Bank and thrift holdings of home-equity loans continue to decline, according to the Inside Mortgage Finance Bank Mortgage Database, with lenders hesitant to pursue new originations. The low interest rate environment for first liens has not particularly extended to HELs, with interest rates above 5.00 percent often offered to borrowers looking into a home-equity loan. Banks and thrifts held $1.14 trillion in home-equity lines-of-credit, HELOC commitments and closed-end second liens ... [Includes one data chart]

“Servicers are less likely to act on the first-lien mortgage owned by investors when they themselves own the second-lien mortgage secured by the same property,” according to a new study based on data collected by the Office of the Comptroller of the Currency from 10 large bank servicers. The study confirms suspicions that bank servicers are conflicted regarding loss mitigation, particularly because their second-lien holdings continue to perform relatively well even as corresponding first liens have ...

The Federal Deposit Insurance Corp. will implement a new definition for subprime mortgages beginning April 1, 2013. The definition will apply to banks with assets of $10 billion or more as part of the FDIC’s Large Bank Pricing model, which determines deposit insurance rates. The reporting deadline was revealed this week as the FDIC published a final rule to determine Deposit Insurance Fund assessment rates for large and highly complex insured depository institutions. The rule was prompted after ...

The FHA is starting to lose business to private mortgage insurers and the conventional mortgage market because it is no longer the cheaper alternative, a recent industry survey indicated. Numbers released by the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey show consumer preference for conventional home loans rising as a growing number of homebuyers, particularly current homeowners, used mortgages backed by Fannie Mae and Freddie Mac to finance home purchases in August. The survey noted that current homeowners increased their use of mortgages in June this year while investor participation began ...

A significant increase in the volume of claims following the announcement of the $25 billion joint servicer settlement earlier this year has created a huge backlog that could potentially threaten the FHA Mutual Mortgage Insurance Fund, warned the Department of Housing and Urban Development’s Office of the Inspector General. Separate OIG audits of the five mortgage servicers that signed the groundbreaking settlement pact with federal agencies and state attorneys general in February found that if those servicers were to file all ...

The FHA Mutual Mortgage Insurance Fund appears poised for another potential settlement infusion following this week’s announcement of a federal lawsuit against Wells Fargo Bank for alleged reckless underwriting and fraudulent loan certifications on thousands of FHA-insured loans that ultimately defaulted. Filed by the U.S. Attorney’s Office in Manhattan, the lawsuit accuses Wells Fargo of engaging in “a long standing and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, while relying on the convenient backstop of government insurance.” Ten years of Wells Fargo’s alleged misconduct ...

The Department of Housing and Urban Development’s Office of the Inspector General is seeking indemnification from a sponsored third-party originator (TPO) for potential losses of more than $1.5 million due to poor loan documentation. The IG also ordered the TPO, Bankers Mortgage Group of Woodland Hills, CA, to reimburse the FHA insurance fund $58,704 for the actual loss on one FHA-insured mortgage loan. The IG also recommended that HUD impose fines on Bankers Mortgage for allegedly signing off on false loan information. IG auditors targeted BMG after internal investigators found significant ...

Endorsements of new loans under the Home Equity Conversion Mortgage program continued to slide as production fell significantly during first half of 2012. HECM production declined by 25.0 percent from the same period last year to $7.1 billion and fell 4.9 percent from the first to the second quarter. In-house originations accounted for almost all originations reported by top HECM lenders. Initial principal amount at loan origination totaled $4.7 billion. MetLife Bank led all lenders with $2.03 billion, an estimated 63 percent originated in house, and captured a 28.5 percent market share. Production rose 21.6 percent ... [One chart]

Portfolio lenders held to a cautious strategy for home-equity lending during the first half of 2012, with most companies not doing enough new business to offset runoff in their retained holdings, according to a new Inside Mortgage Finance ranking and analysis. But several large lenders reported significant increases in HEL originations during the second quarter, and some institutions managed to originate enough new business to increase their retained portfolios. The credit union sector continued to show more enthusiasm for the business than commercial banks and savings institutions. As of the end of June, banks, thrifts and credit unions held...[Includes three data charts]

Rules proposed by the Consumer Financial Protection Bureau in August to revamp servicing practices prompted widely varied reactions from servicers, individual consumers and community banks. Servicers largely sought to keep current servicing rules unchanged while borrowers asked for greater protections and community banks requested an exemption from the proposal. The CFPB said the proposed rules are aimed at ending “surprises and runarounds” for borrowers. The proposed rules incorporated a number of provisions included in the national servicing settlement and consent orders between servicers and federal regulators. Some of those provisions were required by the Dodd-Frank Act. Servicers largely suggested that the CFPB should not implement servicing rules beyond those specifically required by the DFA. However, the Consumer Mortgage Coalition, whose members include the servicers complying with the settlement and consent orders, called...