Bank of America and Fannie Mae this week announced a multibillion dollar settlement of their longstanding dispute over outstanding and potential repurchase claims from the government-sponsored enterprise dating back through much of the last decade. The “comprehensive resolution” covers current and future repurchase obligations related to loans with an outstanding balance of $297 billion, as of Nov. 30, 2012, that were originated by Countrywide Financial and Bank of America and sold to Fannie from Jan. 1, 2000, through Dec. 31, 2008. BofA will make...

Eighteen Republicans gave Carol Galante the benefit of the doubt by helping to confirm her nomination as FHA Commissioner on a 69-24 vote after she promised a series of changes for the beleaguered FHA program. Galante, who had been serving as acting FHA commissioner, garnered enough Republican support to surpass the 60 votes needed to secure Senate approval of her nomination in late December. President Obama nominated her in June 2011 to replace FHA Commissioner David Stevens. In December 2011, the Senate Committee on Banking, Housing and Urban Affairs approved...

The White House is once again toying with the idea of HARP 3.0 - using Fannie Mae and Freddie Mac to refinance underwater non-agency loans, giving the GSEs leeway to charge higher guaranty fees for securitizing these mortgages, and waiving mortgage insurance requirements, according to industry officials who’ve been briefed on the plan. However, such an effort – modeled on the GSE’s Home Affordable Refinancing Program – would require Congressional approval and is already meeting with industry resistance. Also, many House Republicans are not happy with the thought. “While we all recognize the need to help as many underwater borrowers as possible, I do not think any further expansion of the GSE charter to originate higher risk, underwater loans makes sense and only shifts risk from the private sector onto the U.S. taxpayer,” said David Stevens, president and CEO of the Mortgage Bankers Association. “Based on past experience, the GSEs are not experts at pricing these kinds of risks.”

City councils on each end of the U.S. have responded to the foreclosure crisis by demonstrating an interest in controversial proposals to use eminent domain to seize underwater mortgages, refinance them into FHA loans at fair market value, and then sell them off to other investors. The Salinas (CA) City Council has gone the furthest of the two jurisdictions, choosing Mortgage Resolution Partners earlier this month to develop such a program for the benefit of the homeowners in its jurisdiction. At its Oct. 16, 2012, meeting, the council’s housing subcommittee directed staff to develop and circulate a request for proposals to determine the magnitude of the local residential foreclosure crisis and possible solutions. On Nov. 1, 2012, the RFP was circulated...

MBS analysts hold differing expectations as to what the potential replacement of the “temporary” head of the Federal Housing Finance Agency could mean to Fannie Mae, Freddie Mac and the mortgage securities sector. Recently reported Obama administration backchannel chatter suggests that the White House is actively seeking potential candidates to replace FHFA Acting Director Edward DeMarco, who has been the de facto agency chief since the departure of James Lockhart in September 2009. A report last week by Credit Suisse speculated...

The FHA this week announced additional measures to restore the financial health of its insurance fund and better protect consumers, including tighter underwriting on new FHA loans and elimination of a widely used standard fixed-rate reverse mortgage product. Acting FHA Commissioner Carol Galante unveiled the latest structural reforms in a Dec. 18 letter to Sen. Bob Corker, R-TN, who has repeatedly expressed concerns over the slow pace of reforms at FHA. The reforms address issues the senator raised with Department of Housing and Urban Development Secretary Shaun Donovan at a Dec. 6 Senate Banking, Housing and Urban Affairs Committee hearing on ...

A Senate vote on FHA reform legislation appears unlikely unless Senate Majority Leader Harry Reid, D-NV, and Senate Banking Committee Chairman Tim Johnson, D-SD, find a way to persuade Republican lawmakers to sign off on a House-approved bill before the end of the year, industry sources say. Senate Republicans are poring over the bill, H.R. 4264, the FHA Emergency Fiscal Solvency Act of 2012, which the House passed overwhelmingly 402-7. It is unclear how much Republican support the bill would have if – and when – it is taken to the Senate floor, said one trade group executive. The bill would strengthen the ...

As the wait for the highly anticipated “qualified mortgage” final rule continues, its impact on FHA lending programs remains uncertain. Concerns have been raised over the possibility that the final QM rule the Consumer Financial Protection Bureau is finalizing may establish a “safe harbor” for prime loans with a maximum debt-to-income ratio of up to 43 percent. This could have implications for FHA loans, which allow higher back-end ratios under certain circumstances, according to some lenders and industry participants. At what point the DTI ratios will ...

The FHA and VA have announced loan limit adjustments in many counties even as disparities with conventional loan limits persist in 2013, according to a new analysis by Inside FHA Lending. FHA loan limits for forward mortgages will increase in 2013 for 19 counties, 10 of which are part of the Houston metropolitan area. In those counties, the one-unit limit is going up just $1,500 to $272,550. The remaining counties are in Alaska. Congress authorized the “emergency” loan limits for high-costs markets – still $729,750 for FHA and $625,500 for Fannie Mae and Freddie Mac –to run through Dec. 31, 2013. The base loan limit nationwide and in ...

The Department of Housing and Urban Development reported strong note sales of more than $1.7 billion under the expanded Distressed Asset Stabilization Program (DASP) and announced another big sale in the first quarter of 2013. Preliminary results from the sale in September showed record participation among interested bidders on 13 pools. In total, the 13 pools went to 10 different entities, among them nonprofit and community-based organizations, according to HUD. While still in the process of settling the transactions, the FHA said it is very ...