The FHA Mutual Mortgage Insurance Fund, which has been below the levels mandated by Congress for the past two years, appeared to come under more pressure in the first quarter of 2012. The Department of Housing and Urban Development reported that total capital resources available to the MMIF declined by $1.0 billion to $32.3 billion as of the end of March. Total MMIF capital has hit lower marks over the past two years – it fell to $31.6 billion in the first quarter of 2011 – but the fund’s total exposure has been climbing steadily. HUD reports the financial health of the MMIF only at the end of its fiscal year...

With an enormous volume of unresolved mortgage buyback demands continuing to hang menacingly over the industry’s head, vendor providers are hustling to develop viable solutions to help lenders get a handle on the risk and reduce their liability. The latest case in point is a new Quality Control Service for Correspondents from Melbourne, FL-based ISGN Corp., which provides end-to-end technology solutions and services to the U.S. mortgage industry. The company’s new offering is aimed at correspondent lenders with warehouse lines of credit, and it reviews and assesses all quality control points in...

A working paper authored by two Federal Reserve Bank of New York economists found that refinancing can be “fruitfully employed” as a tool for loss mitigation by investors and lenders. In their paper, “Payment Changes and Default Risk: The Impact of Refinancing on Expected Credit Losses,” Fed economists Joseph Tracy and Joshua Wright found that the relationship between borrowers’ monthly payments and future credit performance is important for the design of an initiative such as the Home Affordable Refinance Program. The authors used a competing risk model to estimate the sensitivity of default risk...

Is the end near for thrifts? Analysts at Keefe, Bruyette & Woods seem to think so. This week’s announcement by federal banking regulators of three proposed rules that would revise capital requirements may be the death blow to thrifts as we know them, said KBW equity analysts Frederick Cannon, Brian Kleinhanzl and Matthew Dinneen. The analysts contended that regulatory changes following the financial crisis and the announcement of new capital requirements have ended the viability of the thrift industry. Issued jointly by the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the...

Banks reported higher fair market values on their mortgage servicing rights assets during the first quarter of 2012, according to a new Inside Mortgage Trends analysis of call report data. Financial institutions filing bank call reports said they serviced $5.786 trillion of single-family mortgages for other investors – mostly through mortgage securitization activities – as of the end of March. They put a fair market value on these MSR assets of $48.69 billion, or 0.841 percent of the unpaid principal balance. At the end of December, the ratio of MSR fair value to mortgages...(Includes one data chart)

An ambitious public-private partnership hopes to harness the legal standing of the state and private money to solve the issue of negative equity by condemning underwater homes. Mortgage Resolution Partners is a San Francisco-based firm that works to, in words from its own website, “keep as many homeowners with underwater mortgages in their homes as possible, aiding in the stabilization of local housing markets and economies.” To create stability, however, Mortgage Resolution Partners intends to shake things up. According to a Reuters report, MRP proposes to partner with local governments and...

Since the start of conservatorship in 2008, government wards Fannie Mae and Freddie Mac have completed more than 2.3 million foreclosure prevention actions, according to the Federal Housing Finance Agency. These actions include 1.1 million permanent loan modifications. Nine months after modification, less than 15 percent of the loans modified in the second quarter of 2011 had missed two or more payments, while half of all borrowers who received loan mods in 1Q12 had their monthly payments reduced by more than 30 percent. Consumer credit performance deteriorated in May largely because of mortgages, according to...

Non-agency mortgage-backed security investors and politicians on both sides of the aisle were critical this week of the recent $25.0 billion servicing settlement. The settlement requires principal reduction loan modifications on mortgages held in five banks’ portfolios and allows the servicers to receive credit for reducing principal on mortgages in non-agency MBS. Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, noted that the Association of Mortgage Investors is not opposed to principal reduction mods ...

The Department of Housing and Urban Development is expanding an existing FHA note sales program as an alternative strategy for disposing of foreclosure property from the department’s bulging real estate-owned inventory. HUD Secretary Shaun Donovan announced enhancements to the accelerated claims disposition (ACD) program, which was designed primarily for delinquent FHA loans, at the 2012 Clinton Global Initiative America Meeting held this week in Chicago. The event brings together government and private sector leaders to discuss ways to ...

Lenders should now consider themselves on notice that the GSEs have adopted an even more aggressive posture in pressing their representation and warranty rights on mortgage loans they find wanting, analysts say, as evidenced by last week’s announced $330 million repurchase of Freddie Mac mortgages by Bank of America. A Freddie spokesman said that the GSE and BofA “mutually agreed” that the bank would repurchase the 2010 and 2011 loans that were not eligible for sale to Freddie under the terms of the company’s contracts with BofA. Specifically, the loans were underwritten using alternative valuation methods that were prohibited for use in the underwriting of the particular types of mortgages involved.