A scathing criticism of the way the Federal Housing Finance Agency and Freddie Mac handled a $1.35 billion settlement with Bank of America could cause the regulator and the government-sponsored enterprises to tighten repurchase enforcement – and consequently inflate the buyback problem, according to litigation experts. Speaking on a recent webinar hosted by Inside Mortgage Finance, experts said a report by the FHFA’s Office of the Inspector General which found flaws in the BofA settlement approval process, could push the GSEs and their regulator to lean harder on major lenders to repurchase “bad loans.” This, in turn, could...

Mortgage banking activity was one bright spot in an otherwise lackluster earnings period, according to a third quarter review by analysts at FBR Capital Markets. “Activity was up 35 percent from 2Q11 as we saw lower interest rates drive another refinance boom, whereby refinances accounted for almost 80 percent of all originations,” FBR said. The analysts expect originations and gain-on-sale margins to be up significantly from 2Q11 due to the persistent decline of mortgage rates through the quarter. “We continue to recommend investors stick with banks that have sizable mortgage banking operations because refinance levels should stay elevated from low interest rates, and some large players have exited the business, which should bode well for gain-on-sale margins,” the FBR team said.

Transparency, investor access to information and a willingness to engage in loss mitigation can help reduce the wave of litigation and investor losses resulting from repurchase demands, according to mortgage litigation experts. There’s a better alternative to fighting out buyback claims in court: all counterparties should sit down and find ways to resolve issues that trigger repurchase claims in an open and forthright manner, said panelists on a webinar hosted by Inside Mortgage Finance Publications. “We have to work together because the country is hurting and the longer this drags on, the bigger the problem is going...

The U.S. Department of Labor’s Occupational Safety and Health Administration has ordered Bank of America to rehire a Countrywide Financial Corp. employee who led internal investigations that revealed “widespread and pervasive wire, mail and bank fraud involving Countrywide employees” and was later dismissed. The employee alleged that those who attempted to report fraud to Countrywide’s employee relations department suffered persistent retaliation. The employee was fired shortly after Countrywide’s acquisition by BofA.

Mortgage investing firm MountainView Capital Holdings partnered with Statebridge Company, an “investor-focused” servicer, to win an auction of loans sold by the Federal Deposit Insurance Corp. last week. Together, the firms won a 40.0 percent interest in a $282.0 million portfolio of residential mortgages from 48 failed banks. Statebridge will service the mortgages and Geneva House, an affiliate of Statebridge, was a minority investor in the deal. Officials with the firms counted the auction win as a major achievement – neither had won any previous structured transaction risk-sharing auctions by the FDIC. ...

Kinecta Federal Credit Union launched a new asset utilization loan program for jumbo mortgages last week, continuing the trend of innovative offerings from credit unions. The program allows borrowers with high net worth and significant liquid assets, including self-employed and retired borrowers, to use a percentage of their assets as income for qualifying purposes. ... [includes three briefs]

The reverse mortgage arena experienced another shake-up as SunTrust Bank, citing poor volume, quite the business even as J.G. Wentworth, the largest purchaser of future payment products, announced its entry into the market. Atlanta-based SunTrust stopped accepting new reverse mortgage applications as of Sept. 1, although it is continuing to process applications already in the pipeline. A statement from the bank indicated that low production volume was the reason for management’s decision to leave the reverse mortgage business and to focus resources instead on mortgage origination and servicing. The market also lost ...

Fannie Mae and Freddie Mac last week both “de-listed” PMI Mortgage Insurance Co. as an eligible private MI, a further blow to a private MI business that has been driven to the brink by the housing market collapse. Republic Mortgage Insurance Corp. was forced to stop writing new business this week as North Carolina regulators declined to extend a waiver of risk-capital ratios under which it had remained in the market. Together, PMI and RMIC accounted...

Lender Processing Services is disputing robo-signing allegations recently made against it and its DOCX LLC subsidiary in a lawsuit filed by American Home Mortgage Servicing Inc. related to the surrogate signing practice at DOCX. “As LPS has previously disclosed, when it discovered the practice at DOCX, LPS immediately notified AHMSI of its discovery of the practice; immediately discontinued the practice; and voluntarily reviewed and remediated assignments of mortgage executed by DOCX using this practice,” LPS said. Once it completed the remediation in January 2010, LPS returned the remediated documents to the attorneys who had originally requested them on AHMSI’s behalf, the company said.

The tough economic and market environment that continues to pound many lenders is also creating opportunities for others, with PennyMac, Carrington and Ocwen among the most noteworthy ready to take advantage of a strong position in the marketplace. PennyMac Mortgage Investment Trust, the real estate investment trust (REIT) run by Stanford Kurland, the former president of Countrywide Financial Corp., plans to triple its mortgage lending through an expansion of its ...