The proposed settlement Bank of America is hoping to reach with non-agency mortgage-backed security investors continues to face new hurdles, but analysts expect a settlement will eventually be reached. The deadline to intervene in the settlement was set for the end of August by the state court overseeing the settlement. However, shortly before the deadline, a group of MBS investors opposing the $8.5 billion settlement had the case moved from a New York state court to federal court, further complicating the settlement. ...

Real estate investment trusts that invest in mortgage-backed securities are on the defensive after the Securities and Exchange Commission said last week that it is considering revising rules for mortgage REITs. “Mortgage REITs provide private capital to these markets, while allowing individual investors to opt in or out of the associated risks,” Thomas Siering, president and CEO of Two Harbors Investment, said this week in a letter to the REIT’s shareholders. ...

Ocwen Financial’s purchase of Litton Loan Servicing at the beginning of this month was contingent on the non-prime servicer implementing new practices based on an agreement with New York regulators. The Federal Reserve also took an enforcement action against Goldman Sachs last week relating to Litton’s servicing practices. “Our agreement sets a new higher standard for the residential mortgage servicing industry,” said Benjamin Lawsky, New York’s superintendent of financial services. “Goldman Sachs, Ocwen and Litton have now all agreed to put the rights of homeowners ahead of their profit margins by implementing these changes.” ...

A subprime mortgage-backed security of seasoned mortgages was rated as AAA by Standard & Poor’s last week, prompting complaints and comparisons to S&P’s recent downgrade of the rating for the U.S. government. S&P notes that the securitization by Springleaf Financial includes a number of unique characteristics and that sovereign ratings are not directly comparable with MBS ratings. S&P assigned AAA ratings to a portion of Springleaf’s $496.86 million subprime MBS. The AAA tranches had an exceptionally high 41.15 percent credit enhancement and more than 98.0 percent of the mortgages in the deal are current, according to S&P. ...

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 Department of Housing and Urban Development is urging Congress not to raise the minimum downpayment on FHA mortgage loans, saying that downpayments are not the best indicator of loan defaults. Testifying before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, Acting Assistant Secretary for Housing/FHA Commissioner Carol Galante warned that a legislative proposal to raise FHA’s minimum downpayment requirement to 5 percent would forestall recovery in the housing market and restrict access to credit for worthy borrowers. Galante said HUD has not made any determination as to ...

The Department of Housing and Urban Development is pondering its next move after discussing with mortgage industry representatives their concerns about extending the current forbearance period for unemployed homeowners to a maximum of 12 months. HUD and FHA officials met recently with the Mortgage Bankers Association and several small mortgage servicers, which took issue with FHA’s recently revised forbearance policy. HUD declined to discuss the outcome of the meeting, saying it was more about understanding the industry’s concerns and discussing solutions. “No decision has been made as to whether we can or will make any changes, but we are looking into the issues they have raised,” said a HUD spokesman. On July 7, the FHA announced ...

Losses on re-performing FHA/VA mortgage pools are expected to rise as servicers cut back on the claims they submit to the Department of Housing and Urban Development and pass on to mortgage securitization trusts instead, according to a recent analysis by Moody’s Investors Service. With FHA experiencing increasing losses in its portfolio, HUD is scrutinizing claims more vigorously for servicing or underwriting defects, which may serve as a basis for denying claims on re-performing FHA/VA pools. Servicers are also required to bring the property to an acceptable conveyance condition. Furthermore, HUD imposes very strict timeline guidelines that FHA servicers must follow. Given the recent servicing irregularities and staffing constraints due to rising defaults, servicers may not always ...

A coalition of industry and advocacy groups is flexing its collective muscle as it prepares to push Senate legislation extending the current maximum mortgage loan limits. The group, comprised of 14 financial and real estate trade and advocacy associations, are lining up behind S. 1508, the Homeownership Affordability Act of 2011, which would extend the temporary high-cost area loan limit through the end of 2013. Introduced by Sens. Robert Menendez, D-NJ, and Johnny Isakson, R-GA, the bill complements a similar bipartisan effort by Reps. John Campbell, R-CA, and Gary Ackerman, D-NY, in the House Financial Services Committee to keep ...