Buyers, sellers and real estate agents have until the end of 2014 to take advantage of the property-flipping waiver that the FHA had put in place in 2010 to increase the availability of affordable homes for first-time homebuyers and other purchasers. After Dec. 31, the Department of Housing and Urban Development will let the waiver lapse subjecting investors again to property-flipping prohibitions. Lenders say the waiver program worked well in underserved and hard-hit areas but HUD believes the program’s initial objectives have been attained and that prudence and vigilance are again called for to prevent abuses and potential losses. As a rule, the FHA prohibits “property flipping” in which a recently acquired property undergoes a minor makeover, is appraised with an artificially high value and is resold for a considerable profit. Most property flipping occurs within a matter of days, which prompted HUD to ...

In what may be a first, an individual borrower who received compensation under the terms of the consent order the Consumer Financial Protection Bureau brought against Castle & Cooke Mortgage late last year has since filed a class-action lawsuit. The litigation was brought on the basis of the same alleged violations of the Truth in Lending Act, the Real Estate Settlement Procedures Act and state law as were documented in the bureau’s enforcement action. Homeowner Luis Cabrales, on behalf of himself and “all others similarly situated,” recently filed...

Even though the origination volume of non-agency, non-jumbo mortgages is relatively small, private equity firms increasingly are eyeing the space, believing that within two years – or maybe sooner – the business could be producing robust profits. In short, investors want to enter non-agency lending before anyone else does – and at “ground level” prices. According to non-prime executives and investment advisors, private-equity funds of varying sizes want...

The mortgage credit box contracted quickly as the housing market slid toward disaster in 2007, but it’s proving to be much more difficult to stretch it back to what used to be considered normal. The subtitle to this week’s annual convention of the Mortgage Bankers Association could well have been “access to credit,” an idea that clearly dominated the conversation. Despite the recent unexpected drop in mortgage interest rates, most observers expect origination volume in 2015 to track closely to this year’s sluggish level and part of the problem is relatively weak home-purchase lending. Industry people are...

Federal Housing Finance Agency Director Mel Watt this week unveiled two significant policy changes aimed at opening up the mortgage credit box: additional buyback relief for originators that sell loans to the government-sponsored enterprises and a return to Fannie Mae and Freddie Mac purchases of mortgages with loan-to-value ratios between 95 percent and 97 percent. Speaking at the annual convention of the Mortgage Bankers Association in Las Vegas, Watt gave some concrete details about the new “life of loan” representation and warranty relief and outlined a number of other changes in the works. Moreover, industry officials contend...

An Iowa-based investor in government-sponsored enterprise common stock this week asked a federal court in the Hawkeye State to give “no weight” to a ruling earlier this month by a Washington, DC, federal judge who dismissed litigation against the government by other GSE shareholders, including Perry Capital and Fairholme Funds. Continental Western Insurance Co. filed papers in U.S. District Court for the Southern District of Iowa Central Division arguing that Judge Royce Lamberth was “simply wrong” in his interpretation of the Housing and Economic Recovery Act of 2008 and his HERA-based rationale to shut down shareholders’ suits in DC. An investor in GSE stock, Continental’s counsel in the case is...

Waiting several years to unify Fannie Mae and Freddie Mac securities into a single MBS could pose a huge risk to its successful completion, warned the mortgage banking industry, but Wall Street thinks it’s worth the wait to get market participants totally behind the move. The Federal Housing Finance Agency’s proposed single security for the government-sponsored enterprises met with conflicting views as the comment period ended this week. The proposal is aimed at eliminating Freddie’s pricing disadvantage and improving liquidity in the to-be-announced market. The Securities Industry and Financial Markets Association urged...

New issuance of non-mortgage ABS faltered again in the third quarter of 2014, slipping 5.4 percent from the second quarter, according to a new Inside MBS & ABS ranking and analysis. Issuers produced $46.48 billion of new ABS during the third quarter. While that marked the second straight quarterly decline after the robust $53.44 billion issued in early 2014, current issuance levels remained relatively high for the post-crisis period. Through the first nine months of 2014, new ABS issuance totaled...[Includes three data charts]

Subprime loans are accounting for a larger share of auto ABS issuance and losses on auto ABS are increasing. However, rating services suggest that the trends aren’t too worrisome, with ratings performance on track to record one of the best years ever. Some $66.9 billion in auto ABS were issued this year through September, up 26.8 percent from the same period in 2013. Subprime deals accounted for 25.8 percent of auto ABS issued this year, and volume ($17.0 billion) was down slightly from a year ago. But subprime auto loans also show up...

The liquidity coverage ratio rule recently finalized by federal regulators will hinder the revival of the non-agency MBS market, according to industry participants. Non-agency MBS are not counted as high-quality liquid assets (HQLA) under the rule, reducing incentives for banks to hold the securities. The Structured Finance Industry Group and others raised concerns about the lack of an HQLA designation for non-agency MBS at a time when the Obama administration is working to revive the non-agency MBS market. “There are...