Residential mortgage securitization rates declined in the third quarter of 2011, but surging volume in the primary market will push new MBS issuance higher in coming months. A total of $247.5 billion of residential MBS backed by newly originated loans were issued during the third quarter, representing a relatively low 76.1 percent of the supply of new home loans originated by lenders during the period, according to an Inside MBS & ABS analysis. During the third quarter, about 67 percent of single-family mortgages securitized by Fannie Mae were...(Includes one data chart)

Most major mortgage servicers reported slight increases in the number of loans in distress during the third quarter of 2011, according to the Inside Mortgage Finance Large Servicer Delinquency Index. Servicers handling over $7 trillion in mortgage loans reported a combined 10.70 percent delinquency/foreclosure rate as of the end of September. That was up 12 basis points from the previous quarter. Of the 17 servicers included in the index, only six reported improved mortgage performance data compared to June. The problem was focused squarely on more...(Includes two data charts)

With no end in sight for the conservatorships of Fannie Mae and Freddie Mac and huge obstacles to the recovery of the non-agency MBS market, Washington policymakers and industry analysts are searching for ways to bring private capital into the mortgage market without jeopardizing the stability provided by government mortgage finance programs. Analysts at Barclays Capital think they have found a way. The company this week released a paper outlining a new program through which the government-sponsored enterprises would issue a new form of unsecured debt with cash flows linked to...

Housing finance and real estate groups are hailing the enactment this week of legislation raising the size of mortgage loans insured by FHA to $729,750 or 125 percent of area median home prices over objections by conservatives and most Republicans. The reinstated loan limit formula and maximum cap for FHA-insured home loans are good through 2013. The loan limits for Fannie Mae and Freddie Mac will remain at 115 percent of local area median home price, up to $625,500. The FHA floor will remain at $271,050 while the floor for loans purchased by the government-sponsored enterprises will still be $417,000. Last month...

California’s Attorney General has reportedly issued subpoenas to Fannie Mae and Freddie Mac seeking details of the government-sponsored enterprises’ mortgage lending and foreclosure practices, possibly as a way to cajole the Federal Housing Finance Agency to overcome its resistance to principal reductions for GSE loans. The subpoenas seek information about how Fannie and Freddie are handling thousands of foreclosed properties, as well as details about the GSEs’ mortgage-servicing and home-repossession practices. According to published reports, State AG Kamala Harris, a Democrat, also is looking into how...

Private mortgage insurers are moving to adopt policies to fit with the recently expanded Home Affordable Refinance Program offered by Fannie Mae, Freddie Mac and the Federal Housing Finance Agency. Genworth Financial said that it’s all in, announcing last week that its U.S. mortgage insurance business is making changes so it can fully support HARP 2.0. The upgraded changes to HARP from the two government-sponsored enterprises are designed to enable more underwater borrowers to refinance their residential mortgages at today’s record-low interest rates. Genworth says the changes...

Most of the impressive increase in new mortgage originations during the third quarter was in conventional home loans, including the non-agency jumbo market, according to a new market analysis and ranking by Inside Mortgage Finance. An estimated $212 billion in conventional conforming loans were originated during the third quarter, a gain of 29.3 percent from the previous three-month period. That boosted the conventional conforming share of the market to 65.2 percent for the period, up from just 60.7 percent in the second quarter of 2011. The non-agency jumbo market was... (Includes two data charts)

Federal Housing Finance Agency.Office of the Comptroller of the Currency. Single Uniform Audit Program discussed. Representatives of mortgage servicing and foreclosure law firms met with officials from the Federal Housing Finance Agency and the Office of the Comptroller of the Currency recently to discuss development of a Single Uniform Audit Program to replace the individual servicer reviews of foreclosure law firms as required by the bank regulators’ consent orders and regulatory directives. Industry reps are said to be developing a straw-man proposal.

The Consumer Financial Protection Bureau, in a conciliatory gesture to a wary industry, recently announced the existence of a formal Early Warning Notice process that will provide advance notice of potential enforcement actions to individuals and firms under investigation. The process is modeled on similar procedures that have been successful at other federal agencies, according to the CFPB. It starts with the bureau’s Office of Enforcement explaining to individuals or firms that evidence gathered in a CFPB investigation indicates they have violated consumer financial protection laws. Recipients of an Early Warning Notice are then invited to submit a response in writing, within 14 days, including any relevant legal or policy arguments and facts. The Early Warning Notice process “strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers,” said Raj Date, special advisor to the secretary of the Treasury for the CFPB. “This process will help us fulfill our commitment to transparency in enforcing the law.”

The Consumer Financial Protection Bureau is about to begin its Consumer Risk Assessment process, one of the key components of the agency’s Supervision and Examination Manual. This process evaluates CFPB-supervised entities based on the amount of risk their activities pose to consumers, identifies the various sources of risk, and assesses the quality of risk controls they’ve put in place. This process is definitely something that those who have been concerned about the expansive powers of the bureau should ready themselves for, according to attorneys in the mortgage banking and consumer financial products practice at the law firm of K&L Gates.