The Federal Housing Finance Agency late last month announced a number of changes to the federal government’s Home Affordable Refinance Program for underwater borrowers with mortgages from Fannie Mae and Freddie Mac. But one important little detail that escaped the attention of many has to do with the borrower loss of non-recourse loan protections for borrowers who refinance. Millions of Americans live in states that have such protections that could keep them from being personally liable in the event of a default. But in many of these states, refinancing removes those protections – enabling a lender to pursue tens or hundreds of thousands of dollars more than they would legally have been entitled to without the refinance.
FHA claims rose in 2011 from last year with loss mitigation and property conveyances accounting for the bulk of paid claims, according to Inside FHA Lending’s analysis of FHA fiscal year data. Though increasing by 7.7 percent, claims are still far below the 15.0 percent average for FHA loans, said an agency spokesperson. On Sept. 30, servicers reported 635,096 mortgages in serious default, yielding a default rate of 8.7 percent. This fiscal year, FHA reported 326,892 claims, of which 200,808 were loss mitigation-related and 91,448 were property conveyance actions. Claims related to pre-foreclosure sales and Home Equity Conversion Mortgage loans showed the most ...
Fannie Mae, Freddie Mac and their federal conservator are trying to devise a new servicing compensation scheme without upsetting the to-be-announced agency MBS market that Wall Street dealers and Main Street mortgage lenders depend on. In a recent white paper outlining two alternatives for reforming servicing compensation so that more resources are available for distressed loans, the Federal Housing Finance Agency said “promoting continued liquidity” in the TBA market is one of its primary objectives. The agency also mused that a new servicer compensation system for the government-sponsored enterprises could...
Prospects for a return of elevated conforming loan limits remain unclear after the Senate approved a reinstatement provision in an appropriations bill in October. Most conservatives in the House remain strongly opposed to the reinstatement – which would likely delay the return of the non-agency market. More than 30 percent of members of the House support a temporary reinstatement of elevated conforming loan limits, according to a letter sent to House leaders this week. ...
Even though the home-purchase mortgage market remains on life support, this important sector of the mortgage industry got a little bit of good news in September – namely, that the share of home purchases involving all cash transactions actually dipped to the lowest level seen in 2011. According to the results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, cash transactions accounted for 29.5 percent of home-purchase transactions tracked in September. While that still represented the most popular method for purchasing a home in the U.S., it was...(Includes one data graph)
With home sales slow, house prices still floundering and little lender appetite for cash-out refinancing, the mortgage servicing business may be another year or more away from reversing the historic contraction that’s been underway since early 2008. But a new servicing ranking by Inside Mortgage Finance reveals that some companies have managed to grow their business. Servicing remains a top-heavy industry dominated by three companies that collectively held 47.8 percent of the market as of the end of September. But only one of those firms – second-ranked Wells Fargo – has seen its servicing portfolio...(Includes one data chart)
As the picture of the revised Home Affordable Refinance Program finally came into greater focus this week, MBS analysts indicate that the impact of HARP 2.0 will neither be quite as terrible for MBS investors as feared, nor terribly helpful to the stagnant housing market and the economy at large. The Federal Housing Finance Agency made most of the changes the market expected and steered clear of one that might have boosted HARP business significantly: changing the eligibility cut-off date to give existing HARP borrowers a second crack at the program. The agency agreed to remove the 125 percent loan-to-value cap – although very little...
House Republicans have already introduced a variety of separate bills to clamp down on Fannie Mae and Freddie Mac while the two government-sponsored enterprises remain in conservatorship, and a key GOP lawmaker this week introduced legislation intended to jumpstart a private MBS market to take over when the agencies are finally dissolved. The Private Mortgage Market Investment Act, drafted by Rep. Scott Garrett, R-NJ, would create a heavily regulated MBS market made up solely of private entities functioning with no federal guarantee at all. The lawmaker, who chairs the House Financial Services Subcommittee on...
Fannie Mae and Freddie Mac’s total taxpayer cash infusion could top as much as $311 billion by the end of 2014 – a “savings” of some $52 billion from similar projections one year ago, according to the Federal Housing Finance Agency.The FHFA this week released its updated projections of the financial performance of the two GSEs, including potential draws under the Senior Preferred Stock Purchase Agreements with the Treasury Department. "The projections have been updated to reflect the current outlook for house prices, interest rates, and recent trends toward borrower behavior,” explained the FHFA.
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