Lenders face increased regulation under policy changes designed to bring the FHA Mutual Mortgage Insurance Fund back to positive within the fiscal year and reduce the likelihood of a Treasury bailout to shore up the FHA’s claims-paying ability. The Department of Housing and Urban Development late last week announced a hike in FHA premiums and other changes designed to restore the FHA’s insurance fund, which had a negative 1.44 percent capital ratio at the end of September 2012, according to a new actuarial review. Department of Housing and Urban Development Secretary Shaun Donovan blamed...
Mortgage lenders of all sizes and stripes got some breathing room late last week when the Consumer Financial Protection Bureau announced it was delaying the effective date of some new requirements under its integrated mortgage disclosure project to provide a more seamless integration with other mortgage disclosures the agency has proposed. The delay applies to more than a dozen disclosures, including those on the cancellation of escrow accounts, consumersf liability for debt payment after foreclosure, and the creditor acceptance of partial payment. Under the Dodd-Frank Act, the new disclosures were scheduled to take effect Jan. 21, 2013. gTo avoid potential consumer confusion and reduce compliance burden for industry, the bureau plans...
The Making Home Affordable program might not tap even half of the $29.9 billion in Troubled Asset Relief Program funds allocated for it, according to new estimates from the Treasury Department. Recently loosened requirements for the Home Affordable Modification Program Tier 2 could increase activity, though initial signals suggest that the increase will not be significant. Some 1.30 million MHA actions had been implemented as of the end of the third quarter of 2012, up from 1.22 million at the end of the second quarter, according to an Inside Mortgage Finance analysis. First-lien mods as part of HAMP Tier 1 dominated MHA activity, which also included second-lien mods, short sales and unemployment forbearance plans and other programs. There were...
The Department of Housing and Urban Development will raise the annual insurance premium on new FHA originations, reverse the agency’s current policy on mortgage insurance premium cancellation and institute other policy changes to improve the health of the FHA insurance fund. The new measures aim to offset significant losses from FHA’s legacy loans, which have caused significant stress to the agency’s Mutual Mortgage Insurance Fund. Results of a new FHA actuarial audit showed that the stress has plunged the MMI Fund into a deep hole, revealing negative capital of $16.3 billion (negative $13.5 billion excluding Home Equity Conversion Mortgages) on a $1.13 trillion FHA portfolio. The capital reserve ratio fell ...
Securitization market professionals are jointly promoting the practice of “margining” transactions involving Fannie Mae, Freddie Mac and Ginnie Mae MBS, despite the costs involved, to reduce counterparty and systemic risks. Last week, the Treasury Market Practices Group revised its existing “best practices” for Treasury, agency debt and agency MBS markets to include a recommendation that forward-settling agency MBS transactions be margined in order to prudently manage counterparty exposures. “In order to allow market participants to develop...
Members of the Residential Mortgage-Backed Securities Working Group filed a lawsuit this week against Credit Suisse Securities and reached separate settlements last week with JPMorgan Securities and Credit Suisse. New York Attorney General Eric Schneiderman, a co-chair of the working group, said federal and state regulators are working on a number of other actions. “We’re a long way away from wrapping this up,” he said. The lawsuit against Credit Suisse was filed this week by Schneiderman, alleging that ...
Mortgage lenders will be facing tougher enforcement if Congress decides to act on a series of proposals to hold lenders accountable for noncompliance with FHA policies and regulations. In the wake of an adverse actuarial report regarding the health of the FHA’s Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante announced that the agency will seek new powers to recoup losses from lenders that originate bad FHA loans. The proposals are designed to provide the FHA with greater flexibility to revise policies and procedures to avoid unnecessary losses before they occur. They will also improve the agency’s ...
JPMorgan Securities and Credit Suisse Securities have agreed to pay more than $400 million combined to settle government charges that they misled investors in offerings of non-agency MBS from 2005 to 2010, according to the Securities and Exchange Commission. The SEC, working with the federal-state Residential MBS Working Group, reached separate settlement agreements with the two financial institutions after filing a complaint and issuing a cease-and-desist order. Neither JPMorgan nor Credit Suisse admitted to or denied the findings against them or any of their affiliates. The SEC alleged...
The five banks participating in the $25.0 billion national servicing settlement are on track to meet their obligations under the settlement – some two years ahead of the 2015 deadline – according to a report this week from the settlement’s monitor. Loss mitigation activity is focused on portfolio loans, though Bank of America has completed significant principal forgiveness on mortgages in non-agency mortgage-backed securities. The settlement requires $19.11 billion in consumer relief, and the participating servicers ...
Wells Fargo originated the most rate-spread loans in 2011, according to an analysis by affiliated publication Inside Mortgage Finance of Home Mortgage Disclosure Act data compiled by ComplianceTech/Lending Patterns. The loans, also known as higher priced mortgages, are federal regulators’ proxy for subprime mortgages. Wells had $1.73 billion in rate-spread originations in 2011, accounting for 6.0 percent of such originations. While a number of lenders focused almost exclusively ... [Includes two data charts]
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