Major banks significantly increased their use of principal reduction loan modifications in 2012, according to new data from the Office of the Comptroller of the Currency. The eight banks and one thrift tracked by the OCC completed 126,283 principal reduction mods in 2012, up from 43,396 the previous year. Principal reduction was used on 20.0 percent of all loss mitigation actions taken by the firms in the fourth quarter, up from an 8.5 percent share in the fourth quarter of 2011. Mortgages in non-agency MBS ...

Bank of America agreed to a $165.0 million settlement with the National Credit Union Administration this week regarding non-agency mortgage-backed securities purchased by credit unions that subsequently failed. BofA did not admit fault as part of the settlement. The NCUA has received more than $335.0 million in non-agency MBS settlements with five firms and has similar lawsuits pending against nine other firms. The Conference of State Bank Supervisors ... [Includes three briefs]

The FHA is seeking comment on a proposal to change the period for reviewing loans for direct endorsement from pre- to post-closing in order to increase the number of acceptable loans and, therefore, reduce any potential risk to the Mutual Mortgage Insurance Fund. Under the proposal, a lender applying for unconditional direct endorsement authority would be required to submit the necessary loan files only after closing. After determining that the mortgage is acceptable and meets all FHA requirements, the agency would notify the lender that the loan has been endorsed. Current regulations provide for ...

The FHA may allow a borrower’s 401(k) retirement fund to be included in the calculation of debt-to-income (DTI) ratio, according to the agency. Normally, up to 60 percent of the fund’s value may be included in the DTI ratio, the agency said. Fund assets, such as Individual Retirement Accounts, thrift savings plans, 401(k) retirement plan and Keogh Accounts, may be counted in the underwriting, it added. The rule remains applicable unless the borrower presents proof that a higher percentage may be withdrawn after subtracting any federal income tax and withdrawal penalties. In such cases, the lender would ...

New non-agency MBS settlements and issuance.

Fannie Mae and Freddie Mac suffered lower losses on their nonprime mortgage holdings in 2012 compared with previous years as mortgage performance has stabilized and investor demand for vintage non-agency mortgage-backed securities has increased.

Inside MBS & ABS found big gains in the securitization of most commercial property types, including a huge surge in mortgages on hotels and motels.

Moody’s Investors Service issued a “special comment” this week to warn that the new non-agency jumbo MBS issued by JPMorgan Chase would not have received a AAA rating from Moody’s, had the firm been asked to rate the deal. The rating service raised concerns about representations and warranties and a lack of risk retention on the deal.

It hasn’t been an easy time for due diligence firms that make their living off the mortgage business, at least not this year. Firms like Allonhill LLC, which bulked up on staff to handle the rush of work on investor buyback demands, have been cutting back in recent months as those contracts run their natural course.

Fannie Mae may be having second thoughts about selling nonperforming loans into the secondary market where cash-rich investors are waiting with bated breath.