures, have led to chaos in the legal processes to track who may foreclose and sell homes,” said Alan White, professor of law at Valparaiso Law School ...

An examination of how quickly the distressed real estate inventory dissipates in three Northeast states suggests that federal policymakers need to pay much more attention to local mortgage market conditions when formulating policy, one researcher says. “A critical issue in today’s housing market concerns both the size of the distressed real estate inventory and the speed at which it will dissolve,” said James Follain, principal of James R Follain LLC and contributing editor to ...

The former chief executive of DocX admitted to her role in a fraud scheme that duped servicers and relied on forged signatures and employees that could sign thousands of mortgage-related instruments a day. Lorraine Brown pled guilty to charges from the Department of Justice of conspiracy to commit mail and wire fraud. “She was responsible for more than a million fraudulent documents entering the system, directing company employees to forge and falsify documents relied on by property recorders ...

The Home Affordable Refinance Program hit record levels in the third quarter of 2012, with 286,044 Fannie Mae and Freddie Mac borrowers taking advantage of the program designed for underwater borrowers. That was up 17.8 percent from the second quarter and raised total participation in the program to 1.73 million since it began back in 2009. The biggest gains this year have been in the refinances of mortgages with loan-to-value ratios exceeding 105 percent [Includes one data chart] ...

Portfolio lending by community banks could be treated differently than other types of lending under pending Basel III capital requirements, according to recent indications from federal regulators. The potential exceptions for community banks follow strong lobbying from lenders as well as bipartisan support in Congress. “While we strongly believe that finalizing the regulations is critically important for certainty and planning, we also believe there are merits to considering alternative, simpler approaches to ...

The Department of Housing and Urban Development will raise the annual insurance premium on new FHA originations, reverse the agency’s current policy on mortgage insurance premium cancellation and institute other policy changes to improve the health of the FHA insurance fund. The new measures aim to offset significant losses from FHA’s legacy loans, which have caused significant stress to the agency’s Mutual Mortgage Insurance Fund. Results of a new FHA actuarial audit showed that the stress has plunged the MMI Fund into a deep hole, revealing negative capital of $16.3 billion (negative $13.5 billion excluding Home Equity Conversion Mortgages) on a $1.13 trillion FHA portfolio. The capital reserve ratio fell ...

Mortgage lenders will be facing tougher enforcement if Congress decides to act on a series of proposals to hold lenders accountable for noncompliance with FHA policies and regulations. In the wake of an adverse actuarial report regarding the health of the FHA’s Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante announced that the agency will seek new powers to recoup losses from lenders that originate bad FHA loans. The proposals are designed to provide the FHA with greater flexibility to revise policies and procedures to avoid unnecessary losses before they occur. They will also improve the agency’s ...