Valuations of mortgage servicing rights could take a severe beating if scores of banks dump MSRs to avoid costly new capital requirements under rules to implement controversial international guidelines that have been proposed by U.S. banking regulators. Proposals to implement the Basel III capital rules for U.S. banks would be a game-changer for the mortgage industry, said David Motley, president of Colonial National Mortgage, during a panel session at the Mortgage Bankers Association annual convention last week. As proposed, the Basel III rules “would restrict our ability to grow and may cause us to shrink,” he said. The complex set of Basel III proposals would affect...

Competing special servicers Ocwen Financial and Walter Investment Management worked together this week to outbid Nationstar Mortgage to acquire Residential Capital’s mortgage servicing rights and origination platform at a bankruptcy auction. And Berkshire Hathaway won a separate auction for ResCap’s whole-loan portfolio. After approval by the bankruptcy court, Ocwen would handle 86.5 percent of the $374.0 billion ResCap MSRs with Walter acquiring $50.4 billion in Fannie Mae MSRs along with ResCap’s ...

FHA loan originations, driven largely by streamline refinancing, increased 5.3 percent to $60.9 billion in the third quarter of this year, the highest level it has been in almost two years, according to Inside FHA Lending’s latest analysis of FHA data. The third-quarter volume reflected an upward trend that began in the first quarter with nearly $48.5 billion in total FHA single-family production and which later rose to $57.8 billion in the second quarter. The last highest point in FHA production was in the fourth quarter of 2010 when ... (2 charts)

New pool level data issued by Ginnie Mae reveal a rising share of FHA-insured loans that have refinanced with grandfathered mortgage insurance premiums (MIP) in new Ginnie Mae mortgage-backed securities issuances, according to analysts. Of particular interest to investors is the share of borrowers with existing FHA-insured home loans who took advantage of an opportunity to refinance on advantageous terms under the FHA Streamline Refinance program, said analysts at Bank of America Merrill Lynch. Under the revised rules of the FHA Streamline Refi program, FHA-insured mortgages endorsed before June 1, 2009, were ...

A weakened mortgage revenue bond market and the unreliability of its primary and pool credit enhancement structure has prompted the Wisconsin Housing and Economic Development Agency to turn to FHA and Ginnie Mae to finance its affordable housing program. Launched in December last year, WHEDA’s $100 million FHA Advantage program is still in its infancy, generating less than $1 million a month. Although marketing has not been aggressive as it should be, Geoff Cooper, WHEDA director of single-family operations, said the housing finance agency will soon announce ...

A nonsupervised Arizona FHA lender whose high default and claims rate triggered a supervisory audit earlier found itself in a deeper mess for improper underwriting on a number of FHA streamline refinanced loans that resulted in losses to the FHA insurance fund. The Department of Housing and Urban Development’s Inspector General found that Allen Mortgage of Centennial Park, AZ, violated HUD’s regulations , procedures, and instructions in the underwriting of FHA-insured loans. Specifically, of the 73 streamlined refinance mortgage loans reviewed by the IG, 23 were ...

VA Home Loan Program Celebrates 20-Millionth Loan Beneficiary. The Department of Veterans Affairs this week commemorated the 20-millionth recipient of a VA loan under the agency’s Home Loan Guaranty Program. Agency officials held a ceremony at the Woodbridge, VA, home of the loan’s recipient, Mrs. Elizabeth Carpenter, whose husband, Capt. Matthew Carpenter, passed away in 2010. Since 1944 as part of the original GI Bill of Rights, the VA has been providing guarantees to 30-year mortgage loans with low interest rates and has guaranteed ...

Attendees at the ABS East conference sponsored by Information Management Network this week in Miami were more optimistic about the MBS and ABS markets than they have been in some time. So optimistic, in fact, that some industry participants are already concerned about bubbles forming in the still recovering securities markets. “If this conference is any indicator, it looks like everybody feels there’s real vitality,” said Lewis Ranieri, chairman and founding partner of Ranieri Partners. “I haven’t seen a conference like this in quite a while.” Close to 3,000 people attended the event. Jay Steiner, a managing director at Deutsche Bank, noted...

Recent efforts by the government-sponsored enterprises and the Federal Housing Finance Agency to offer clarity and consistency about repurchase demands may or may not bear fruit as neither agency officials nor industry observers can speak confidently as to its ultimate effectiveness. According to participants at an Inside Mortgage Finance webinar this week, the GSE representation and warranty framework unveiled by the FHFA last month and the GSEs’ new quality control guidelines announced last week are steps in the right direction but there are a lot of moving parts to take into account. “We tried the best we could to address...

Mortgage real estate investment trusts that invest in MBS are likely to see their profitability reduced in coming quarters, largely as a result of the competition they’re facing from the Federal Reserve for assets to buy. Since the Fed’s Sept. 13 announcement that it would snap up an additional $40 billion of agency MBS a month as part of its latest quantitative easing, yields have dropped and spreads have narrowed, and that’s cutting into the earnings and dividends of mortgage REITs. Paul Miller, a securities analyst at FBR Capital Markets, agrees...