Excluding streamlined FHA refinancing from the “Compare Ratio” loan review process to facilitate refinancing of underwater non-agency mortgages, as proposed by the Obama administration, would make sense. At the margin, however, the proposal would increase Ginnie Mae prepayment speeds on higher-coupon borrowers, analysts cautioned. The proposal is part of a broader administration plan for housing recovery, which calls on Congress to provide non-agency borrowers with access to low-cost refinancing through FHA, and fully streamlined refinancing for borrowers with Fannie Mae or Freddie Mac loans. Underwater borrowers who opt for streamlined refinancing in either agency or non-agency programs would have ... [one data chart]

Total delinquency rates and foreclosure start rates decreased for all loan types on a quarter-over-quarter basis, except FHA loans, according to the Mortgage Bankers Association’s National Delinquency Survey for the fourth quarter of 2011. All delinquency and foreclosure measures for FHA loans were up over the previous quarter because the agency’s book of business experienced rapid growth, and purchase loans originated in 2008 and 2009 are now only entering the peaks of a normal delinquency, the MBA explained. On a seasonally adjusted basis, the delinquency rate for FHA loans increased 27 basis points to 12.36 percent and the foreclosure inventory rate rose by ... [one data chart]

The Department of Housing and Urban Development last week withdrew a proposal that would have allowed the Farmer Credit System’s direct lenders to participate as approved lenders in the FHA insurance programs. In a notice published in the Feb. 13 Federal Register, HUD explained that while it supports having mortgage credit available to qualified borrowers, particularly in underserved areas, it remains committed to the administration’s goal of reducing the FHA’s market share and facilitating the return of private capital to the housing finance market. The FHA and its approved lenders will continue mortgage lending in rural areas to ensure ...

While the multistate servicing settlement reached by 49 states, federal officials and the nation’s five largest servicers gets the state and federal attorneys off the banks’ backs in regards to servicing and foreclosure, the banks are still wide open to servicing lawsuits from individuals, criminal charges and litigation over their securitization activities. “This is only one part of a long resolution process,” said Richard Andreano, practice leader of Ballard Spahr’s mortgage banking group. Despite complaints from a wide swath of consumer protection groups that the $25 billion in penalties to be...

Loan production was up sharply in the wholesale mortgage business late last year, despite the high-profile retreat from the sector by some major lenders. A new Inside Mortgage Finance ranking and analysis reveals that wholesale production jumped 22.4 percent from the third to the fourth quarter of last year, posting a bigger gain than the 17.0 percent increase in retail originations. While the broker channel saw the biggest increase – a hefty 48.5 percent jump that raised its market share back to double digits – the correspondent business also posted a solid 14.9 percent gain in volume. Despite the fourth...

In an unusual legal development, the City of St. Paul, MN, late last week suddenly removed its challenge in a case before the Supreme Court of the United States that could have produced a definitive ruling on the disparate impact theory of lending discrimination under the Fair Housing Act. What’s unusual in Magner v. Gallagher is that the city believes it would have prevailed in the nation’s highest court – but opted to ask for dismissal because city leaders came to the conclusion that a victory could substantially undermine important civil rights enforcement in housing throughout the nation. The city expects to...

The Federal Housing Finance Agency’s own data prove that reducing the principal owed on underwater Fannie Mae and Freddie Mac loans would actually save taxpayers money, contrary to the agency’s position that writedowns are against taxpayer interests, according to House Democrats. In a letter last week to FHFA Acting Director Edward DeMarco, Reps. Elijah Cummings, D-MD, and John Tierney, D-MA, labeled the agency’s report justifying its policy against principal reduction as “seriously deficient and misleading.” “We understand that the FHFA is not part of the Obama administration, and that you do not take...

The Department of Housing and Urban Development is going all out to bolster FHA’s capital reserves with budgetary proposals to increase annual premiums beyond the 10-basis points hike authorized by Congress late last year. The proposed premium increases are expected to complement the $1 billion that Bank of America has agreed to pay to resolve claims against the bank and its subsidiary, Countrywide Financial Corp., for alleged underwriting and mortgage origination fraud. The BofA settlement, half of which is a penalty paid directly to the FHA, is part of a $25 billion agreement among 49 state...

The Consumer Financial Protection Bureau is on course to spend nearly half a billion dollars in 2013, half of which is projected to be devoted to supervision and enforcement, according to the budget proposal released by the Obama administration this week. The CFPB breaks down its expenditures into three categories, the largest of which is devoted to supervision, enforcement, fair lending and equal opportunity (SEFLEO), with projected funding to exceed the other two categories combined. After spending approximately $60 million in 2011, the SEFLEO bucket is budgeted at $214 million for 2012 and $261...

The already formidable task of replacing the outgoing CEOs at Fannie Mae and Freddie Mac got a little harder this week following swift congressional action to cut compensation levels at the GSEs down to size.Both the House this week and the Senate have approved by overwhelming margins the Stop Trading on Congressional Knowledge Act of 2012, which would bar members of Congress and congressional staff from using non-public, inside information for private gain.While the House version of the STOCK Act is weaker than the Senate’s, both versions retained an amendment sponsored by Sens. John McCain, R-AZ and Jay Rockefeller, D-WV, to prohibit Fannie and Freddie executives from receiving multi-million dollar bonuses while the GSEs remain in federal conservatorship.