Losses on re-performing FHA/VA mortgage pools are expected to rise as servicers cut back on the claims they submit to the Department of Housing and Urban Development and pass on to mortgage securitization trusts instead, according to a recent analysis by Moody’s Investors Service. With FHA experiencing increasing losses in its portfolio, HUD is scrutinizing claims more vigorously for servicing or underwriting defects, which may serve as a basis for denying claims on re-performing FHA/VA pools. Servicers are also required to bring the property to an acceptable conveyance condition. Furthermore, HUD imposes very strict timeline guidelines that FHA servicers must follow. Given the recent servicing irregularities and staffing constraints due to rising defaults, servicers may not always ...

A coalition of industry and advocacy groups is flexing its collective muscle as it prepares to push Senate legislation extending the current maximum mortgage loan limits. The group, comprised of 14 financial and real estate trade and advocacy associations, are lining up behind S. 1508, the Homeownership Affordability Act of 2011, which would extend the temporary high-cost area loan limit through the end of 2013. Introduced by Sens. Robert Menendez, D-NJ, and Johnny Isakson, R-GA, the bill complements a similar bipartisan effort by Reps. John Campbell, R-CA, and Gary Ackerman, D-NY, in the House Financial Services Committee to keep ...

The Department of Housing and Urban Development recently provided guidance to housing counselors and lenders regarding changes made to the layout and administration of HUD’s Certificate of Home Equity Conversion Mortgage Counseling. HUD’s Certificate of HECM Counseling, identified as Form HUD 92902, is provided by housing counselor as proof that a homeowner interested in pursuing a HECM product has received information about the implications of and alternatives to a reverse mortgage. The HECM counselor must adhere to all of FHA’s guidelines regarding information that must be provided to the HECM borrower. With respect to the form’s layout under Mortgagee Letter 2011-31, HUD has inserted ...

The reverse mortgage arena experienced another shake-up as SunTrust Bank, citing poor volume, quite the business even as J.G. Wentworth, the largest purchaser of future payment products, announced its entry into the market. Atlanta-based SunTrust stopped accepting new reverse mortgage applications as of Sept. 1, although it is continuing to process applications already in the pipeline. A statement from the bank indicated that low production volume was the reason for management’s decision to leave the reverse mortgage business and to focus resources instead on mortgage origination and servicing. The market also lost ...

Government-insured mortgage programs held up a little better than the overall market during the second quarter of 2011, edging back toward the higher market shares they recorded in late 2009 and early last year, according to a new analysis and ranking by Inside Mortgage Finance. FHA and VA lending accounted for 27.2 percent of new loan originations in the second quarter, despite a 5.3 percent drop in volume. That represented the highest market penetration for the government programs since early 2010, when they accounted for 28.8 percent of new originations. The all-time high market share for FHA and VA was back in the fourth quarter of 2008, at... [Includes two data charts]

Officials with Bank of America maintain that a proposed $8.5 billion settlement related to non-agency buybacks and servicing is fair, even as opposition continues to mount. BofA also continues to take action to distance itself from “legacy” assets acquired from Countrywide Financial. “Obviously there aren’t many days when I get up and think positively about the Countrywide transaction in 2008,” BofA’s CEO Brian Moynihan said this month in a conference call with investors. “In each quarter, we continue to put risk behind us ...

The amount of subprime mortgages outstanding as of the second quarter of 2011 has declined by nearly 50 percent compared with the market’s peak of $1.0 trillion in the second quarter of 2007, according to an analysis by Inside Nonconforming Markets. However, subprime servicers have reasons to be optimistic, according to industry analysts.Subprime mortgage delinquencies increased in the first and second quarters of 2011 after declining throughout 2010 ... [includes one data chart]

Walter Investment Management is looking to capitalize on its recent acquisition of special servicer Green Tree and continue to grow. Officials with Walter said the company currently services a $40 billion portfolio and is on pace for a servicing portfolio of at least $60 billion by the end of this year. “We feel very good about our ability to get our fair share and more of what’s available in the market,” said Denmar Dixon, vice chairman of the board and executive vice president at Walter. ...

One of PennyMac Mortgage Investment Trust's primary goals is to increase jumbo correspondent lending activity, according to David Spector, president and COO of the real estate investment trust. Stanford Kurland, chairman and CEO of PennyMac, noted that banks have reduced correspondent activity due to impending risk-retention rules and other regulatory issues. “PennyMac has great potential to bridge the significant gap that exists in the origination market, which will likely grow with the expansion of the prime non-agency market as the agencies’ conforming loan limits are reduced,” Kurland said this month. ...

The massive losses taken by the government-sponsored enterprises on their non-prime holdings are not over yet. Fannie Mae and Freddie Mac warned this month that they expect greater credit losses for 2011 than the hits they took last year, largely due to the continued poor performance of legacy non-prime acquisitions. The GSEs had a combined $430.51 billion in non-prime holdings as of the second quarter of 2011, according to a new ranking and analysis by Inside Nonconforming Markets. ... [includes one data chart]