The American Securitization Forum this week announced a credit risk-retention model which, it claims, imposes requirements more powerful than those proposed by federal regulators. The “ASF Model Residential Mortgage-Backed Securities Principles” spell out steps for investigating, resolving and enforcing remedies in connection with representations and warranties in non-agency MBS transactions involving newly originated mortgages. Essentially, the ASF model requires...

Even as the MBS market warily watches reports that the White House is considering mortgage refinancing as part of a broad effort to stimulate the housing industry and the economy at large, analysts offered mixed assessments of the effectiveness of the most likely option. Industry observers say the most likely scenario would involve a change in the pricing policies of Fannie Mae and Freddie Mac, a move that would not require...

Any modified FHA or VA loan can now be repurchased from a Ginnie Mae MBS if the borrower successfully completes a three-month trial period under a policy shift to align with the FHA version of the Home Affordable Modification Program. Ginnie made the announcement on Aug. 26, effective immediately. Before the policy change, loans had to have missed three full payments before qualifying for a repurchase. Issuers can buy out loans that have remained in pools while borrowers made partial payments for at least three consecutive months under an FHA or VA trial payment plan that is a condition to a permanent modification, Ginnie explained. “Until the loan has been...

Fannie Mae made its second foray of 2011 into the non-agency MBS market by providing a guarantee wrap on a $690.6 billion deal backed by previously modified FHA and VA mortgages. Government Loan Securitization Trust 2011-FV1 is comprised of government loans originated by Wells Fargo and Wachovia. All the loans were previously securitized in non-agency MBS backed by Fannie wraps, including some that date back to 2001. The average age of the loans since modification is 132 months, and 91.2 percent of them are insured by the FHA. According to the prospectus, 19.8 percent of the loans were 30-days delinquent and 35.9 percent were more than...

The average mortgage banking firm reported increased production earnings in the second quarter of 2011 and higher loan production compared to the first three months of the year, according to the Mortgage Bankers Association quarterly performance report. The report, which collected data from 167 companies including many smaller mortgage bankers, found average pretax income fell 60.5 percent to $451,000 during the second quarter. That was the lowest level of profitability since the fourth quarter of 2008, when the average mortgage banking company lost $206,000. The MBA survey suggested that...

The financial crisis and the housing meltdown have cast unprecedented doubt about the virtue of homeownership, and many experts at a conference sponsored this week by the Federal Reserve acknowledged that homeownership has lost its universal appeal. “For low-income households I do think it’s more risky because it’s such a large share of their assets, such a large share of the wealth, so a price decline has a disproportionate effect,” explained Karen Pence, assistant director of the division of research and statistics for the Fed. “I think it’s more risky for low-income households just because it’s such a big part of their portfolio. I think it’s...

The Federal Housing Finance Agency this week became among the latest, most influential parties to legally weigh in on the proposed $8.5 billion Bank of America settlement over non-agency mortgage-backed securities.On Aug. 30, the deadline to file objections to the deal, the Finance Agency filed a “Notice of Appearance and Conditional Objection” with the U.S. District Court in Manhattan on behalf of Fannie Mae and Freddie Mac.

The spread between the average and lowest mortgage rates being offered in the primary market is continuing to widen as lenders try to get customers to take advantage of the record-low rates either for purchasing a home or refinancing. While the average mortgage rates remained in the 4.22 percent to 4.28 percent range for a 30-year fixed-rate mortgage across the country, the most aggressive lenders are offering rates as low as 3.88 percent, according to mortgage brokers. The Lending Tree Weekly Mortgage Rate Pulse, which tracks the lowest and average mortgage rates offered by lenders on the company’s network, recently reported...

Default technology provider Commerce Velocity, based in Irvine, CA, recently upgraded its Optimizer solution to help servicer clients achieve the new requirements for Fannie Mae’s Quality Right Party Contact initiative. The original version of Optimizer enabled servicers to maximize cash flows from delinquencies, and enforce workout consistency throughout the default management process. By applying net present value calculations, cash flow projections, valuation models, and comprehensive workout guidelines, the technology provides “the most intelligent outcomes possible,” the company said. The Optimal Outcome module monitors...

A proposal to rid the agency mortgage programs of some of their real estate-owned property through bulk sales has come under fire from Radar Logic, a housing research firm. The company said house prices continued to drop in June, down 4.7 percent from a year ago, and bulk sales of REO properties could hasten the fall. The Obama administration recently launched a fact-finding mission soliciting ideas and opinions about ways to reduce the massive REO inventories held by the FHA, Fannie Mae and Freddie Mac. One solution is bulk sales to investors who would likely turn the houses into rentals. Radar Logic is afraid of possible...