California is about to become the first state to enact into law a large portion of the national mortgage servicing settlement that state and federal government officials negotiated this year with the nation’s top five banks and apply it to all lenders. The state legislature passed the Homeowner Bill of Rights last week (AB 278/SB 900). The Democrat-controlled state Assembly approved the bill on a 53-25 vote, with the Senate endorsing the measure 25-13. The legislation will force large lenders to provide a single point of contact, eliminate dual tracking and impose significant civil...

In response to the Federal Housing Finance Agency’s request for comments on its recent strate-gic plan, the American Securitization Forum put out a white paper this week spelling out the mechanics and potential benefits of a blueprint to transition to a single agency security that could be issued by Fannie Mae and Freddie Mac. “Implemented correctly, a single agency security could benefit all participants in the mortgage market, including borrowers, originators, investors and the taxpayer,” said ASF Executive Director Tom Deutsch. Current trading markets for Fannie MBS and Freddie PCs are...

Nationstar Mortgage LLC last week finalized its acquisition of more than $63.7 billion worth of servicing assets from Aurora Bank.Aurora Bank, a subsidiary of Lehman Brothers, has been carved up to repay creditors of the bankrupt Wall Street firm that was a major player in the non-agency MBS market. Ocwen Financial had earlier purchased $1.8 billion in commercial servicing rights from Aurora. The Aurora mortgage servicing portfolio is comprised of 75 percent non-conforming loans in non-agency MBS and 25 percent conforming loans in Fannie Mae and Freddie Mac pools, according to...

Delinquencies on home-equity loans increased in the first quarter of 2012 and industry analysts expect further increases even though first-lien mortgage performance has been improving. The top two holders of HELs have differing strategies on HEL originations, and some smaller banks are also pushing the products. The serious delinquency rate on HELs hit 2.83 percent in the first quarter of 2012, according to the Inside Mortgage Finance Bank Mortgage Database. Delinquencies increased 34.1 percent from the end of 2011 and ...

Loan modifications performed on mortgages in bank portfolios perform much better than mods on mortgages included in non-agency mortgage-backed securities, according to an analysis by Inside Nonconforming Markets of new data from the Office of the Comptroller of the Currency. The performance varies significantly even as the two types of non-agency mortgages receive the vast majority of principal reduction loan mods. The 12-month re-default rate on mods implemented from 2008 through the first quarter of 2011 was ...

The Federal Deposit Insurance Corp. is revising its definition of subprime mortgages in an effort to better compare bank portfolios, according to analysts that worked on the rule proposed by the FDIC in March. Brenda Bruno, a senior financial analyst at the FDIC, said the regulator is looking to classify “the worst” of subprime mortgages as higher-risk. “We are looking at those assets that are really sort of the ‘bottom of the barrel’ type assets,” she said last week during a webinar sponsored by VantageScore Solutions ...

Lenders are potentially abusing reverse mortgage borrowers, according to the Consumer Financial Protection Bureau. Last week, the CFPB released a study on reverse mortgages and issued a request for information on the products along with threats of increased regulation. “In some situations the product can be misused in ways that harm borrowers,” said Richard Cordray, director of the CFPB. He noted the age of reverse mortgage applicants and lump sum payments to borrowers as particular concerns. The CFPB’s study ...

Thousands of ineligible tax cheats received FHA-insured mortgage loans under the American Recovery and Reinvestment Act of 2009 even though federal tax regulations prohibited tax debtors from obtaining government-backed mortgages, the Government Accountability Office reported in a new study. The report found that 6,327 borrowers, who owed a total of $77.6 million in federal taxes, were able to obtain more than $1.44 billion in FHA-insured mortgages under the ARRA. Of these borrowers, 3,815 individuals claimed and received $27.4 million under the statute’s temporary First-Time Homebuyer Credit program. The GAO’s analysis included ...

Some FHA borrowers are still having difficulty obtaining lower-cost streamline refinancing even though the FHA has said it will accept streamline loans with “no credit check, income verification or appraisal.” Borrowers said they are still encountering credit checks, income verification and other obstacles, which indicate that lenders are disregarding FHA instructions regarding the enhanced streamline refi program. Even though FHA guidelines are in place, lenders are adding their credit overlays to the detriment of FHA borrowers seeking to ...

Given the features of the enhanced FHA streamline refinancing product, investors will be focusing on the FHA low mortgage-insurance premium (MIP) pools in the coming months, according to analysts with Barclays Research. Barclay’s analysts estimate that 27 percent of outstanding Ginnie Mae MBS pools are eligible for streamline refinancing, which could translate to $36 billion in new annual Ginnie Mae issuance. Approximately $293.0 billion of Ginnie Mae’s $1 trillion-plus 30-year loan pools were originated before May 2009, analysts said. About 79 percent of the collateral underlying the pools are ...