Banks and thrifts reported a substantial decline in the volume of mortgages they repurchased during the second quarter of 2012, according to a new Inside Mortgage Trends analysis of call-report data. The financial institutions reported a total of $3.86 billion in mortgage repurchases and indemnifications during the second quarter, down 6.1 percent from the first three months of the year. It marked the lowest quarterly repurchase volume since the final three months of 2008, when banks reported ... [Includes one data chart]

The average mortgage banking business earned a tidy $2.94 million in after-tax income during the second quarter of 2012, up 44.9 percent from the first three months of the year, according to the Mortgage Bankers Association’s latest performance report. Midway through the year, average after-tax income was $4.97 million for the 300-odd companies that participate in the MBA survey. That was up more than five-fold from the first half of last year. The stronger earnings resulted from increased profitability ...

The Federal Housing Finance Agency’s streamlined short sale guidelines set to kick in Nov. 1 could increase losses on certain home-equity loans and second liens held in bank portfolios, according to a recent analysis by Fitch Ratings. Under the new guidelines, which were announced last month, servicers will be able to accelerate their processing of a short sale for borrowers with eligible hardships without any additional approval from either of the government-sponsored enterprises. This will ...

Excess servicing spreads qualify as real-estate related investments for real estate investment trusts, according to a new ruling by the IRS. The private-letter ruling issued in August allows an un-named REIT to invest in the assets, with others exploring the possibility, according to industry analysts. “In anticipation of new financial industry regulations and in order to improve their liquidity and capital positions, many servicers have begun selling their excess servicing spreads to passive ...

Two years after the enactment of the Dodd-Frank Act, banks with mortgage operations are faced with the question of whether to build up or scale back their mortgage lending operations, or simply divest and wait for a more favorable regulatory environment. Financial institutions are beginning to feel the impact of Dodd-Frank as the Consumer Financial Protection Bureau carries out its mandate to write rules based on the law’s goal of targeting systemic risk and protecting consumers. But while ...

As some aggregators scale back or add overlays to their FHA Streamline Refinance mortgage loans, First Mortgage Corp. stands out because of its confident approach to the product. While other lenders impose overlays or charge more for the additional risk, FMC, an FHA-approved direct lender in Ontario, CA, imposes no restrictions on streamline refinancing other than those required by FHA guidelines. “First Mortgage prides itself in serving historically underserved borrowers and so we have a commitment to underwrite loans to FHA guidelines for the most part,” said FMC spokesperson Sharon Magnuson. The FHA streamline refi program allows certain borrowers ...

FHA jumbo activity kicked into high gear in the second quarter of 2012 as originations jumped more than 30 percent from the first quarter, Inside FHA Lending’s analysis of FHA data showed. The volume of FHA loans exceeding $417,000 totaled $6.33 billion in the second quarter, up from $4.78 billion during the first quarter. FHA jumbo production was robust during the first half of the year as the top lenders reported $11.1 billion in total originations, which was 9.1 percent more compared to the same period a year ago. Purchase jumbo loans accounted for ...

$7.5 Million FHA Mortgage Fraud Scheme. The Department of Justice has filed charges against top executives of a real estate brokerage for their participation in a mortgage fraud scheme that may cost the FHA $7.5 million in losses. Indictments were unsealed earlier this month in Manhattan federal court charging Mitchell Cohen and Erin Davis, the owner and sales manager, respectively, of Buy-A-Home, a real estate brokerage business in Queens, NY. The criminal charges follow a civil fraud lawsuit filed by the U.S. Attorney’s Office for the Southern District of New York last December against ...

The five servicers participating in the $25.0 billion national servicing settlement have taken vastly different approaches to loss mitigation, according to a report released this week by the Office of Mortgage Settlement Oversight. Short sales dominated early activity and Bank of America, the servicer with the largest obligations under the settlement, accounted for a small amount of initial loan modifications completed by the servicers. Combined, the five servicers granted non-agency borrowers ... [Includes one chart]

The streamlined short sale programs announced last week by Fannie Mae and Freddie Mac could increase losses on bank holdings of second liens, according to industry analysts. The changes, directed by the Federal Housing Finance Agency, include the ability for the government-sponsored enterprises to offer up to $6,000 to second-lien holders to expedite a short sale. “Previously, second-lien holders could slow down the short sale process by negotiating for higher amounts,” the FHFA said. Overall ...