Mortgage industry veteran Lewis Ranieri says big banks will easily dodge the risk-retention requirements for mortgage securitizers that have been proposed by federal regulators. Issuers of non-agency mortgage securities that aren’t backed by “qualified residential mortgages” would have to retain a 5 percent interest in the transaction. In a joint comment letter submitted by Ranieri and Kenneth Rosen, chairman of Rosen Consulting Group, a real estate research firm, the pair warned that risk retention as proposed will benefit ...

Rules proposed by federal regulators to establish “qualified mortgage” and ability-to-repay standards would severely limit the originations of alternative mortgages, including certain ARMs, according to lenders. Consumer advocates, meanwhile, are calling for even more restrictive underwriting standards than those proposed by the Federal Reserve. In April, the Fed proposed strong ability-to-repay requirements that expand upon existing rules for higher-priced mortgages, include stringent penalties for violations, and would apply to ...

Wells Fargo agreed last week to settle with disgruntled Wachovia shareholders regarding Wachovia’s option ARM portfolio. Wachovia and its affiliated entities agreed to pay $590 million and KPMG, Wachovia’s auditor, agreed to pay an additional $37 million. The settlement is subject to approval by the U.S. District Court for the Southern District of New York. The claims asserted by government-run pension and retirement funds were largely based on allegations that Wachovia misrepresented and/or omitted material facts regarding the quality of the ...

The National Credit Union Administration filed a lawsuit against Goldman Sachs this week, marking the fourth non-agency buyback lawsuit filed by the federal regulator in recent months. The action seeks damages in excess of $491 million from Goldman Sachs, bringing the total sought by the NCUA to nearly $2 billion.The lawsuits claim the sellers and underwriters of “questionable” non-agency mortgage-backed securities made numerous material misrepresentations in the deals’ offering documents. The NCUA claims the misrepresentations caused ...

Wells Fargo Bank and Bank of America dominated the FHA jumbo market during the first six months of 2011, accounting for a third of total jumbo loan originations during the period, according to Inside FHA Lending’s latest analysis of the sector. The two financial institutions outdistanced their competitors by producing a total of $3.04 billion in FHA-insured mortgage loans, nearly a third of the $10.2 billion of government-insured jumbo loans originated during the first half of the year. Top-ranked Wells Fargo generated $1.90 billion in FHA loans exceeding $417,000 for an 18.7 percent market share, while BofA claimed... [Includes two data charts]

The Department of Housing and Urban Development said it expects to issue guidance by the end of the month clarifying which mortgage loans would qualify for the higher loan limits. A department spokesman said the guidance is in its last phase of departmental clearance and contains detailed information on which loans are eligible for the higher loan limits as well as additional requirements for using the higher loan limits. Unless Congress intervenes, the current high-cost area loan limit, which is set temporarily at 125 percent of the median house price in each area up to a maximum of $729,750, will be replaced on Oct. 1 by a...

Bank of America is in the process of contacting 57,000 seriously delinquent FHA borrowers to determine who would qualify for special loss mitigation options under a recent settlement agreement with the Department of Housing and Urban Development. Previously undisclosed, the settlement was confirmed by HUD officials, who declined to give further details about what led up to the agreement. A BofA spokesman said a HUD inquiry into the bank’s servicing practices found that 38 percent of the 1.5 million FHA mortgage loans currently serviced by BofA were delinquent but have not been offered loss mitigation options in accordance with...

Bank of America is currently sitting on $1.4 billion of real estate it acquired upon foreclosure of delinquent FHA-insured loans. The properties are not included in BofA’s inventory of foreclosed properties at June 30, 2011, but remain on the bank’s balance sheet until they are conveyed to the FHA, the bank disclosed in its 2Q11 filings. BofA expects to be reimbursed once the properties are transferred to the FHA for principal and, up to a certain limit, costs incurred during the foreclosure process and interest incurred during the holding period. The bank suspended its foreclosure activities in October 2010 as it began a...

Small FHA-approved lenders no longer have to submit audited financial statements to the Department of Housing and Urban Development in order to be approved or renewed for FHA programs, according to new guidelines issued July 28. Under Mortgagee Letter 2011-25, small supervised lenders regulated by the Federal Deposit Insurance Corp., National Credit Union Administration or the Office of the Comptroller of the Currency are exempt from current regulation requiring all FHA lenders to submit annual audited financial statements as a condition for their approval or continued participation in FHA programs. Currently, the regulation applies to...

A federal district court in Dallas dismissed a civil lawsuit against the Department of Housing and Urban Development and HUD Secretary Shaun Donovan because the plaintiff, a mortgage lender and servicer, lacked standing to bring suit. U.S. District Court Judge Barbara Lynn for the Northern District of Texas, however, gave American Home Mortgage Servicing, Inc. (AHMSI) another opportunity to amend and refile its complaint. Ruling against AHMSI on standing, Lynn never got to the core of the complaint, which accused HUD of failing to pay insurance claims submitted by AHMSI on 161 defaulted FHA-insured mortgage loans, which it serviced. AHMSI claimed...