Banks reported higher fair market values on their mortgage servicing rights assets during the first quarter of 2012, according to a new Inside Mortgage Trends analysis of call report data. Financial institutions filing bank call reports said they serviced $5.786 trillion of single-family mortgages for other investors – mostly through mortgage securitization activities – as of the end of March. They put a fair market value on these MSR assets of $48.69 billion, or 0.841 percent of the unpaid principal balance. At the end of December, the ratio of MSR fair value to mortgages...(Includes one data chart)

An ambitious public-private partnership hopes to harness the legal standing of the state and private money to solve the issue of negative equity by condemning underwater homes. Mortgage Resolution Partners is a San Francisco-based firm that works to, in words from its own website, “keep as many homeowners with underwater mortgages in their homes as possible, aiding in the stabilization of local housing markets and economies.” To create stability, however, Mortgage Resolution Partners intends to shake things up. According to a Reuters report, MRP proposes to partner with local governments and...

Since the start of conservatorship in 2008, government wards Fannie Mae and Freddie Mac have completed more than 2.3 million foreclosure prevention actions, according to the Federal Housing Finance Agency. These actions include 1.1 million permanent loan modifications. Nine months after modification, less than 15 percent of the loans modified in the second quarter of 2011 had missed two or more payments, while half of all borrowers who received loan mods in 1Q12 had their monthly payments reduced by more than 30 percent. Consumer credit performance deteriorated in May largely because of mortgages, according to...

Non-agency mortgage-backed security investors and politicians on both sides of the aisle were critical this week of the recent $25.0 billion servicing settlement. The settlement requires principal reduction loan modifications on mortgages held in five banks’ portfolios and allows the servicers to receive credit for reducing principal on mortgages in non-agency MBS. Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, noted that the Association of Mortgage Investors is not opposed to principal reduction mods ...

The Department of Housing and Urban Development is expanding an existing FHA note sales program as an alternative strategy for disposing of foreclosure property from the department’s bulging real estate-owned inventory. HUD Secretary Shaun Donovan announced enhancements to the accelerated claims disposition (ACD) program, which was designed primarily for delinquent FHA loans, at the 2012 Clinton Global Initiative America Meeting held this week in Chicago. The event brings together government and private sector leaders to discuss ways to ...

Lenders should now consider themselves on notice that the GSEs have adopted an even more aggressive posture in pressing their representation and warranty rights on mortgage loans they find wanting, analysts say, as evidenced by last week’s announced $330 million repurchase of Freddie Mac mortgages by Bank of America. A Freddie spokesman said that the GSE and BofA “mutually agreed” that the bank would repurchase the 2010 and 2011 loans that were not eligible for sale to Freddie under the terms of the company’s contracts with BofA. Specifically, the loans were underwritten using alternative valuation methods that were prohibited for use in the underwriting of the particular types of mortgages involved.

Banks earned a record $7.96 billion on their mortgage banking activities during the first quarter of 2012, according to a new Inside Mortgage Trends analysis of bank call reports. First-quarter earnings from mortgage banking were up a whopping 42.8 percent from the fourth quarter of 2011, and they more than double the amount banks earned during the first three months of last year. One factor contributing to the big increase in mortgage banking income was the expansion of the universe of financial institutions that complete the bank call report to include thrifts. The now obsolete...(Includes two data charts)

The housing market remains the one big drag for the overall economy, but home prices may have finally bottomed out in the first quarter of the year and pent-up demand will eventually bring market forces to a decisive tipping point at which time a quick turn-around might occur, according to one analyst. In the current market, challenges remain, perhaps most notably the big disconnect between housing affordability and market demand. “Despite record low mortgage rates, housing demand remains weak,” said Christopher Flanagan, managing director and head of U.S. securitized product research for Bank of...

Bank of America could turn a profit by re-securitizing the $330 million of recently originated “defective” mortgages that it agreed to buy back from Freddie Mac, according to analysts, but the bank said it will hold the loans in portfolio. Resecuritizing repurchased performing residential mortgages could potentially result in substantial gains for lenders such as BofA, if they can fix the minor deficiencies and misrepresentations and re-pool the loans into new Freddie Mac bonds after a manual appraisal, analysts said. Freddie officials have said the government-sponsored enterprise will not...

Home Loan Servicing Solutions, recently launched as an independent acquirer of high quality mortgage servicing assets from Ocwen Financial Corp., is off to a good start as analysts gave it a thumbs up after a promising first-quarter debut. Analysts with Keefe, Bruyette & Woods gave the new company an Outperform rating and projected upward-trending dividend yields of 8.2 percent in 2012 and 9.9 percent in 2013-14. On May 8, the company declared a 10-cent monthly dividend, and the 30-cent quarterly dividend is slightly below KBW’s estimate of quarterly earnings-per-share of 32 cents...