The number of settlement problems as an overall percentage of market closings has increased in past months as on-time settlements plunged to 47 percent from 65 percent, according to the latest survey by the National Association of Realtors. Respondents to a monthly NAR survey cited problems with obtaining mortgages along with appraisal and inspection problems as causes of settlement delays and cancellations. The inability to obtain a mortgage was reported by 9 percent of respondents in October as causing a settlement cancellation, up from 4 percent in September. Asked whether they had any problems in...

This week, the Mortgage Bankers Association announced it was bringing the Mortgage Industry Standards Maintenance Organization back into its fold after a more than two-year stint with Mortgage Electronic Registration Systems Inc., a move likely to benefit the mortgage lending industry at large as well as the three participating entities. Management of MISMO transferred back to the MBA on Dec. 1, 2011, under the terms of a deal announced back in September by MERSCorp. and the MBA. “MERSCorp successfully managed MISMO during an important period of technical and technological development for...

Some large banks may be re-thinking their commitment to the mortgage business and creating opportunities for a number of mid-sized firms, according to analysts at FBR Capital Markets. Servicing problems and mounting repurchase demands have pushed some large banks to allocate less capital to mortgage banking and slowed their originations, FBR analysts said. “This has created an opportunity for smaller players to step up and fill the void while still attaining healthy margins,” the company added. FBR specifically pointed to PHH Mortgage, U.S. Bank, Quicken Home Loans, Provident Funding, BB&T and...

Home prices remain under stress. The CoreLogic Home Price Index shows that home prices have decreased 1.3 percent from September to October, making it the third consecutive month in which home prices have been on a downward slide. Looking at it from a wider scope, national home prices (including distressed sales) have decreased 3.9 percent from Oct. 2010 to Oct. 2011. Excluding distressed sales, Oct. 2011 posted a 0.5 percent yearly decline. States in the best shape, when including distressed sales, are West Virginia, with 4.8 percent price appreciation; South Dakota, with 3.1 percent...

The combined holdings of residential MBS by banks and thrifts topped the $1.5 trillion mark for the first time ever during the third quarter, as depository institutions without a lot of great alternative investment options continued to plow money into the market. Banks and thrifts held a record $1.533 trillion in residential MBS at the end of September, up 2.8 percent from the previous quarter and 10.4 percent ahead of the same period in 2010. Banks and thrifts held a combined 23.2 percent share of the outstanding residential MBS in the market. The biggest...(Includes two data charts)

The chief of enforcement at the Securities and Exchange Commission took issue with a U.S. District Court judge’s rejection this week of the agency’s proposed $285 million settlement with Citigroup over a collateralized debt obligation backed by MBS that went sour, and defended the deal as the best available course of action, given the restrictions under current law. Robert Khuzami, director of the SEC’s Division of Enforcement, responded to a ruling announced early this week by U.S. District Court Judge Jed Rakoff in Manhattan in which the judge rejected the multi-million-dollar...

Settlements regarding non-agency mortgage-backed securities are starting to increase as industry analysts suggest that the agreements limit the future liability faced by issuers. Bank of America and the Royal Bank of Scotland recently reached separate non-agency MBS settlements. At the end of October, BofA quietly settled with investors – including the Public Employees’ Retirement System of Mississippi – in 18 non-agency securities issued by Merrill Lynch. The settlement price was not disclosed but was reportedly $315.0 million. ...

The Department of Housing and Urban Development has reportedly offered to release major servicers from some liability related to FHA mortgages as part of a pending settlement related to foreclosure problems. While the offer may sweeten the deal for banks to settle with state attorneys general and federal regulators, observers say it’s not a total game changer. The complex negotiations have lasted more than a year, stemming from servicing practices that include robo-signing of foreclosure documents and poor communication with borrowers. A key sticking point has been...

The Federal Reserve Bank of New York will ask its primary dealers, as part of best practices, to raise their upfront cash collateral for MBS trades. A NY Fed spokesman denied that the change in collateral requirements was a reaction to the recent collapse of MF Global, a primary dealer. Since its last foray into the agency MBS business in 2010, the agency has been considering raising the margin for MBS deals, he said. The spokesman said a best practices guidance issued by the NY Fed’s Treasury Market Practices Group in September 2010 requires trading desks to consider...

The Federal Housing Finance Agency earlier this month issued a proposed rule to require the Federal Home Loan Banks to “monitor and assess the eligibility” of each Bank member for access to long-term advances through compliance with the Community Reinvestment Act and the member’s first-time homebuyer standards.To maintain access to FHLBank long-term credit and community investment products, Bank members are required to submit a community support statement to the FHFA every two years to document their CRA performance and record of lending to first-time homebuyers.