The Department of Housing and Urban Development is taking aggressive actions to mitigate the negative impact of future Home Equity Conversion Mortgage books of business on the FHA Mutual Mortgage Insurance Fund. HUD said changes in borrower use of the HECM program, particularly among younger users, and the modeling changes in the FY2012 actuarial review of the MMI Fund show substantial stress in the HECM program. Besides softening the impact of HECM losses on the fund, the department wants to ensure that consumers are better protected and able to sustain their reverse mortgages. While the MMI Fund’s economic value fell to ... [1 chart]

Some real estate agents are refusing to accept offers from buyers using FHA financing prompting minority rights advocates to question whether racial discrimination is causing the problem or some other factors. While illegal flipping and steering that targeted minority communities appear to have abated, bias against borrowers using FHA financing continues in the real estate market, according to Janis Bowdler, director of the Wealth-Building Policy project of the National Council of La Raza. Bowdler expressed her concern during a recent panel discussion of an FHA Working Paper on the FHA’s role in the housing finance market hosted by the Urban Institute. She said there have been reports of ...

The Department of Housing and Urban Development has announced changes to existing loss mitigation options to reduce the number of claims against the FHA Mutual Mortgage Insurance Fund.The changes will benefit qualified, distressed FHA borrowers, who will be able to qualify for FHA loss mitigation interventions and get more help than what was allowed under previous guidelines. HUD has issued a mortgagee letter to amend existing FHA Home Affordable Modification Program guidelines, the definition of “special forbearance,” and loss mitigation-priority guidelines. Specifically, HUD eliminated the ...

Private mortgage insurers have been making a slow comeback and reclaiming market share, thanks in part to policy changes adopted by the FHA, according to MI industry executives. Executives say MI penetration of the market has grown from 2.8 percent in the first quarter of 2012 to anywhere between 8-10 percent in the third quarter, an increase they attributed in part to gaining market share from FHA. Currently, private MI companies account for approximately one-third of loans with loan-to-value ratios of 80 percent or more, which are also ...

Fannie Mae and Freddie Mac each emerged from the third quarter of 2012 with a healthy profit, reporting a combined $4.74 billion in net income, a 41.7 percent decline from the second quarter but still well enough into the black to forgo taxpayer assistance to stay solvent. Fannie’s third quarter net income of $1.81 billion compared to a net loss of $5.1 billion in the same quarter a year ago but much more in line with the $2.72 billion it earned during the first quarter of 2012.

Mortgage bankers posted record profits on their loan origination and secondary market activity during the third quarter of 2012, according to a new Inside Mortgage Trends analysis of earnings reports from a diverse group of 10 lenders. The group, which included the four biggest lenders in the industry and eight of the top 20, reported a combined $5.344 billion in net production income during the third quarter, a record for the group. Production and secondary marketing income ... [Includes one data chart]

The Federal Deposit Insurance Corp. recently filed a lawsuit against the auditors of Colonial Bank alleging that they could have prevented “enormous losses” suffered by the bank due to fraud by Colonial’s largest mortgage banking customer, Taylor Bean & Whitaker Mortgage. The lawsuit is the first by the FDIC post-crisis against the accountants of a failed bank. Colonial was closed in August 2009 by the Alabama State Banking Department and the FDIC was named as receiver and is now ...

Community mortgage lenders increasingly anxious about complying with a growing regulatory burden got a strong show of support recently when Federal Reserve Board Governor Elizabeth Duke called for giving them a separate oversight regime that respects their unique differences when compared to their much larger competitors. “I am convinced that the best course for policymakers would be to abandon efforts for a one-size-fits-all approach to mortgage lending,” Duke said during a community bank symposium ...

Redwood Trust late last week reported net income of $40.0 million for the third quarter of 2012, including $3.0 million in net gains on the $372.0 million of non-agency MBS issuance and whole loan sales the real estate investment trust completed during the period. Redwood officials said the company is well-positioned for growth in non-agency MBS issuance, commercial MBS issuance and soon agency origination activity. In a quarterly review, company officials noted that some have called the REIT “crazy” for resuming issuance of non-agency MBS after the financial crisis of 2007. Redwood has issued eight non-agency MBS since April 2010 totaling $2.6 billion. The REIT said...

The ACLU is calling for changes to federal anti-discrimination statutes to deter secondary mortgage market participants from engaging in business practices that might have a discriminatory impact on certain protected classes of borrowers. In a recent analysis of mortgage foreclosures, the ACLU said the origination and securitization of subprime and other high-risk mortgage products have hurt minority families and caused the loss of 3.5 million homes to foreclosure. The ACLU believes...