A regional inspector general report found “material underwriting deficiencies” in a clump of FHA loans originated by Countrywide Financial, and though Bank of America may end up paying about $1 million to settle the charges, the case could be a harbinger of bigger losses to come. The Department of Housing and Urban Development inspector general for five upper midwest states singled out Countrywide for an audit because the company’s average default-to-claim rate was high for the region. The IG audited just 14 FHA loans, but half of them contained material underwriting deficiencies, mostly failing to...

The strongest mortgage insurers benefit the most if the Federal Housing Finance Agency follows through on recent comments that it is considering expanding use of MI as one of a number of potential risk sharing strategies for the government-sponsored enterprises, according to a recent report by Moody’s Investors Service. Moody’s noted that uncertainty about the role of private MI in a post-GSE environment “remains a key credit concern” for the industry. “If the FHFA opted for an increase in mortgage insurance as a way to share risk, even as the GSE mortgage universe shrinks, the action would likely to be a...

Conforming loan limits will edge lower this weekend and likely have a bigger impact on the FHA market than on Fannie Mae and Freddie Mac business, according to a new Inside Mortgage Trends analysis. Starting Oct. 1, the “emergency” conforming limits that were based on 125 percent of area median housing prices will be cranked down to “permanent” limits based on 115 percent of area median prices. That will lower the top high-cost market limit for single-family properties in the lower 48 states from $729,750 to $625,500. In the FHA market, there were some $2.39 billion of home loans exceeding $625,500 originated during...(Includes one data chart)

The concept of the paperless mortgage is on the fast track to becoming the norm rather than the exception as technology advances improve productivity and influence thinking throughout the lending chain, according to a survey by Xerox Mortgage Services. Xerox’s seventh annual Path to Paperless survey found that most mortgage professionals now think online collaboration across multiple platforms is a key component to paperless mortgage adoption. Ninety-six percent of survey respondents indicated that working together through an electronic folder is crucial to achieving a more...

Its decision to dump its wholesale correspondent channel is the latest in a series of moves by Bank of America to distance itself from “legacy” mortgage issues, but analysts remain doubtful. Moody’s Investors Service last week downgraded the bank’s rating. “The downgrades result from a decrease in the probability that the U.S. government would support the bank, if needed,” thanks to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the ratings firm said. Moody’s said that the government is likely to continue to provide some level of support to systemically important financial institutions. “However, it is also...

Mortgage lenders need to get a better understanding of their business in today’s economic and regulatory environment and be able to make important decisions quickly in order to stay competitive, according to industry experts. Having more thoughtful insight into the mortgage business lies in the ability of a lender to go deep into its mortgage portfolio and see the risks and opportunities. The key to improving portfolio performance, experts say, is better analytics and using solutions to maximize the value of the portfolio. Today, banks are forced to redefine their loan accounting reporting in light of new regulatory requirements and expectations of...

News media have for months barraged consumers with news of “record-breaking mortgage rates,” but some observers are confounded that the refinancing market isn’t exploding with consumers looking to take advantage of the historically low rates. Analysts at Barclays Capital chalk it up to originators setting higher mortgage rates for borrowers refinancing their homes than those purchasing a home, which might be a sign of capacity constraints. The purpose of the Federal Reserve’s Operation Twist is, in great part, to place more money in the pockets of borrowers in an attempt to stimulate greater activity in the housing market. However, much of...

States are moving quickly to implement laws and regulations facilitating “eExamination” of mortgage lenders, leveraging technological innovation to bring the industry closer towards the goal of self-examination and self-regulation. “We are close to 30 states that are doing eExaminations, and we’re trying to bring on additional states as we move forward,” said Michael Chan, vice president of technology vendor Compliance Ease. “One of the reasons why I would say we’re reaching a tipping point is that state regulators are conducting limited-scope electronic exams,” he added. The idea behind that is...

A majority of Americans say that they would be unable to pay their mortgage if they lose their jobs. According to a new Country Financial survey, 68 percent of homeowners say that, were they laid off, they wouldn’t have the means to continue paying their mortgages after nine months. U.S. Bureau of Labor Statistics from August 2011 place average length of unemployment at slightly under 10 months, meaning that most Americans could be a pink slip away from delinquency. For some, the situation is more ominous. Slightly less than a third of Americans – 31 percent – say that they would only be able to continue...

Mortgage lenders originated a significantly higher share of new loan applications in 2010 than the year before, helping to offset a steep decline in consumer demand for mortgage credit, according to an Inside Mortgage Finance analysis of recently released Home Mortgage Disclosure Act data. The total volume of mortgage originations reported under HMDA fell 10.2 percent from 2009 to 2010, ending with $1.576 trillion. Although refinance transactions accounted for 67.1 percent of total HMDA originations last year, the refi market bore the brunt of the downturn, with the dollar volume of refinance production...(Includes one data chart)