Total single-family originations could drop another 20 percent or more in 2012, following a similar decline this year, according to mortgage industry economists. The consensus forecast from Fannie Mae, Freddie Mac and the Mortgage Bankers Association is that $1.28 trillion in home loans will be originated in 2011, a decline of 22 percent from last year’s estimated volume. But 2011 will prove to be just a prelude to another sharp decline in production next year. Despite the fact that mortgage rates are expected to stay at...

One of the goals in the recent revisions to the Home Affordable Refinance Program is to stimulate more interest among lenders, largely through relaxed requirements on representations and warranties and some streamlining of the process. But HARP 2.0 also includes new guidelines on soliciting potential customers, both from the lender’s own portfolio and from borrowers currently serviced by another firm. A handful of lenders have begun touting the expanded program to consumers. The new program includes specific refi solicitation practices that lenders must...

Employment and income fraud risk has been steadily rising since 2009. Analysts at Interthinx attribute the growing risk to the misrepresentation of borrower data to meet the tighter debt-to-income ratios that lenders now demand. The Mortgage Fraud Risk Report shows that employment and income fraud risk in the third quarter was up 8.8 percent from the same period last year, and up 50.0 percent from the third quarter of 2009. One thing that doesn’t change is the states that have the highest exposure to this fraud; Nevada, the riskiest state, has an index value of 255, and Arizona comes in a close second with an index of 243. These...

Four years after the credit crisis, analysts at Fitch Ratings expect eventual losses from structured finance transactions to soar from current levels, about $94 billion, or 2.7 percent of the original balance of rated transactions, to $376 billion, or 10.6 percent, by the time the dust settles. And the primary culprit, of course, is residential MBS. “Fitch expects a further 9,754 tranches to not recover their full principal, representing 33 percent of all tranches and increasing the proportion of tranches with realized or expected losses to 63 percent of the total...

The National Credit Union Administration this week reached settlements with two underwriters of non-agency mortgage-backed securities. The settlements also have implications for non-agency MBS issuers and underwriters facing lawsuits from the Federal Housing Finance Agency. Deutsche Bank Securities agreed to pay the NCUA $145.0 million to reduce losses associated with five failed credit unions. Citigroup also agreed to pay the NCUA $20.5 million to settle similar charges. The settlements included terms stating that the issuers did not admit fault. NCUA Board Chairman Debbie Matz warned that the settlements are...

A number of real estate investment trusts – besides Redwood Trust – are hoping to issue non-agency mortgage-backed securities in the coming years. PennyMac Mortgage Investment Trust and Two Harbors Investment have taken two significantly different strategies to reach that goal. PennyMac has focused on investing in non-performing whole loans and has established a correspondent lending platform, including some jumbo activity. The REIT is also establishing warehouse lending capabilities, with a roll-out planned by mid-2012. In the near-term...

The FHA and the Internal Revenue Service are working on implementing electronic signatures in loan documents and certain federal tax forms in 2012. In a recent letter to members, David Stevens, president and chief executive officer of the Mortgage Bankers Association, said the trade group has been working with both agencies for the past 18 months to allow the use of e-signatures on FHA loan documents and to automate the IRS Form 4506-T process as early as next year. Form 4506-T is a request for a transcript of a filer’s tax return.

Despite several high-profile retreats from the wholesale production channel in recent months, the mortgage industry was pressed to rely more on mortgage brokers and correspondents to meet the increased consumer demand for refinance loans during the third quarter. A new Inside Mortgage Finance analysis and ranking reveals that wholesale loan production increased by 27.7 percent from the second quarter, while the still-dominant retail channel posted a more modest 15.2 percent gain. Many companies have been paring back their retail capacity during 2011 as origination volumes fell sharply through...(Includes four data charts)

Top mortgage lenders continued to write big checks to settle repurchase claims during the third quarter, but they continued to face a huge inventory of unresolved cases, according to a new analysis of corporate earnings reports by Inside Mortgage Trends. As of the end of September, the top five lenders in the industry reported a combined $19.22 billion in outstanding repurchase demands, mortgage insurance denials and other disputes related to their representations and warranties. That was down slightly, by 0.2 percent, from the previous quarter. As a group, the lenders reported... (Includes one data chart)

The second round of mortgage banker earnings reports for the third quarter drained some of the positive results for the industry as two key players – Ally Financial and PHH Mortgage – posted significant losses. Ally – the fifth largest lender in the industry in 2011 originations – reported a $311 million net loss in continuing mortgage banking operations, following a string of positive results that ended with $47 million in net earnings in the second quarter. Company officials blamed the downturn on poor performance on its servicing asset valuations and hedges. The company reported a $471 million net loss on... (Includes one data chart)