Activity in the Home Affordable Modification Programs Principal Reduction Alternative is heavily concentrated, according to an analysis by Inside Nonconforming Markets. Bank of America and Wells Fargo combined account for 51.4 percent of the non-agency principal reduction mods, based on new disclosures by the Treasury Department. The servicers PRA activity is outsized even compared with their overall non-agency HAMP activity. BofA and Wells combined account for 33.6 percent of active non-agency HAMP mods ... [Includes one data chart]
MBS investors were not at the negotiating table for the multistate servicing settlement, yet they will feel the reverberations of the principal reductions and loan modifications the banks have promised state attorneys general and federal agencies. The $25 billion agreement reached last week among 49 states, the federal government and five major servicers Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial allocates $10 billion toward principal reductions for underwater borrowers at risk of default. The banks will cough up another $7 billion for other forms of borrower...
Industry trade groups this week stepped up their efforts to block the imposition of additional fees on Fannie Mae and Freddie Mac MBS as a way for the government to pay for an extension of the payroll tax holiday and unemployment benefits. Late this week, the House-Senate conference committee announced it reached an agreement on a $150 billion extension through the end of 2012, although final details of the deal were not yet finalized as Inside MBS & ABS went to press. Lawmakers had been considering raising $4 billion of new revenue from increased guarantee fees from the two government-sponsored...
Reaction among non-agency participants regarding the settlement by five large bank servicers announced last week has been mixed. Investors are divided on what impact principal forgiveness loan modifications will have on non-agency mortgage-backed securities largely because the settlement terms have not been settled yet. Once the bank modifies their own portfolio loans, where it makes sense to reduce principal, there is a huge incentive to do the rest of the modifications using investor money, warned Amherst Securities Group. This stems from the fact that the servicers are able to use investor funds to satisfy their own claims. And the conflicts of interest are exacerbated because of the second liens ...
The delinquency rate on subprime mortgages at the end of 2011 hit levels not seen since 2008, but analysts warn that subprime performance could worsen as borrowers are unable to refinance and negative equity increases. The seasonally adjusted delinquency rate for subprime mortgages fell to 20.8 percent at the end of 2011, according to the Mortgage Bankers Association. The rate has declined in each of the past seven quarters from a peak of 27.2 percent in the first quarter of 2010. However, a number of factors suggest that delinquency rates on non-agency mortgages will increase ...
The $25.0 billion servicing settlement is just the latest step toward standardized servicing regulation, according to industry analysts. Many non-agency servicers have taken major steps to prepare for an overhaul of servicing regulation, though increased costs are a concern. It appears that non-agency MBS servicers have already made significant operational changes in an effort to address process deficiencies identified in this settlement and by regulators, Fitch Ratings said. As with federal consent orders several servicers agreed to last year ...
The Department of Housing and Urban Development plans to use revenues from proposed FHA premium hikes and servicer settlements to stabilize the Mutual Mortgage Insurance Fund and bring capital reserves back to compliance. The proposals for annual premium increases on forward FHA-insured mortgage loans, multifamily and health care loans were laid out in the FY 2013 HUD budget, which the Obama administration sent to Congress this week. During a press briefing, HUD Secretary Shaun Donovan said raising FHA premiums further would improve the FHA insurance funds capital reserves, which fell ...
Citigroup, Inc. this week agreed to settle a civil fraud lawsuit with the Manhattan U.S. Attorneys Office and the Department of Housing and Urban Development alleging reckless mortgage lending practices. The $158.3 million settlement was reached on Feb. 15, hours after Preet Bharara, the U.S. Attorney for the Southern District of New York, filed a civil fraud lawsuit against CitiMortgage, a subsidiary of Citibank. The suit sought treble damages and civil penalties under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the False Claims Act, a federal Civil War-era statute Congress passed to ...
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 Associations 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 agencys 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]