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Inside Mortgage Finance

October 6, 2006

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Long-Awaited Guidance on Nontraditional Loans Stresses Repayment Ability, Clearer Disclosures

Some mortgage lenders are grumbling about new federal guidelines on nontraditional mortgages issued by bank and thrift regulators late last week, but it’s not clear whether the new rules will force profound changes in the marketplace. The guidance was issued in response to growing concerns those nontraditional loan products – specifically option ARMs and interest-only loans – are being offered increasingly to unsophisticated borrowers who may not be aware of the risks they face if... Read More

FHA Upgrades Reverse Mortgage Program, Warns of Increasing Fraud by Loan Officers

With the reverse mortgage market heating up, the Department of Housing and Urban Development has revamped its FHA program to attract even more borrowers and lenders – while also warning that there has been an increase in fraud surrounding these loans. HUD is also reportedly looking at ways to use Ginnie Mae to securitize FHA home-equity conversion mortgages, which account for 90 percent of all reverse mortgage originations in the market. Some $926 million of reverse mortgages, mostly FHA-insured HECMs... Read More

Wachovia Faces Challenges Absorbing Unique Golden West Business Culture

Investor analysts remain skeptical about the biggest mortgage industry merger so far this year, Wachovia’s recently approved $24.2 billion acquisition of Golden West Financial that should raise the company’s origination ranking several rungs. Through its World Savings thrift, Golden West was a pioneer in option ARMs, a product that has caught fire over the past year and accounted for an estimated 8.9 percent of mortgage originations during the first half of 2006... Read More

Countrywide Tries to Recover Losses from Scam Tied to Fraudulent Asset Verifications

An elaborate scheme hinging on falsified income and inflated appraisals has put Countrywide Home Loans in court with a man from Indiana and one of the company’s previous correspondent lenders. What Countrywide could have done to prevent itself from funding some $80 million in fraudulent loans could save other lenders from similar losses. In a lawsuit filed in Marion Superior Court in June, Countrywide alleges that Indiana businessman Robert Penn, with help from others, tricked dozens of Virginia residents into... Read More

Mortgage Originations Business Looks Much More Fragmented from HMDA Perspective

An exclusive new analysis of 2005 Home Mortgage Disclosure Act filings portrays a mortgage origination business that is markedly more fragmented than is commonly thought. According to HMDA data compiled by Geosegment Systems, a market research firm based in Nashua, NH, the top five mortgage originators last year reported a combined $741.08 billion in volume for 2005, or 25.6 percent of total originations... [Includes 2 page chart] Read More

Home-Equity Lending Heats Up; $11 Trillion in Equity up for Grabs

Home-equity lending – the Holy Grail of mortgage cross-sell crusaders – is looking even more alluring now that the first-lien lending business is starting to cool. And even though analysts project a slowdown from the rapid growth in HEL production over the past year, they note that there is still some $11 trillion in home-equity for borrowers to tap if lenders can find the right product for them. HEL originations, both HELOCs and closed-end seconds, totaled a record $212 billion in... Read More

Lenders Need Deft Strategies to Help Minorities Attain Homeownership Safely

There are many profitable opportunities in the so-called emerging mortgage markets if lenders can figure out how to approach and attract the diverse demographic groups without making them vulnerable to exploitation and lending abuses, according to a panel of experts at a recent diversity conference in Arlington, VA. Participants at last week’s Diversity and Emerging Markets Conference considered strategies for increasing homeownership among minority groups without compromising households'... Read More

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