Servicers handling portfolio loans and non-agency mortgages continue to increase their use of principal reduction loan modifications, according to the Office of the Comptroller of the Currency. Some 23,335 principal reduction mods were completed in the third quarter, up from 11,178 in the third quarter of 2011 and from 14,944 in the second quarter of 2012. The mods accounted...[Includes four briefs]

Mortgage industry participants are confident that newly confirmed FHA Commissioner Carol Galante will deliver on reforms she committed to in an effort to reach out to Republican critics. Eighteen Senate Republicans veered away from their hardline party colleagues to help Carol Galante secure confirmation of her nomination as the Department of Housing and Urban Development’s chief overseer of the FHA mortgage insurance program and overlord of housing policies. Galante broke through the GOP firewall Dec. 30 after the Senate voted 69 to 24 to approve her nomination. She needed at least 60 votes to ...

Competition in FHA lending may get a boost following the easing of reporting requirements for insured depository institutions with $500 million or less in total assets. The Department of Housing and Urban Development recently announced a policy change to eliminate a requirement for small supervised lenders and mortgagees to submit internal control and compliance reports under the FHA’s interim financial reporting rules. Independent mortgage companies, regardless of their asset size, are not covered by the exemption. A supervised lender or mortgagee is a financial institution that is a member of ...

The Consumer Financial Protection Bureau this week spread a huge safety net under the agency mortgage market, ruling that loans deemed suitable for Fannie Mae, Freddie Mac, the FHA and the Veterans Administration will be “qualified mortgages” that provide strong protection against litigation for mortgage lenders. The CFPB’s long-awaited ability-to-repay final rule provides a safe harbor for loans that meet its QM definition and also are not considered “higher-priced mortgages” under an older Truth in Lending Act regulation promulgated by the Federal Reserve back in 2008. That rule classifies first mortgages as higher-priced if the annual percentage rate exceeds the average offered rate for comparable loans by 1.5 percentage points or more. Generally, the CFPB final rule defines...

Acknowledging problems with independent foreclosure reviews established in 2011, federal regulators this week agreed to a settlement with 10 bank servicers for $8.5 billion in borrower relief. The settlement applies to a portion of the 14 servicers under related consent orders from the Federal Reserve and the Office of the Comptroller of the Currency. “The OCC and the Federal Reserve accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process,” the regulators said. The agreement in principle includes...

Expect the Consumer Financial Protection Bureau and the Federal Housing Finance Agency to roll out a national mortgage database this year, but experts say it remains to be seen how comprehensive or how secure the first-of-its-kind mega electronic information storehouse will be. This week, during a webinar sponsored by the Ballard Spahr law firm, experts from Ballard and Navigant Consulting agreed that the government’s commitment to develop an origination-to-foreclosure repository of mortgage data is a “daunting” task that will take much longer than a single calendar year to implement and refine. “I absolutely believe...

The official watchdog of the Federal Housing Finance Agency has pointedly suggested that the GSE regulator direct Fannie Mae and Freddie Mac to determine whether or by how much the two companies were swindled out of billions of dollars as a result of banks’ alleged manipulation of a key interest rate and then determine how to recoup those losses, in court if necessary. A recent unpublished memo by the FHFA’s Office of Inspector General urged the Finance Agency to prepare to file suit against the banks involved in setting the London Interbank Offered Rate after an analysis of the GSEs’ published financial statements and publicly available historical interest data concluded that Fannie and Freddie may have suffered more than $3 billion in losses due to LIBOR manipulation.

The agency residential MBS market expanded for the third consecutive quarter during the three months ending in September, according to a new Inside MBS & ABS analysis. A total of $5.39 trillion of single-family MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae were outstanding as of the end of the third quarter of 2012. That was up by a scant 0.2 percent from the previous period, although it was still 0.4 percent below the level at the same time in 2011. Both Ginnie (2.1 percent) and Fannie (0.6 percent) posted...[Includes two data charts]

Investors in non-agency MBS have numerous concerns about a loan modification program proposed by the Obama administration, according to Tom Deutsch, executive director of the American Securitization Forum. The so-called Market Rate Modification program would target borrowers with negative equity on a mortgage in a non-agency MBS. “For the many significantly underwater borrowers that would not default on their mortgage loans, the MRM proposal would ultimately represent a transfer of wealth from the pension fund and 401(k) investors who lent the mortgage principal through residential MBS to borrowers that have not demonstrated any material life changes that would impair their ability to make their monthly mortgage payments,” Deutsch said in a letter this week to the Treasury Department. He noted...

A recession resulting from the federal government taking the U.S. economy over the fiscal cliff would leave Fannie Mae and Freddie Mac vulnerable to higher credit losses and make the two government-sponsored enterprises unprofitable again, according to Moody’s Investors Service. Moody’s this week warned that Washington’s failure to reach a tax and spending agreement would also force the GSEs to ride out the shockwaves of potential financial market disruptions on their derivatives trades. “In our current central economic scenario, both Fannie Mae and Freddie Mac are...