Lenders looking to participate in Redwood Trust’s jumbo securitization efforts must meet high standards, according to a review of the real estate investment trust’s new jumbo mortgage-backed security. The major originators in the $375.2 million jumbo MBS Redwood issued last week were all considered “above average” by Fitch Ratings. Redwood has invested significant resources into its jumbo conduit and correspondent program in an effort to revive non-agency securitization. ...

Use of principal reduction in loan modifications increased in the second quarter of 2011, according to the Office of the Comptroller of the Currency. Principal reduction has gained popularity for non-agency mortgages after initially being used almost exclusively on portfolio loans. Some 8,645 principal reduction mods were completed by major banks and thrifts in the second quarter of 2011, according to the OCC. Non-agency mortgages accounted for 48.9 percent of all principal reduction mods in the second quarter of 2011, with portfolio mortgages accounting for the rest of the activity. ...

Holdings of home-equity loans by banks and thrifts fell by 1.9 percent in the second quarter of 2011 compared with the previous quarter, according to the Inside Mortgage Finance Bank Mortgage Database. Delinquencies on the loans remain low but banks are being subject to greater regulatory scrutiny regarding their treatment of HELs. Banks and thrifts held $1.23 trillion in HELs at the end of the second quarter of 2011. The serious delinquency rate on the loans was 2.04 percent, down from 2.09 percent the previous quarter. ... [Includes one data chart]

Two nonconforming-focused mortgage companies controlled by Fortress Investment Group have suffered setbacks recently. Springleaf Financial Services is facing investor uncertainty, while Nationstar Mortgage was unsuccessful in its bid for Bank of America’s correspondent division. Fitch Ratings downgraded Springleaf’s issuer default rating to CCC from B- in September. ...

Subprime lending remained subdued in 2010, according to newly released data from the Home Mortgage Disclosure Act. Higher-priced mortgages – the Federal Reserve’s revised proxy for subprime mortgages – accounted for 3.2 percent of the number of loans originated in 2010. Some $7.14 billion in higher-priced mortgages were sold in 2010, according to a new analysis by Inside Nonconforming Markets. Ginnie Mae continued to account for the largest portion of the sales at 35.0 percent in 2010, up from 21.1 percent the previous year. ... [Includes one data chart]

Negative equity among jumbo borrowers with securitized mortgages is set to increase significantly, according to Fitch Ratings. This week, the rating service projected that half of non-agency jumbo borrowers will end up with negative equity, up from more than a third of such borrowers currently. ... [Includes three briefs]

High-quality endorsements and lower-than-expected prepayment speeds have given a slight boost to the FHA Mutual Mortgage Insurance Fund in the second quarter of 2011 even as agency officials remained cautiously optimistic about the recent book of business. In its quarterly report, the Department of Housing and Urban Development said that the MMI fund’s total capital improved by $100 million to $31.7 billion from the previous quarter as revenues from premiums and property sales exceeded higher claims payments. Endorsements in the second quarter alone added $1.7 billion to the capital reserve account, which stood at $2.8 billion at the end of June, the report noted. The FHA capital reserve account, which absorbs ...

Ginnie Mae is following its own path in exploring potential changes to servicer compensation, a project that parallels the Federal Housing Finance Agency’s Joint Initiative on Fannie Mae/Freddie Mac servicing compensation. As part of the FHA’s effort to improve default servicing, Ginnie Mae and other government housing agencies will be working separately to develop better claims mechanisms and pooling services as well as clearer risk and warranty delineations to improve the value of securitizations, the FHFA said. In a discussion paper, the FHFA, which oversees Fannie Mae, Freddie Mac and the Federal Home Loan Banks, said ...

A proposed FHA rule on “seller concessions” recently listed as withdrawn from the Office of Information and Regulatory Affairs’ review process is now being cleared for issuance by the Department of Housing and Urban Development. FHA spokesman Lemar Wooley clarified that the long-awaited proposal was not withdrawn as reported but “delayed” as a routine requirement for an Economic Impact analysis. “But now it is moving again,” he explained in an email. “It is in the clearance process and we hope to publish a proposed rule before the end of the year. According to Wooley, the proposed rule would ...

The FHA is seeking legal opinion on whether Congress can grant it authority to bar any former executive of a defunct lender from participating in FHA programs for material violation of agency requirements. The Department of Housing and Urban Development’s Office of General Counsel is pondering the question in the wake of an internal report on the FHA’s inability to prevent former executives of defunct mortgage companies that failed to indemnify HUD on FHA losses from reentering the FHA program. The report from HUD’s Inspector General said 12 corporate officers have signed on to new mortgage firms with ...