The five large mortgage servicers that agreed to a $25 billion settlement with 49 state attorneys general this week have already established more than enough reserves to cover their costs, analysts say. Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial agreed to pay $20.0 billion in financial relief to homeowners and $5.0 billion to federal and state governments, of which $1.5 billion will be used to compensate some borrowers who have gone through foreclosure. Both the Federal Reserve Board and the Office of the Comptroller of the Currency levied separate monetary penalties...

The boom in mortgage origination activity in the fourth quarter of 2011 carried mortgage banking profits to their highest level in nearly two years, according to a new Inside Mortgage Trends analysis of earnings reports from 22 companies. The group, which includes all the top originators and servicers, reported a combined $5.10 billion in mortgage banking income during the fourth quarter of 2011. That was up 20.0 percent from the previous three-month period and represented the most profitable quarter for the group since the first quarter of 2010. On a full-year basis, the results don’t...(Includes one data chart)

The mortgage settlement agreement between state and federal law enforcement agencies and the country’s five largest loan servicers will unleash a new foreclosure wave that will cause real estate-owned properties and distressed home sales to increase, according to market observers. Having the Federal Housing Finance Agency’s REO Initiative ready will be useful when the foreclosure and REO tsunami comes rolling in, academics, economists and analysts agree. The number of properties classified by banks as “real estate-owned,” or REO, has declined over the past year. The reason: the robosigning scandals...

Firms participating in the Public-Private Investment Program with a focus on non-agency mortgage-backed securities all took losses in the fourth quarter of 2011 compared with the previous quarter, according to an analysis by Inside Nonconforming Markets. The Oaktree PPIP Fund – which only invests in commercial MBS – was the only public-private investment fund to increase its net internal rate of return since inception in the fourth quarter of 2011, Treasury Department data show. The Treasury cautioned that it is ... [Includes one data chart]

Wells Fargo reclaimed the top ranking in residential mortgage servicing at the end of 2011, a position that the firm last held back in 2006. A new Inside Mortgage Finance ranking and analysis shows that Wells continued to build its mortgage servicing portfolio through robust loan origination activity, but it wasn’t easy. Wells originated $120.5 billion in new loans during the fourth quarter, but managed to increase its servicing portfolio by just $7.5 billion, a 0.4 percent increase. That relatively small increase was enough to move well ahead of Bank of America, which reported a huge $165.8 billion net...

The Federal Home Loan Bank of Chicago is in the midst of crafting an “unusual” plan to supplement the Bank’s current affordable housing and community investment programs with $50 million in additional funds to be used to promote housing and economic development throughout its district.According to a filing the Chicago Bank made with the Securities and Exchange Commission late last month, the three-year initiative will be in addition to the Bank’s current Affordable Housing Program (AHP) grant process and is part of an agreement with the FHLBank regulator, the Federal Housing Finance Agency.“We are in the process of developing the framework for the use of these funds which will be deployed by the end of 2014,” explained the Bank in its Dec. 27 SEC filing. “This program will be in addition to our other community investment programs in 2012, 2013 and 2014.”

The Federal Home Loan Bank of Cincinnati last week announced a changing of the guard among top management as the Bank’s president and CEO will step down this summer to retire.David Hehman will step down effective June 1 after 35 years at the Bank, including nine years as its president and CEO. Hehman, 63, is credited with leading the FHLBank of Cincinnati through the 2008 financial crisis when banks of all sizes were forced to turn to the Cincinnati FHLBank for liquidity.The FHLBank’s board appointed Andrew Howell to replace Hehman. Howell joined the FHLBank of Cincinnati in 1989 and is currently its executive vice president and chief operating officer.

In what may be a harbinger for other nonbank mortgage lenders fighting to make their way in a tough and competitive market, Primary Residential Mortgage, Inc. has launched an enterprise risk management (ERM) group, a step taken to make sure the company has in place the risk-monitoring and evaluation policies to properly manage risk through the entire loan origination process. “Over the last couple years, the mortgage industry has been under intense scrutiny,” said Dave Zitting, president and CEO of PRMI, a nationwide mortgage banking company based in Salt Lake City. “While the larger banks all have...

Originations of 1-4 family residential mortgages rose by a substantial 19.4 percent at the end of last year, but 2011 still ranked as the worst year for new production activity since year 2000. Mortgage lenders produced an estimated $1.35 trillion of home loans last year, down 17.2 percent from the total in 2010, according to Inside Mortgage Finance. Production hit a low spot during the second quarter, when just $280.0 billion in new mortgages were originated – the weakest quarter since financial markets seized up at the end of 2008. New record lows in mortgage interest...(Includes two data charts)

Well-known jumbo originators contributed most of the collateral for Redwood Trust’s pending $415.73 million non-agency mortgage-backed security, but a handful of smaller lenders also benefitted from Redwood’s jumbo correspondent program. These lenders have little securitization experience but received strong endorsements from rating services and due-diligence firms. Redwood purchased most of the loans to be included in Sequoia Mortgage Trust 2012-1 on a flow basis, according to Kroll Bond Rating Agency. Flagstar Bank led the smaller originators, with $31.84 million of its loans included in the security ...