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Inside Mortgage Finance

September 8, 2011

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Refinance Originations Drop Sharply in 2Q11 While Agency Programs Continue to Dominate

Government-insured mortgage programs held up a little better than the overall market during the second quarter of 2011, edging back toward the higher market shares they recorded in late 2009 and early last year, according to a new analysis and ranking by Inside Mortgage Finance. FHA and VA lending accounted for 27.2 percent of new loan originations in the second quarter, despite a 5.3 percent drop in volume. That represented the highest market penetration for the government programs since early 2010, when they accounted for 28.8 percent of new originations. The all-time high market share for FHA and VA was back in the fourth quarter of 2008, at... [Includes two data charts] Read More

Expectations Low on Obama Refi Plan II, Fed Official Cites Need to Reduce HARP ‘Frictions’

As part of a new jobs and economic growth plan to be announced this week, the White House is expected to include a bid to invigorate a mortgage refinance effort that has failed to live up to expectations. Most observers think the Obama administration will opt for targeted changes to the Home Affordable Refinance Program. In a speech last week, Federal Reserve Board Governor Elizabeth Duke said HARP has been only marginally effective despite Fed estimates that as many as 4 million borrowers meet HARP’s basic eligibility requirements. Through the end of June, some 830,552 borrowers had refinanced their home loans under HARP, which allows... [Includes one data chart] Read More

CFPB’s Authority Over Non-Banks is Limited as GOP Remains Intent on Blocking Director Nominee

Senate Republicans’ commitment to block the confirmation of any nominee to the Consumer Financial Protection Bureau will prevent the agency from deploying all of its supervisory and enforcement powers – at least as far as nonbanks are concerned – and that’s infuriating Senate Democrats. Partisan squabbling was on full display this week as the Senate Banking, Housing and Urban Affairs Committee considered President Obama’s nomination of Richard Cordray, currently chief of enforcement for the CFPB, to be the first director for the fledgling agency. “The purpose of today’s hearing should be to consider whether Mr. Cordray is qualified for that job. Instead... Read More

Investor Purchases of Distressed Properties Fall as Business Model Shifts from Flipping to Renting, HousingPulse Finds

Despite a continuing glut of distressed properties in the housing market, investors have started dialing back their purchase activity. And the primary reason appears to be a shifting business model that is forcing investors – at least for the time being – to rent rather than flip properties. That’s one of the major findings of the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which found that the investor share of home purchase transactions slipped to 19.6 percent in July. That was not only down from 21.3 percent in June but also the lowest investor market share recorded in a year. The inability of most investors to... Read More

Ouster of New York AG Schneiderman from Negotiation Panel Not Meant to Stifle Dissent, Miller Assures Lawmakers

Iowa Attorney General Tom Miller this week sought to allay concerns of the New York congressional delegation, denying that Empire State’s attorney general was ousted from an executive committee negotiating a nationwide foreclosure settlement with major banks to silence legitimate opposition. Responding to a letter from NY House Democrats, Miller said New York AG Eric Schneiderman was invited to join the core negotiating team of state AGs in June but refused. Miller, who is leading the negotiations, said Schneiderman “voluntarily” walked away from the negotiating table to “pursue another path.” Miller said Schneiderman was asked to... Read More

FHFA Sues 17 Financial Institutions to Recover Unspecified GSE Losses on Non-Agency MBS

The Federal Housing Finance Agency this week defended its massive legal action against many of the nation’s largest financial institutions on behalf of Fannie Mae and Freddie Mac over the government-sponsored enterprises’ losses on non-agency mortgage backed security purchases. The Finance Agency contends that 17 financial institutions sold Fannie and Freddie some $196 billion of MBS, mostly between 2005 and 2008, that caused losses to the GSEs for which there should be compensation. Filed late last week in federal and state courts in New York and in federal court in Connecticut, the lawsuits seek damages and civil penalties under... [Includes one data chart] Read More

Experts Acknowledge Need for Government Role in Reinventing Mortgage Finance System

Experts agree that the federal government plays too big a role in the housing market, but panelists at a Federal Reserve conference last week said there is little consensus on how to fix it. FHA is “not our silver bullet,” observed Janis Bowdler, a director at the National Council of La Raza. “Surely, it’s stepping in while we are in a tight credit market. But it’s no long-term solution.” One problem with FHA is that lenders aren’t required to offer it, which means entire communities are left “credit-starved,” Bowdler said. “This leaves them in the same vulnerable position to predatory lenders that they were in five or six or 10 years ago,” she... Read More

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