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Inside Mortgage Finance

October 13, 2011

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Dour Outlook and Gauntlet of Legal, Regulatory and Business Challenges Can’t Kill Buzz at MBA Annual

More people than expected showed up at the Mortgage Bankers Association annual convention this week in Chicago – including intermittent Occupy protestors – given the hugely uncertain prospects facing the industry. MBA economists are predicting less than $1 trillion in new originations in 2012, which would be the lowest new production volume since 1997, and all three major components in the business – origination, servicing and secondary marketing – face huge structural challenges that so far are still just vaguely mapped out. Yet attendance was up about 18 percent from last year, and several observers noted that investors are... Read More

Servicing Industry Faces Huge Changes, And Biggest Challenge May Be Finding Consensus

In five years, the mortgage servicing business will likely be dramatically different than it is now or has been in the past, experts say, and getting there won’t be easy. “Homeowners think servicing is about them, that the industry should be trying to solve their problems,” said Peter Swire, a law professor at Ohio State, during a panel at this week’s Mortgage Bankers Association annual convention. “But the servicer is working primarily for the investor,” he said, adding that the “legal structure of servicing makes the homeowner extraneous.” Although there is widespread acknowledgement that change is necessary, the significant... Read More

House Dems Frustrated with Pace of HARP Review; Push White House to Support of ‘Homeowners Bill of Rights’

The head of the Federal Housing Finance Agency says his agency expects to complete a review of potential improvements to the Home Affordable Refinance Program “by the end of this month” but based on what they heard during a private meeting last week, dissatisfied House Democrats say they expect the results won’t nearly be good enough. FHFA Acting Director Edward DeMarco met last week with a group of 17 congressmen, led by Reps. Dennis Cardoza, D-CA, and Elijah Cummings, D-MD, to discuss ways to reinvigorate the underwhelming Fannie Mae and Freddie Mac refinance program. In what’s been described as a... Read More

OIG Criticism Might Compel GSEs to Be More Aggressive on Buybacks, Litigation Experts Warn

A scathing criticism of the way the Federal Housing Finance Agency and Freddie Mac handled a $1.35 billion settlement with Bank of America could cause the regulator and the government-sponsored enterprises to tighten repurchase enforcement – and consequently inflate the buyback problem, according to litigation experts. Speaking on a recent webinar hosted by Inside Mortgage Finance, experts said a report by the FHFA’s Office of the Inspector General which found flaws in the BofA settlement approval process, could push the GSEs and their regulator to lean harder on major lenders to repurchase “bad loans.” This, in turn, could... Read More

MERS on a Roll as U.S. Supreme Court Looks Away, Dozens of Other Challenges Dismissed

Mortgage Electronic Registration Systems has been at the center of two significant developments recently that bring more legal clarity to the mortgage industry’s foreclosure practices – and could portend a quicker resolution of an enormous number of cases currently tied up in foreclosure. Early this week, the U.S. Supreme Court denied certiorari in Gomes v. Countrywide, declining to reconsider lower court rulings in the case, essentially affirming MERS’ authority to foreclose in California in the process. “The petition for a writ of certiorari is denied,” the high court said in its certiorari summary dispositions. “The chief justice [John Roberts] took... Read More

SunTrust Win Over Mortgage Insurer Should Force MIs to Reconsider Contracts, Expert Says

A ruling by a federal district court in Richmond awarding more than $40 million to a mortgage lender for covered losses should compel private mortgage insurers to be more circumspect about their MI agreements, according to industry attorneys. American International Group, parent company of United Guaranty Residential Insurance Co. of North Carolina, is appealing the court’s ruling that it pay SunTrust Mortgage more than $34.0 million for covered losses, $6.0 million in stipulated interest and about $5.4 million in legal fees and costs. Joseph Norton, AIG spokesman, said the insurer has appealed the decision to the... Read More

Progress Made in AG Settlement Talks, But Parties Still Working on Key Issues

Negotiations among major banks and state attorneys general to settle problems in foreclosure servicing practices reached a one-year anniversary this week with little apparent progress over the key issue of how much litigation relief the lenders will gain from the deal. “We worked out a tremendous amount of the settlement and gotten a lot done,” said a spokesman for Iowa Attorney General Tom Miller, who has been spearheading the negotiation on behalf of the states. However, he disputed applying the word “imminent,” which some bankers had used, to describe when the settlement might be finalized. “Let’s not jump... Read More

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