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]

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...

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...

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...

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...

The federal government thought that Bank of America went too far in documenting the income of a handful of borrowers with disabilities to make sure they could pay on their mortgages. That’s going to cost the lender an aggregate amount yet to be determined, as well as force the lender to change some of its underwriting practices, even though Bank of America insists it was following policy established by the Department of Housing and Urban Development. Bank of America reached an agreement with the Department of Justice last week that...

In another sign of just how anxious the mortgage lending community is about the Consumer Financial Protection Bureau’s pending ability-to-repay rulemaking, especially the aspects that deal with qualified mortgages, the leading industry trade groups again wrote to CFPB Director Richard Cordray late last week to reiterate their views and concerns. In particular, they said they wanted to express their continued strong support for a QM that meets three critical requirements, the first of which is that the QM “must be broadly...

Sixteen industry trade groups urged the Consumer Financial Protection Bureau to abandon a proposal to create a new, higher “all in” annual percentage rate calculation that would include additional fees and charges. The APR measure is one part of the CFPB’s massive proposed rule designed to streamline and harmonize mortgage disclosure requirements under the Truth in Lending Act and Real Estate Settlement Procedures Act. The trade groups pointed out that the bureau’s own research indicates that consumers confuse the APR...

The Community Mortgage Banking Project, the Housing Policy Council of The Financial Services Roundtable, and the Mortgage Bankers Association recently expressed concern to the Consumer Financial Protection Bureau about some aspects of the agency’s proposed rulemaking on high-cost mortgages that would implement changes to the Home Ownership and Equity Protection Act as per the Dodd-Frank Act. The changes would establish new definitions of points and fees and prepayment penalties as well as new restrictions and requirements...

The Mortgage Bankers Association, the Leading Builders of America and the Real Estate Services Providers Council Inc. joined together to express “profound concern” to the Consumer Financial Protection Bureau regarding the agency’s proposed treatment of fees paid to affiliated settlement service providers under the Home Ownership and Equity Protection Act. “We strongly support a competitive mortgage market where builders and lenders large and small, as well as unaffiliated and affiliated third-party settlement providers...