State attorneys general trying to negotiate a big-ticket settlement with top mortgage servicers saw their coalition fracture further over the past week, including a decision by Massachusetts to move independently toward litigation. A major stumbling block continues to be divergent views among the states on whether lenders should get immunity from non-servicing issues such as potential litigation over securitization as part of the deal. The widely held view is that top banks were willing to put up a combined $20 billion to be used to help struggling borrowers to settle legal challenges that were spawned by...

A regional inspector general report found “material underwriting deficiencies” in a clump of FHA loans originated by Countrywide Financial, and though Bank of America may end up paying about $1 million to settle the charges, the case could be a harbinger of bigger losses to come. The Department of Housing and Urban Development inspector general for five upper midwest states singled out Countrywide for an audit because the company’s average default-to-claim rate was high for the region. The IG audited just 14 FHA loans, but half of them contained material underwriting deficiencies, mostly failing to...

Two strongly pro-consumer mortgage lending initiatives underway at the Consumer Financial Protection Bureau are nearing completion, top agency officials told industry representatives recently. One project nearing the finish line is the ability-to-repay rulemaking the bureau inherited earlier this year from the Federal Reserve Board. The final rule will be unveiled “early next year in order to provide clarity to the market as quickly as we can, without sacrificing the quality of our analysis,” said Raj Date, special advisor to the Secretary of the Treasury for the CFPB, in comments before attendees at a conference sponsored by SourceMedia. “I’m a real believer in...

The Federal Housing Finance Agency is looking for public input on two separate proposals that could change the way Fannie Mae and Freddie Mac servicers are compensated.This week, the FHFA issued a discussion paper detailing proposed alternatives for a GSE servicing compensation model that will benefit servicers, consumers and investors.

The Federal Housing Finance Agency is seeking comments and suggestions as it prepares for an upcoming, mandated review and revision of its existing regulations.

The average fee charged by Fannie Mae and Freddie Mac to lenders rose last year, while payments collected on the Home Affordable Refinance Program contributed to the GSEs’ bottom line, according to the Federal Housing Finance Agency.The third-annual FHFA study found that the average total guarantee fee charged by Fannie and Freddie on single-family mortgages was 26 basis points in 2010, compared to 22 bps in 2009. When HARP loans were excluded, the FHFA said the total average g-fee increased to 25 bps in 2010 from 21 bps in 2009.

Its decision to dump its wholesale correspondent channel is the latest in a series of moves by Bank of America to distance itself from “legacy” mortgage issues, but analysts remain doubtful. Moody’s Investors Service last week downgraded the bank’s rating. “The downgrades result from a decrease in the probability that the U.S. government would support the bank, if needed,” thanks to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the ratings firm said. Moody’s said that the government is likely to continue to provide some level of support to systemically important financial institutions. “However, it is also...

Mortgage lenders need to get a better understanding of their business in today’s economic and regulatory environment and be able to make important decisions quickly in order to stay competitive, according to industry experts. Having more thoughtful insight into the mortgage business lies in the ability of a lender to go deep into its mortgage portfolio and see the risks and opportunities. The key to improving portfolio performance, experts say, is better analytics and using solutions to maximize the value of the portfolio. Today, banks are forced to redefine their loan accounting reporting in light of new regulatory requirements and expectations of...

States are moving quickly to implement laws and regulations facilitating “eExamination” of mortgage lenders, leveraging technological innovation to bring the industry closer towards the goal of self-examination and self-regulation. “We are close to 30 states that are doing eExaminations, and we’re trying to bring on additional states as we move forward,” said Michael Chan, vice president of technology vendor Compliance Ease. “One of the reasons why I would say we’re reaching a tipping point is that state regulators are conducting limited-scope electronic exams,” he added. The idea behind that is...

In a proposal that could reshape the economics and competitive landscape of the mortgage industry, the Federal Housing Finance Agency this week proposed two alternatives for servicing compensation on future Fannie Mae and Freddie Mac business that could end up being the model for the market beyond the government-sponsored enterprises.“As the recent problems in managing mortgage delinquencies suggest, the current servicing compensation model was not designed for current market conditions,” said FHFA Acting Director Edward DeMarco. “The goal of this joint initiative is to explore alternative models for single-family mortgage servicing compensation that...