Bank of America’s 2008 purchase of Countrywide Financial Corp. continues to be an albatross around BofA’s neck, with U.S. Bancorp. filing suit against the largest lender in the land to compel it to repurchase mortgages sold by Countrywide back in 2005. U.S. Bancorp, which filed the lawsuit as a trustee on behalf of several unnamed investors, alleges breaches of representations and warranties, claiming Countrywide disregarded its own mortgage underwriting guidelines when it issued the loans at the center of the dispute. The 4,000 mortgages involved originally totaled $1.75 billion in principal. Countrywide agreed to buy back the loans within 90 days of the purchase date if any of the statements made in the loan contract were untrue, including an assertion that the loans complied with the bank’s underwriting guidelines, according to the complaint.

The National Association of Mortgage Brokers is tapping into national policymakers’ anxiety over job creation to press the Consumer Financial Protection Bureau to rescind its loan originator compensation rule. Ever since the early April implementation of the Federal Reserve Board’s Regulation Z Truth-in-Lending rule on steering and LO compensation, consumers have experienced a “dramatic increase in costs on their mortgages,” the NAMB said, and the regulation has become “a great impediment on the vital service of mortgage lending throughout local communities.” The group also complained about the overall regulatory compliance burden of a seemingly ever-increasing amount of regulations coming out of Washington, DC.

The Federal Housing Finance Agency’s legal action late last week against many of the nation’s largest financial institutions on the grounds they misled Fannie Mae and Freddie Mac about the quality of subprime and Alt A MBS purchased by the government-sponsored enterprises has few positives but plenty of negative potential consequences for the market, experts say. The 17 separate lawsuits filed by the FHFA seek unspecified damages on $196 billion in mortgage securities the two GSEs purchased, mostly between 2005 and 2008. The agency conducted extensive loan-level reviews that allegedly revealed widespread discrepancies between... [Includes two pages of data]

Private investors in agency MBS could lose $13 billion to $15 billion from a new government effort to help current Fannie Mae, Freddie Mac and FHA borrowers refinance, according to a new Congressional Budget Office staff working paper. The Obama administration is expected to announce a revved-up refinance program as part of a new strategy to strengthen economic growth. A “stylized” refinance program analyzed by the CBO would have a relatively small impact on the overall economy, the analysts said. The biggest impact would be on private MBS investors and the estimated 2.9 million households that would likely be brought into the...

Fannie Mae, Freddie Mac and Ginnie Mae produced a total of $84.25 billion of new single-family MBS during August, a sturdy 19.8 percent jump from the previous month, according to a new analysis and ranking by Inside MBS & ABS. Although there was a brief bump higher in production in June, agency MBS issuance has generally been sliding lower since the end of 2010. The decline has corresponded to reduced production of refinance mortgages, which accounted for just 55.1 percent of new originations in the second quarter, down from 67.1 percent for all of last year. New data suggest the refi market is still struggling. Some 63.5 percent of...

The securitization market needs less uncertainty and a great deal more transparency in order to restore investor confidence and lure back private capital, industry executives told members of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises. Witnesses testifying before the subcommittee, which held a field hearing in New York City, said the state of the securitization market remains uncertain, not just due to government subsidies crowding out any private sector action but also because hesitant investors do not yet see much improvement in the opaque environment that led to the...

Goldman Sachs has been ordered to retain an independent consultant to review foreclosure proceedings initiated by its former subsidiary, Litton Loan Servicing LP, under a formal enforcement action announced by the Federal Reserve Board last week. The firm was also required to provide financial remediation to affected borrowers. Additional monetary penalties are likely to be announced shortly. The Fed said it was acting against Goldman Sachs “to address a pattern of misconduct and negligence relating to deficient practices in residential mortgage loan servicing and foreclosure processing” involving Litton. Goldman sold...

Originations of non-agency jumbo mortgages declined in the second quarter of 2011, along with the rest of the mortgage market, but a new ranking and analysis by Inside Nonconforming Markets shows the jumbo sector still running higher than the pace in the first half of last year. Moreover, a number of lenders have boosted their jumbo originations or are looking to expand into the market as conforming loan limits are set to decrease. ... [includes one data chart]

New Penn Financial continued to expand its non-agency offerings this week with the launch of a correspondent channel. The lender said it will buy non-agency mortgages from approved clients and hold the loans in portfolio. “There are limited options today for correspondent lenders to originate high quality loans that do not fit agency standards,” said Bob Wexler, head of New Penn’s correspondent division. “New Penn’s proprietary loan programs fill a major gap in today’s market and the correspondent channel helps us reach more of these borrowers.” ...

Real estate investment trusts that invest in mortgage-backed securities are on the defensive after the Securities and Exchange Commission said last week that it is considering revising rules for mortgage REITs. “Mortgage REITs provide private capital to these markets, while allowing individual investors to opt in or out of the associated risks,” Thomas Siering, president and CEO of Two Harbors Investment, said this week in a letter to the REIT’s shareholders. ...