Department of Housing and Urban Development Secretary Shaun Donovan this week reiterated his agency’s request for additional legislative authority to regulate the Home Equity Conversion Mortgage program by mortgagee letter so that much-needed changes can be implemented immediately. Rather than go through the tedious legislative process of amending HECM legislation to improve the program and reduce HECM losses, expanding HUD’s authority would enable the department to undertake immediate reforms, such as restricting lump sum payments, requiring financial assessments of HECM applicants and requiring borrowers to ...

The Department of Justice recently announced enforcement actions against a New York-based FHA lender and its owner/president for fraudulent certification of FHA-insured loans as well as two separate settlements with bank subsidiaries for alleged violations of the Servicemembers Civil Relief Act. In the first action, the U.S. Attorney for the Southern District of New York, the Department of Housing and Urban Development, and the HUD Office of the Inspector General jointly announced a civil mortgage fraud lawsuit against ...

The Department of Housing and Urban Development’s Mortgagee Review Board slapped 157 FHA lenders during the first nine months of 2012 with various administrative actions, including more than $1.7 million in civil money penalties and indemnifications to HUD for paid and potential claim losses totaling $1.25 million. The MRB, which is HUD’s disciplinary arm, took action against the approved lenders from Jan. 1, 2012, to Sept. 30, 2012. According to a notice published in the April 11 Federal Register, the board withdrew the FHA approval of 130 lenders for failing to ...

Ginnie Mae is seeking feedback from dealers, issuers and investors about whether to continue to maintain two separate mortgage-backed securities programs or to consolidate them under a single security. Comments are also being sought on other possible options. Bloomberg.com recently reported that Ginnie Mae sent out questionnaires to Wall Street broker-dealers for their input on the future of both the Ginnie Mae I and Ginnie Mae II MBS programs. The agency has been considering whether it should merge the programs for some time. The Ginnie Mae I single-issuer pool program with stringent pooling requirements began in ...

No one is suggesting that Wells Fargo will begin lopping off large chunks of its $1.9 trillion residential servicing portfolio in a fashion similar to what Bank of America has done the past two years, but clearly selling mortgage servicing rights is on its to-do list. The big question is how much Wells Fargo is willing to part with. The bank declined to discuss the matter with Inside Mortgage Finance, but confirmed that it seeks to hire what it calls a “project manager” to oversee the effort. A spokeswoman for Wells downplayed the significance of the hire, saying the person who eventually joins the staff will be a “non-executive.” At least four servicing professionals said...

Fannie Mae’s and Freddie Mac’s recent, unambiguous return to profitability will diminish an already waning urgency among Capitol Hill lawmakers to proceed with legislative GSE reform as the companies’ profits flow into the U.S. Treasury by the billions, industry experts warn. Fannie announced last week that the GSE expects to remain profitable “for the foreseeable future” after posting record-shattering quarterly and yearly earnings for the period ending Dec. 31, 2012. In the wake of Fannie’s announcement, the White House this week said that from January 2013 to the end of 2023 the two GSEs could send $183.3 billion to the Treasury.

Although Fannie Mae posted stellar – and record – earnings last week, the best is yet to come thanks to a $58.9 billion allowance for “deferred tax assets” the GSE is likely to capture when it releases earnings for the first quarter of 2013, a number that will be revealed some time in May. In its 10-K filing for 2012, Fannie did not absolutely say it will move to capture the DTA allowance in the first quarter, but notes that “if and when the valuation allowance is released, it will be included as income.” The GSE said it did not take the DTA in 2012 because it has not been steadily profitable for a long enough period of time. It noted that the decision was “complicated.”

Mortgage banking remained hugely profitable during the fourth quarter of 2012, but it took a rebound in servicing income to boost overall earnings, according to the most recent quarterly performance report from the Mortgage Bankers Association. The MBA data show that average pretax income for a wide variety of mortgage companies rose 11.1 percent from the third to the fourth quarter of last year, hitting a record $4.71 million. That raised the average firm’s pretax income for all of 2012 to ...

Gain-on-sale margins for mortgage originations declined for lenders during the first quarter of 2013, according to industry analysts, but a number of factors appear likely to keep the margins this year well above historical levels. Core gain-on-sale margins for the major banks fell to 2.9 percent in the first quarter of 2013, according to estimates by Credit Suisse Securities, down from 3.3 percent in the previous quarter and from a high of 3.5 percent in the third quarter of 2012. The analysts warn ...

Modified mortgage loans continue to pose credit risks for banks despite improved housing-market conditions and modest declines in foreclosure activity, according to a new analysis by Fitch Ratings. Despite better modification results (partly due to reduced payments under the Home Affordable Modification Program) through the third quarter of 2012, the high delinquency and foreclosure rates for recently modified mortgages indicate persistent asset quality problems, said ...