Although primary market lenders will face fewer hurdles in originating refinance loans for underwater Fannie Mae and Freddie Mac borrowers, detailed guidelines released by the government-sponsored enterprises this week confirm that it will take several months before the expanded programs are fully implemented. And when they are, the revamped Home Affordable Refinance Program will generate up to one million new loans that otherwise wouldn’t have happened, according to estimates by Keefe, Bruyette & Woods. That’s just about what the market expected, and it will mean... (Includes one data chart)

The outstanding supply of subprime mortgages in the market continued to decline in the third quarter, but three special servicers significantly increased their portfolios, according to a new ranking and analysis by Inside Nonconforming Markets. The growing servicers – Ocwen Financial, Nationstar Mortgage and Walter Investment Management – all focus on high-touch servicing. Special servicing is in particularly high demand as banks have started to sell their subprime holdings, a trend expected to...

The high-cost loan limits for FHA mortgages will be re-elevated to $729,750 through at least the end of 2013 while the government-sponsored enterprises’ loan limits will remain unchanged under appropriations legislation approved by Congress this week. Industry participants suggest that the FHA’s newly higher loan limits will have little impact on non-agency jumbo activity. The revised FHA loan limits were included in “mini-bus” appropriations legislation for the Department of Housing and Urban Development and other federal agencies. The bill – which also contained a Continuing Resolution to avoid a government shutdown – was...

The Federal Housing Finance Agency’s recent proposal to revamp servicer compensation has received mixed reactions from non-agency participants. High-touch servicers approve of the landscape-shifting fee-for-service proposal but analysts suggest that the system would be much more difficult to establish for non-agency mortgages than for agency loans. Ocwen Financial and other servicers that predominantly handle delinquent mortgages favor the FHFA’s proposal that would significantly increase the fees paid to service delinquent loans and lower the base servicing fee for performing loans, perhaps to...

Mortgage real estate investment trusts, along with investors, urged the Securities and Exchange Commission to maintain certain exemptions for mortgage REITs or risk further housing finance issues. REITs are seen as key in efforts to reduce the federal government’s current support of mortgage finance. “Mortgage-focused real estate investment trusts, such as Redwood, are well-suited to carry out this key mortgage banking business function,” said Andrew Stone, general counsel for Redwood Trust. “However, these companies need to continue to be able to rely on the [SEC] exclusion in order to efficiently and effectively carry out...

Recent modifications on non-agency mortgages performed relatively well but mod activity is slowing down, according to new data. The relative lack of activity applies to both the Home Affordable Modification Program and proprietary non-agency mod efforts. About 33.5 percent of non-agency mortgages were delinquent as of the third quarter of 2011, according to LoanPerformance, and 46.0 percent of all non-agency borrowers have negative equity. However, Fitch Ratings found that only 24.0 percent of outstanding non-agency mortgages (measured by loan balance) have been modified at least once, up from 20.0 percent at the...

Two new bills aimed at increasing non-agency activity were introduced in the Senate last week. One would wind down the government-sponsored enterprises while the other would establish a framework for covered bonds. S. 1834, “The Residential Mortgage Market Privatization and Standardization Act” introduced last week by Sen. Bob Corker, R-TN, would gradually reduce the portion of the mortgage-backed security guarantee provided by Fannie Mae and Freddie Mac. Within 180 days of the bill’s enactment, the GSEs could only issue MBS with a guarantee for 90 percent of a bond. The guarantee on...

Three new housing professionals have joined the Department of Housing and Urban Development’s Single Family, Risk Management and Multifamily offices. Sarah Garecke was named senior policy advisor in the Single Family Office and will help organize the new Office of Housing Counseling. She was previously with the Furman Center for Real Estate and Urban Policy at New York University’s School of Law, where she launched the Institute for Affordable Housing Policy. She also co-authored the Directory of Affordable Housing Programs.

Despite several high-profile retreats from the wholesale production channel in recent months, the mortgage industry was pressed to rely more on mortgage brokers and correspondents to meet the increased consumer demand for refinance loans during the third quarter. A new Inside Mortgage Finance analysis and ranking reveals that wholesale loan production increased by 27.7 percent from the second quarter, while the still-dominant retail channel posted a more modest 15.2 percent gain. Many companies have been paring back their retail capacity during 2011 as origination volumes fell sharply through...(Includes four data charts)

Although some changes under the revised Home Affordable Refinance Program will take effect as early as next month, key features such as automated underwriting and new securitization executions will not be available until well into 2012. Observers found no surprises in the HARP 2.0 seller-servicer bulletins issued this week by Fannie Mae and Freddie Mac, and most expect only a modest expansion in program activity. In many cases, the new rules reflect a standardization of the existing programs offered by the government-sponsored enterprises. Among the new changes are a lifting of the existing 125 percent...