The share of “unacceptable” ratings for defective FHA loans following a post-endorsement technical review has dropped from double- to single-digits in FY 2015 due to lenders’ mitigation efforts, according to the FHA’s latest loan-review results. FHA’s initial unacceptable rate has remained at 45 to 47 percent over the last four quarters, but lender submission of mitigating documentation has reduced that rate to 5 percent as of Oct. 31, 2015, the FHA report said. This means an overall mitigation rate of nearly 90 percent of the FHA-insured loan sample. The number of initially unacceptable findings and those findings subsequently mitigated are based on 6,415 FHA-insured mortgages that underwent post-endorsement technical reviews between April 1 and June 30, 2015. Of the total loans reviewed, 68.6 percent were purchase loans, 17.9 percent streamline refinance and ...

Joint civil fraud initiatives have resulted in $558.5 million in recoveries and receivables to the Department of Housing and Urban Development in FY 2015, according to the HUD inspector general’s semiannual report to Congress. The amount includes civil settlements of $212.5 million from First Tennessee Bank, $29.6 million from Reverse Mortgage Solutions, and $1.8 million from three other settlements. The settlements resolved enforcement actions brought by the Department of Justice on behalf of HUD in pursuit of civil remedies under a variety of statutes, including the False Claims Act, Program Fraud Civil Remedies Act, and the Financial Institutions Reform, Recovery and Enforcement Act. Recoveries and receivables for other entities during the reporting period – April 1 to Sept. 30, 2015 – totaled $86.9 million and $268.2 million for the entire fiscal year. Some of the payments were made to the ...

A precedent-setting court case decided in May has disrupted the MBS and ABS markets, according to the Securities Industry and Financial Markets Association and the Structured Finance Industry Group. The trade groups filed an amicus brief to the Supreme Court of the United States late last week, calling for the court to hear an appeal of the ruling in Madden v. Midland Funding. In May, the U.S. Court of Appeals for the Second Circuit ruled that federal preemption under the National Bank Act doesn’t apply to nonbanks that purchase loans from banks. The Madden ruling subjects nonbank purchasers of loans originated by banks to state usury laws. If a bank’s preemption from such laws isn’t transferred when a nonbank acquires a loan originated by a bank, the loan can be...

Income from mortgage production-related activities fell sharply during the third quarter of 2015, according to a new Inside Mortgage Trends analysis of earnings reports from 13 major companies. And results from mortgage servicing operations were even worse. The 13 lenders reported a combined $1.623 billion in production-related income for the third quarter, a decline of 23.9 percent from the previous period. While all but two of the lenders managed to ... [Includes one data chart]

Mortgage bankers reported a sharp decline in profitability during the third quarter of 2015, including a bottom-line loss on servicing activity, according to the Mortgage Bankers Association’s quarterly performance report. The average firm’s pretax income was $1.70 million for the third quarter, the MBA said, down 51.4 percent from the previous three-month period. For the year, however, average firm pretax income was up 19.1 percent from the first nine months of 2014 ...

Ally Financial – which operates mostly as an auto lender now – plans to reenter the residential mortgage space, a move that comes more than three years after the depository threw its Residential Capital subsidiary into Chapter 11 bankruptcy protection and liquidated its once-massive servicing portfolio. Then again, a quick look at Ally’s balance sheet reveals that it still holds a tidy sum of home mortgages, $7.85 billion in residential first liens and $344 million in junior liens ...

Household growth between 2010 and 2030 will be overwhelmingly nonwhite and half of the net new homeowners over the next 15 years will be Hispanic, according to experts in a forum on demographic changes hosted this week by the Urban Institute. Groups with low “headship” rate (the number of householders who are primary borrowers) and homeownership rates, including Hispanics and other nonwhites, constitute a growing share of the U.S. population ...

As an increasing share of “baby boomer” mortgage executives reach retirement age over the next few years, there’s a growing concern about a talent “brain drain” from the industry. But rest assured, there’s still plenty of senior managers who plan on working well past the standard retirement age of 65. “The retirement rate of 10,000 people [baby boomers] per day may be applicable to the general population, but I do not think it is applicable to the mortgage banking industry,” said Larry Charbonneau ...

A significant shift occurred in bank loan modification practices in the third quarter of 2015, according to data from the Office of the Comptroller of the Currency. Major banks’ use of proprietary loan mods declined sharply compared with the previous quarter while the number of Home Affordable Modification Program mods was nearly level in that span. The OCC’s data cover eight banks with a combined $3.73 trillion servicing portfolio, 42 percent of all outstanding first-lien residential mortgages ...

The average daily trading volume in agency MBS fell to $180.2 billion in November, hitting a new low for the year, according to the Securities Industry and Financial Markets Association. Such a low reading is indicative of a lack of liquidity in the market, but by now, investment bankers and policy makers are no longer wringing their hands about the number. The complacency, in part, is fueled...