Fannie Mae recently started to transfer “higher-risk” mortgages to special servicers in an effort to improve performance, typically on non-prime loans. In its earnings filing for the third quarter of 2011, Fannie said it is “transferring servicing on loan populations that include loans with higher-risk characteristics to special servicers with whom we have worked to develop high-touch protocols.” The protocols include ... [Includes one data chart]

Saxon Mortgage prevailed in a closely watched case decided by the Arizona State Supreme Court in November. The 5-0 ruling determined that the recording of an assignment is not necessary to enforce a foreclosure under Arizona law. The decision in Vasquez v. Saxon Mortgage could have a wide-ranging impact, according to legal analysts. Jean Braucher, a professor of law at the University of Arizona, said the court essentially approved of servicers’ “sloppy procedures,” ...

Settlements regarding non-agency mortgage-backed securities are starting to increase as industry analysts suggest that the agreements limit the future liability faced by issuers. Bank of America and the Royal Bank of Scotland recently reached separate non-agency MBS settlements. At the end of October, BofA quietly settled with investors – including the Public Employees’ Retirement System of Mississippi – in 18 non-agency securities issued by Merrill Lynch. The settlement price was not disclosed but was reportedly $315.0 million. ...

Springleaf Finance continues to consider an initial public offering for its real estate investment trust as a way to refinance a portion of its business to pay off debts. The Springleaf REIT filed for an IPO in May and while investor demand has not been overwhelming, the company maintains that it is still considering going public. “The REIT will be primarily engaged in the business of sourcing, screening and acquiring performing whole loans secured by mortgages on residential real estate,” Springleaf Finance said ...

Officials with the Consumer Financial Protection Bureau once again stressed the need for regulation of alternative mortgages this week. However, the performance of such “risky” loans continues to be debated among consumer advocates and economists. “In the lead up to the crisis, when a competitor began to steal market share – or to earn outsize profits – by introducing products like option ARMs or no-doc loans, the pressure to follow suit was intense,” Raj Date, special advisor to the Treasury on the CFPB, said ...

Contrary to what critics claim about the recent increase in the FHA’s loan limits, high-balance mortgage loans insured by FHA have shown historically lower delinquency rates and, therefore, pose no significant risk to taxpayers or the FHA Mutual Mortgage Insurance Fund, said Department of Housing and Urban Development Secretary Shaun Donovan. Notwithstanding the agency’s opposition to legislation reinstating the pre-Oct. 1 temporary maximum loan limits for FHA, Donovan said early evidence, so far, shows that high-balance loans perform better than other FHA-insured loans. Last month, Congress enacted legislation reinstating ...

Jumbo lenders do not expect the higher FHA loan limits to have any adverse impact on their GSE business. Anyone seeking a loan above $625,500 only has one choice, and that is FHA, but the real question is how much business the conventional market would lose to FHA, lenders said. In addition to the higher loan limit, the FHA insures loans of more than 80 percent loan-to-value ratio and requires a 3.5 percent downpayment. The GSEs require a 20 percent downpayment on their jumbos. On the other hand, the private market offers loans above the GSE limits but does not originate loans in excess of 80 percent LTV. “For people seeking under-80 LTV loans, it is unlikely that ... [Includes one data chart]

The decision to restore “emergency” high-cost loan limits for the FHA, but not for Fannie Mae and Freddie Mac, will likely have a negligible impact on the government-sponsored enterprises, according to a new Inside Mortgage Finance analysis of agency jumbo mortgage activity. During the first nine months of 2011, single-family loans exceeding $625,500 – the top GSE loan amount for high-cost markets since Oct. 1 – accounted for an infinitesimal 1.5 percent of Freddie Mac’s total single-family securitization. Although the FHA can resume insuring...(Includes three data charts)

The outstanding supply of subprime mortgages in the market continued to decline in the third quarter, but three special servicers significantly increased their portfolios, according to a new ranking and analysis by Inside Nonconforming Markets. The growing servicers – Ocwen Financial, Nationstar Mortgage and Walter Investment Management – all focus on high-touch servicing. Special servicing is in particularly high demand as banks have started to sell their subprime holdings, a trend expected to...

The high-cost loan limits for FHA mortgages will be re-elevated to $729,750 through at least the end of 2013 while the government-sponsored enterprises’ loan limits will remain unchanged under appropriations legislation approved by Congress this week. Industry participants suggest that the FHA’s newly higher loan limits will have little impact on non-agency jumbo activity. The revised FHA loan limits were included in “mini-bus” appropriations legislation for the Department of Housing and Urban Development and other federal agencies. The bill – which also contained a Continuing Resolution to avoid a government shutdown – was...