A significant increase in the volume of claims following the announcement of the $25 billion joint servicer settlement earlier this year has created a huge backlog that could potentially threaten the FHA Mutual Mortgage Insurance Fund, warned the Department of Housing and Urban Development’s Office of the Inspector General. Separate OIG audits of the five mortgage servicers that signed the groundbreaking settlement pact with federal agencies and state attorneys general in February found that if those servicers were to file all ...

Despite problems associated with the program, the FHA 203(k) Rehabilitation Mortgage Program has seen some modest production gains during the last few quarters, according to an Inside FHA Lending analysis of FHA data. Top FHA 203(k) lenders reported $1.8 billion in total originations during the first six months of 2012, with the top five lenders accounting for 46.9 percent of production. Production rose 8.1 percent from the first quarter to the second, from $851.2 million to $920.5 million. Purchase fixer-uppers comprised ... [Includes 1 chart]

While President Barack Obama and his Republican challenger, Gov. Mitt Romney, differ widely on key issues, both candidates appear to agree on the need to reduce the government’s role in housing and bring private capital back to the mortgage market, industry observers say. Nothing much has been said in public forums or in the first presidential debate (except for a brief mention of the “qualified mortgage” proposal) about the housing issue, but observers say their positions on FHA may not be far apart. Obama’s approach to the housing crisis is ...

Fitch Ratings completed a review of ratings of jumbo mortgage-backed securities last week, resulting in downgrades of 6 percent of outstanding jumbo MBS. The downgrades were concentrated on pre-2005 MBS. “Adverse selection and structural features vulnerable to tail-risk have increased negative rating pressure for seasoned jumbo MBS,” Fitch said. The rating service noted that 14 percent of jumbo MBS remains on watch for downgrade and a determination on the ratings is expected by the end ... [Includes two briefs]

Numerous small servicers submitted comments to the Consumer Financial Protection Bureau warning that proposed servicing rules will result in consolidation – to the benefit of large special servicers. The comment period on the proposed rules closed this week, with small servicers seeking exemptions from potential new servicing standards. The CFPB issued proposed servicing rules in August, some of which were required by the Dodd-Frank Act. Industry analysts suggest that large servicers will have fewer problems complying ...

In collaboration with the Residential Mortgage-Backed Securities Working Group, New York Attorney General Eric Schneiderman filed a lawsuit last week against JPMorgan Chase and two related entities. The lawsuit targets underwriting on nonprime MBS deals, and Schneiderman said it could serve as a model for future planned actions by the Obama administration’s RMBS Working Group. “There are more cases to come,” he said. “We believe that this is a workable template for future actions against issuers of ...

Federal banking regulators, striving to keep their bank oversight current with international regulators through the adoption of the Basel III capitalization standards, are facing growing domestic resistance, including that of some of their state-based counterparts, who are concerned about the impact on mortgage assets. Greg Gonzales, chairman of the Conference of State Bank Supervisors, said last week that the organization strongly supports federal banking agencies’ efforts to improve capital standards internationally and for systemic institutions, but is opposed to their proposed approach to implement the Basel III capital accord and to incorporate a standardized approach for risk-weighted assets. “As bank supervisors, we believe...

A federal district court in Minnesota rejected a mortgage securitization trustee’s plea to compel a lender to repurchase defective home loans after finding that the loans no longer existed following the foreclosure and sale of the mortgaged properties. Ruling in MASTR Asset-Backed Securities Trust 2006-HE3 v. WMC Mortgage Corp., U.S. District Court Judge John Tunheim granted the lender’s motion for partial summary judgment after determining that the loans had been extinguished when the trustee foreclosed on the properties and charged off the remaining principal balances. The dispute boiled down...

Unanticipated complications with the Dodd-Frank Act appear to have caused Fannie Mae and Freddie Mac to miss a Sept. 30 deadline set by the Federal Housing Finance Agency to initiate risk-sharing transactions with non-agency investors. However, FHFA officials said they continue to work with the government-sponsored enterprises on the issue. “Risk sharing is a complex process that requires time to assess market opportunities, structural considerations, make operational changes, and develop proper risk metrics and controls,” an FHFA spokesman said. “We are moving forward steadily and expect to continue making progress in the coming months.” FHFA officials would not comment...

Rules proposed by the Consumer Financial Protection Bureau in August to revamp servicing practices prompted widely varied reactions from servicers, individual consumers and community banks. Servicers largely sought to keep current servicing rules unchanged while borrowers asked for greater protections and community banks requested an exemption from the proposal. The CFPB said the proposed rules are aimed at ending “surprises and runarounds” for borrowers. The proposed rules incorporated a number of provisions included in the national servicing settlement and consent orders between servicers and federal regulators. Some of those provisions were required by the Dodd-Frank Act. Servicers largely suggested that the CFPB should not implement servicing rules beyond those specifically required by the DFA. However, the Consumer Mortgage Coalition, whose members include the servicers complying with the settlement and consent orders, called...