The Department of Housing and Urban Development has reportedly offered to release major servicers from some liability related to FHA mortgages as part of a pending settlement related to foreclosure problems. While the offer may sweeten the deal for banks to settle with state attorneys general and federal regulators, observers say it’s not a total game changer. The complex negotiations have lasted more than a year, stemming from servicing practices that include robo-signing of foreclosure documents and poor communication with borrowers. A key sticking point has been...

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...

The Department of Housing and Urban Development is pondering its next move after a federal district court judge in Houston reversed a suspension order against Allied Home Mortgage Corp., an authorized FHA lender, and its chief executive officer, last week. In a Nov. 15 ruling, U.S. District Court Judge Melinda Harmon granted a motion by the Houston-based mortgage banker and its CEO, James Hodge, to temporarily stop HUD from enforcing a suspension of the plaintiffs’ authority to underwrite and originate FHA loans until a related lawsuit is resolved. On Nov. 1, the government intervened in a False...

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)

Freddie Mac is unwrapping a new set of incentives for its HomeSteps properties to both homebuyers and real estate agents this winter in an effort to pick up the sales pace of the GSE’s real-estate owned inventory.Through January 31, 2012, Freddie is offering homebuyers up to 3 percent of the final sales price toward closing costs while selling agents representing the owner-occupant buyer would receive a $1,000 bonus under the incentive plan.

One of the goals in the recent revisions to the Home Affordable Refinance Program is to stimulate more interest among lenders, largely through relaxed requirements on representations and warranties and some streamlining of the process. But HARP 2.0 also includes new guidelines on soliciting potential customers, both from the lender’s own portfolio and from borrowers currently serviced by another firm. A handful of lenders have begun touting the expanded program to consumers. The new program includes specific refi solicitation practices that lenders must...

The National Community Reinvestment Coalition improperly accepted approximately $2.4 million in donations from 10 of 38 lender organizations it tested under its Fair Housing Initiatives Program grant agreement with the Department of Housing and Urban Development, thereby creating conflict-of-interest situations in violation of the agreement, according to a new report from HUD’s Office of Inspector General. The NCRC immediately challenged the report and maintained it was politically motivated. The OIG said NCRC generally completed administrative and program activities and tasks in accordance with its agreement, the OIG said. The audit also found nonprofit improperly accepted donations from organizations it tested, thereby creating conflict-of-interest situations involving $59,800 of $230,000 in the grant funds (26 percent).

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)

President Obama this week signed into law a stop gap spending measure, which, among other things, reinstates temporary higher limits for loans insured by FHA. The minibus bill, which combines several appropriations bill, passed the house on a vote of 298-121. The Senate approved previously approved it 70-30. The measure raises the FHA’s maximum loan limit back up to $729,750 after it had fallen to the permanent statutory level of $625,500 on Oct. 1, and extends it through the end of 2013. The new limit is effective immediately. After being extended three times – in 2008, 2009 and 2010 – the higher loan limits finally expired on Oct. 1 this year and were ...

The FHA Mutual Mortgage Insurance Fund for single-family loans again fell short of minimum capital standards, spurring renewed warnings of a taxpayer bailout if losses continue to mount. According to FHA’s annual report to Congress on its financial status and the condition of the MMI Fund, reserves dropped to 0.24 percent in 2011 from 0.50 percent last year. This means that the agency is holding only $2.6 billion of excess reserves, down from $4.7 billion the year before, against roughly $1.1 trillion of FHA-insured loans. The report also noted that unless housing prices stabilize and losses drop, the fund has a 50 percent chance of a taxpayer bailout. The negative effects in the report’s “base case” scenario were caused by ...