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 fund’s capital reserves, which fell ...

Citigroup, Inc. this week agreed to settle a civil fraud lawsuit with the Manhattan U.S. Attorney’s 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 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...