The antiquated backbone of the FHA’s Home Equity Conversion Mortgage program will soon be history with the official launch of HERMIT on Oct. 9. HERMIT, or the Home Equity Reverse Mortgage Information Technology, is a second generation, web-based automated system, designed to improve the Department of Housing and Urban Development’s ability to track and monitor its HECM portfolio in real time. The system also automates the payments of insurance claims while increasing efficiency and mitigating risks to the FHA insurance fund. HERMIT consists of a servicing module and an accounting module to ...

Interest rates on fixed-rate mortgages have been at record lows since December 2011, but a considerable number of borrowers continue to choose adjustable-rate mortgages, according to a ranking and analysis by Inside Mortgage Finance. ARM originations rose 7.7 percent from the first to the second quarter of 2012, a slightly faster rate of increase than the overall market. Although ARM originations over the first half of the year were down 3.6 percent from the same period in 2011, ARMs still accounted for 10.3 percent of total loan production. Most ARMs are...[Includes one data chart]

Redwood Trust offered no surprises in its fourth jumbo MBS of the year, a $313.2 million deal that closely resembles the six previous transactions the firm has issued since pioneering the rebirth of the non-agency market back in 2010. With squeaky clean collateral and an investor-friendly securitization structure, Sequoia Mortgage Trust 2012-4 includes three triple-A classes totaling $290.4 million that will be supported by 7.30 percent credit enhancement. That’s the same level as in Redwood’s previous deal, significantly lower than the 8.25 percent enhancement on its first 2012 transaction and slightly above the 7.15 percent level on its second deal this year. In several areas, the latest Redwood MBS includes...

A trio of industry trade groups is asking a federal appeals court to uphold a nearly century-old law that grants federal-court jurisdiction to civil lawsuits against any U.S. corporation in which claims arise from international banking or banking transactions in a U.S. territory. Last week, the Securities Industry and Financial Markets Association, New York Bankers Association and California Bankers Association filed an amicus brief with the U.S. Second Circuit Court of Appeals on behalf of Bank of America in its MBS lawsuit with American International Group. AIG filed...

Originations of non-agency jumbo mortgages through two quarters in 2012 were 35.8 percent above the pace set in 2011, according to affiliated publication Inside Mortgage Finance. Almost all of the major jumbo lenders are increasing production and the vast majority of originations continue to be held in portfolio. An estimated $37.0 billion in non-agency jumbos were originated during the second quarter of 2012, up 5.7 percent from the previous quarter and up 60.9 percent from the ... [Includes one data chart]

Redwood Trust is set to issue its fourth non-agency jumbo mortgage-backed security of the year, according to presale reports released this week. The $313.22 million non-agency jumbo MBS includes only slight changes to improve on securities previously issued by the real estate investment trust. Sequoia Mortgage Trust 2012-4 is set to receive triple-A ratings from Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service, with 7.30 percent credit enhancement on the highest-rated ... [Includes one data chart]

The government-sponsored enterprises’ guaranty fees will increase by an average of 10 basis points in the coming months as the Federal Housing Finance Agency works to align agency pricing with the private market. An increase earlier this year brought interest rates on agency mortgages slightly closer to the rates on non-agency jumbo mortgages but industry analysts suggest that the conforming loan limits have a greater impact on the market share for non-agency originations. “These increases will move [GSE] pricing ...

The eminent domain proposal from Mortgage Resolution Partners will either painlessly help thousands of non-agency borrowers or severely harm the non-agency market, according to industry participants. The newly expanded plan could even hinder efforts to revive the non-agency market going forward, according to MRP’s opponents. “Eminent domain is an important method for mitigating losses to investors,” Graham Williams, CEO of MRP, said in a comment letter last week to the Federal Housing Finance Agency ...

Lender-related underwriting and disclosure issues have prompted a significant increase in liability for non-agency mortgage-backed security issuers, based on a court ruling last week. The U.S. Court of Appeals for the Second Circuit found that liability extends beyond trusts specifically purchased by investors to potentially all trusts in an issuer’s shelf with mortgages originated by the same lenders. “Investors may now seek to intervene to broaden classes in MBS class actions that don’t explicitly ...

After years of holding off, Homeward Residential last week launched a principal forgiveness program for proprietary loan modifications. The program follows a settlement with the Massachusetts attorney general and success with principal reduction by other nonprime servicers. “We view this program as an additional safety net for borrowers who have limited options,” said Javid Jaberi, an executive vice president of servicing operations at Homeward Residential, formerly known as American Home Mortgage Servicing ...