The Federal Housing Finance Agency late last week announced it reached a nearly $100 million settlement with RBS Securities to settle allegations tied to non-agency MBS bought by Freddie Mac from 2005 to 2007, but the deal represents just a fraction of the firm’s remaining exposure. The $99.5 million settlement only resolves claims against RBS in FHFA v. Ally Financial Inc. in the Southern District of New York. Ally Financial is the successor company to GMAC-RFC, a now defunct non-agency MBS issuer.

Several top-tier commercial banks increased their holdings of first-lien mortgages during the first quarter of 2014, according to a new ranking and analysis by Inside Nonconforming Markets. The growing portfolios were largely due to jumbo mortgages along with some conforming loans. Banks and thrifts held $1.74 trillion in first-lien mortgages in portfolio at the end of the first quarter of 2014, down 0.7 percent from the previous quarter ... [Includes one data chart]

SunTrust Mortgage’s recent settlement of a dispute with the federal government and 49 state attorneys general over defective FHA loans and Wells Fargo’s losing bid to quash a similar lawsuit are raising concerns about doing business with the FHA. Industry attorneys say the lesson for lenders in these recent industry debacles is that it is “extraordinarily dangerous” to do FHA loans these days given the outcome of the two cases. It is also getting harder to trust mortgage settlement agreements with the government, they added. “The scariest part in all these is the combination of government forces involved in these claims – state AGs, Department of Justice, Department of Housing and Urban Development and the Consumer Financial Protection Bureau,” said an attorney, who worked on both cases. “When they want to get you, they can get you.” Others believe these developments could have a ...

Two federal agencies have announced separate actions to protect reverse mortgage borrowers and rural home purchasers from deceptive advertising and marketing. This week, the FHA warned lenders participating in the Home Equity Conversion Mortgage program not to use misleading or deceptive language in marketing FHA-insured reverse mortgages to consumers. The FHA said the guidance is intended to protect HECM borrowers from advertising and presentations that appear to limit their options rather than informing them of the full range of available HECM products. Underscoring senior borrowers’ “freedom of choice,” FHA Commissioner Carol Galante said the agency wants lenders to know their marketing and advertising practices are under constant surveillance to prevent customers from being steered to unsuitable reverse mortgage products. Galante noted the ...

FHA jumbo loan originations fell significantly in the first quarter of 2014 due primarily to higher mortgage insurance premiums and a decrease in the mortgage loan limits, particularly in high-cost areas of the country, according to Inside FHA Lending’s analysis of agency data. FHA lenders reported a meager $2.4 billion in jumbo originations during the first three months of the year, a decrease of 21.2 percent from the previous quarter and down a whopping 55.7 percent from the same period a year ago. Purchase loans accounted for 81.0 percent of new originations while fixed-rate loans comprised 86.8 percent. FHA jumbo loans are those over $417,000 and they comprise a very small slice of the FHA’s overall loan portfolio. Citing FHA data, Brian Chappelle, a mortgage industry consultant, said that of the FHA loans originated in the last 12 months, roughly 11,000 loans were above $500,000, down from ... [ 2 charts]

NY Passes Bill to Reduce Number of FHA Loans that Would Fall Under Subprime. The New York Assembly recently passed legislation that would result in fewer FHA loans being classified as “subprime” under state banking law, according to the law firm Ballard Spahr. Already passed by the Senate, the bill would make permanent prior emergency rules issued by the Department of Financial Services, which raised the subprime threshold 75 basis points for those loans subject to the revised FHA mortgage-insurance premium cancellation policy. Although the emergency rules were set to expire on Dec. 31, 2013, the DFS granted an extension to allow the state legislature additional time to find a permanent solution, said Ballard Spahr attorneys. The bill passed with overwhelming bipartisan support and strong industry backing, and is expected to ...

Home-equity lending fell off sharply during the first quarter of 2014, but the sector may be poised for a rebound in the months ahead. Home-equity originations totaled an estimated $13 billion during the first three months of this year, down 18.8 percent from the previous quarter. That was up 8.3 percent from the first quarter of 2013, and a handful of lenders reported increased home-equity activity in early 2014. Most closed-end seconds and home-equity lines of credit are retained...[Includes three data charts]

Commercial banks and savings institutions reported another decline in mortgage repurchase and indemnification activity in the first quarter of 2014, according to a new Inside Mortgage Trends analysis of call reports. The industry reported just $1.14 billion in aggregate repurchases and indemnifications related to single-family mortgage banking operations during the first three months of the year. That was down 21.4 percent from the previous period and ... [Includes one data chart]

The wholesale channel isn’t something to shun, according to officials at Stonegate Mortgage. The nonbank is tapping all three origination channels in an effort to increase its holdings of mortgage servicing rights while controlling origination costs. Stonegate had $2.42 billion in originations in the first quarter of 2014, up 27.4 percent from a year ago, making the publicly traded mortgage banker one of the relatively few lenders to increase its production in that span ...

The environment is ripe for bank mortgage lenders to see improvements in the coming months, according to industry analysts. However, even as interest rates remain at low levels, there has yet to be a significant increase in originations of purchase mortgages. “The mortgage market has slowed, but things aren’t all bad for banks,” Standard & Poor’s said last week in an analysis of banks’ mortgage revenue. The rating service noted that mortgage banking results ...