Federal prosecutors this week sued an FHA lender to recover hundreds of millions of dollars in paid claims in connection with mortgage loans originated through branches that were not approved by the Department of Housing and Urban Development. A lawsuit filed by the U.S. Attorney in Manhattan district court this week alleged that Allied Home Mortgage Corp., President and CEO Jim Hodge and Executive Vice President Jeanne Stell engaged in reckless mortgage lending, flouted FHA mortgage insurance requirements and repeatedly lied about compliance. Such actions, the suit alleged, subsequently led to...

Home mortgage production volume increased by 20.4 percent during the third quarter of 2011 as record-low mortgage interest rates sparked a new wave of refinancing activity. An estimated $325.0 billion in new residential mortgages were originated during the third quarter, according to a new Inside Mortgage Finance ranking and analysis. While that was up solidly from the previous three-month period, it still ranked as the second lowest quarter since the mortgage market collapsed at the end of 2008. Through the nine-month mark in 2011, total production for the year was still down 16.7 percent from...(Includes two data charts)

Private mortgage insurer PMI Group Inc. is assessing its options, including a possible restructuring, after state regulators seized its main unit, PMI Mortgage Insurance Co., last week. Headquartered in Walnut Creek, CA, but incorporated in Arizona, the company was seized by Christina Urias, director of the Arizona Department of Insurance, two months after it was placed under regulatory supervision following a recent “rapid increase in losses that has adversely affected its solvency and that of its affiliates.” On its website, PMI Group informed its clients that Urias has obtained an order “directing full and exclusive...

The U.S. Senate voted late last week to approve an amendment to a federal spending bill that was offered by Sens. Bob Menendez, D-NJ, and Johnny Isakson, R-GA, to reinstate the higher loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration that expired on Sept. 30. Those limits dropped to $625,500 in a number of high-cost markets on Oct. 1, and would be restored to $729,750 through December 2013 under the Menendez/Isakson amendment. The National Association of Home Builders was pleased.

After negotiating with a potential buyer, Bank of America gave up trying to sell its correspondent business and will simply shut the program down by the end of the year, leaving a huge potential hole in the market. The rumored bidder, NationStar Mortgage, reportedly wanted a higher price than BofA was willing to pay to take the correspondent unit off the bank’s hands. “After a comprehensive review of market opportunities, Bank of America will close its correspondent lending channel by the end of 2011, following an orderly transition with clients,” the company said in a written statement. BofA, which had already...

A ruling by a federal district court in Richmond awarding more than $40 million to a mortgage lender for covered losses should compel private mortgage insurers to be more circumspect about their MI agreements, according to industry attorneys. American International Group, parent company of United Guaranty Residential Insurance Co. of North Carolina, is appealing the court’s ruling that it pay SunTrust Mortgage more than $34.0 million for covered losses, $6.0 million in stipulated interest and about $5.4 million in legal fees and costs. Joseph Norton, AIG spokesman, said the insurer has appealed the decision to the...

U.S. policymakers are studying the Canadian mortgage market, which endured a far less costly downturn during the economic recession, for ideas that could be imported in the reform of the domestic mortgage finance system. “We must find characteristics in other countries similar to our own system,” said Rep. Carolyn McCarthy, D-NY, during a hearing in the House Financial Services Subcommittee on International Monetary Policy and Trade this week. In many ways, the U.S. mortgage market is unique. The ubiquity of the 30-year fixed-rate mortgage, a standard mortgage product here, is unparalleled elsewhere. While a 30-year...

The strongest mortgage insurers benefit the most if the Federal Housing Finance Agency follows through on recent comments that it is considering expanding use of MI as one of a number of potential risk sharing strategies for the government-sponsored enterprises, according to a recent report by Moody’s Investors Service. Moody’s noted that uncertainty about the role of private MI in a post-GSE environment “remains a key credit concern” for the industry. “If the FHFA opted for an increase in mortgage insurance as a way to share risk, even as the GSE mortgage universe shrinks, the action would likely to be a...

In a not unexpected development, PMI Mortgage Insurance has become the second mortgage insurer in less than a month to be suspended by Fannie Mae and Freddie Mac as an approved GSE mortgage insurer after the company announced state regulators placed PMI under a supervisory order.Mortgages insured by PMI Mortgage Insurance or its affiliates PMI Mortgage Insurance Co. (MIC) and PMI Insurance Co. (PIC) with notes before May 19, 2011, or after Sept. 16, 2011, will no longer be purchased or securitized by Fannie or Freddie, the GSEs announced separately last week.

Fannie Mae and Freddie Mac last week both “de-listed” PMI Mortgage Insurance Co. as an eligible private MI, a further blow to a private MI business that has been driven to the brink by the housing market collapse. Republic Mortgage Insurance Corp. was forced to stop writing new business this week as North Carolina regulators declined to extend a waiver of risk-capital ratios under which it had remained in the market. Together, PMI and RMIC accounted...