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Inside Mortgage Finance

September 20, 2012

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Fannie, Freddie Ease HARP Repurchase Guidelines Among Other Adjustments as Momentum Wanes

Fannie Mae and Freddie Mac late last week announced another round of changes in the Home Affordable Refinance Program for underwater borrowers, including more liberal repurchase standards that some say may spur lenders to refinance other servicers’ loans. For HARP loans sold to the government-sponsored enterprises on or after Jan. 1, 2013, repurchase risk will be lowered if the borrower stays current in the loan for 12 months. Under a revised repurchase policy announced last week, representation and warranty risk will be eased for non-HARP loans that stay current for 36 months. Effectively immediately, the government-sponsored enterprises reduced... Read More

Fannie, Freddie Stake Out Different Position From Industry on CFPB’s APR Calculation Proposal

Fannie Mae and Freddie Mac support the Consumer Financial Protection Bureau’s proposal to institute a higher “all in” annual percentage rate calculation that would incorporate additional fees and charges – one aspect of the larger proposed rule to combine and simplify the consumer mortgage disclosure under the Truth in Lending Act and the Real Estate Settlement Procedures Act. “Fannie Mae and Freddie Mac support the bureau’s proposal to expand the finance charge for several reasons,” the two government-sponsored enterprises said. “First, it will make comparison shopping easier for consumers by eliminating the lack of clarity that now leads creditors to treat identical fees differently.” Second, a more inclusive finance charge will eliminate... Read More

HMDA Data Reveal Stronger Conventional Purchase Mortgage Market in 2011, Slight Drop in Credit Denials

Mortgage originations reported under the Home Mortgage Disclosure Act declined by 11.2 percent from 2010 to 2011, according to an Inside Mortgage Finance analysis of HMDA data released this week by federal regulators. A total of $1.399 trillion of purchase and refinance mortgage originations were reported under HMDA for last year, as well as $26.0 billion of home-improvement loans. The dollar volume of loan applications was down slightly more, falling 11.4 percent from 2010, and the loan denial rate drifted slightly lower, to 17.7 percent. African-Americans and Hispanic loan applicants continued to have higher loan rejection rates, although both groups followed the overall trend toward lower denial rates. The most common reason cited for rejecting a loan application was...[Includes one data chart] Read More

ARM Lending Defies Historic Lows in Mortgage Interest Rates, Posts Modest Gain in Originations

Interest rates on fixed-rate mortgages have been at record lows since December 2011, but a considerable number of borrowers continue to choose adjustable-rate mortgages, according to a ranking and analysis by Inside Mortgage Finance. ARM originations rose 7.7 percent from the first to the second quarter of 2012, a slightly faster rate of increase than the overall market. Although ARM originations over the first half of the year were down 3.6 percent from the same period in 2011, ARMs still accounted for 10.3 percent of total loan production. Most ARMs are...[Includes one data chart] Read More

Is Raising GSE G-Fees About Driving Business to the Private Sector or Just Eliminating the GSE Subsidy?

As federal regulators move to raise Fannie Mae and Freddie Mac guaranty fees for the second time this year, some industry analysts question whether it will help shrink the role of government programs in the mortgage market or simply shift more business to the FHA. “That’s a concern,” said Meg Burns, senior associate director for housing and regulatory policy at the Federal Housing Finance Agency, during the American Mortgage Conference sponsored by the North Carolina Bankers Association last week. “There are discussions all the time about what will FHA do when Fannie and Freddie are raising the g-fees, and whether FHA is actually in position to move the premium charges?” Burns noted that the government-sponsored enterprises have... Read More

Treasury Seeking More Improvements From Most Major HAMP Servicers

The Treasury Department acknowledged “considerable improvement” among Home Affordable Modification Program servicers last week while also prodding most companies to do better. Meanwhile, researchers suggest that operational issues at a few large servicers significantly reduced the total number of loan modifications that will be completed via HAMP. “While the servicers have improved their performance, they still have more progress to make,” Treasury said. Seven of the nine graded HAMP servicers needed “moderate” improvement as of the end of the second quarter of 2012. Among the major servicers, only OneWest Bank and Select Portfolio Servicing met all seven benchmarks set by Treasury. CitiMortgage was... Read More

Campbell Bill May Thwart Eminent Domain Efforts but Congress Cannot Stop States from Exercising Statutory Powers

Preemptive federal legislation may discourage states and local governments from using their eminent domain powers to seize mortgages, but it will not bar them from exercising such statutory rights, according to legal experts. Rep. John Campbell, R-CA, last week introduced the Defending American Taxpayers from Abusive Government Takings Act, which would prevent Fannie Mae, Freddie Mac, the FHA and the Department of Veterans Affairs from originating, insuring or guaranteeing mortgages from jurisdictions that have seized mortgage assets through eminent domain within the last 10 years. The proposed ban on FHA financing would... Read More

IG Prods Fannie and Freddie to Pay Closer Attention to Counterparty Risk

The Federal Housing Finance Agency is pushing Fannie Mae and Freddie Mac to devise contingency plans to address the potential meltdown of their business partners. The government-sponsored enterprises – which are themselves still in business under the conservatorship of the FHFA – had placed over 300 “high-risk” counterparties on watch lists as of the third quarter of 2011, according to a new report by the FHFA Office of Inspector General. The failures of four companies that do business with the GSEs have cost them some $6.1 billion since 2008, and they estimated they still have some $7.2 billion in exposure to high-risk counterparties. The OIG wants... Read More

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