Survey Question

Is it morally wrong for underwater borrowers to renege on their mortgages and walk away from houses (and loans) they can still afford but are worth less than what they owe?

Most Popular Stories

These were the past week's most frequently emailed stories on our site:

1. Penny Mac Shifting From a Vulture Fund toward Being a Mortgage Conduit
2. A Once Hot Niche, Reverse Mortgages Face the Music
3. Hardly a Stampede to Walk Away from House and Mortgage
4. Seven Charged in Fraud Scheme Involving More Than 100 California Properties
5. FHA: Brokers No Longer Have to Register with Them

Quote of the Week

While we will not delay implementation of RESPA's new requirements, we are sensitive to the concerns of the industry as it integrates these new rules into their day-to-day business practices.

HUD Secretary Shaun Donovan on HUD's staff exercising restraint in taking enforcement actions against Federal Housing Administration-approved lenders during the first 120 days.

Reprints

If you would like professionally prepared reprints of articles or permission to re-publish an article or post an article on a Web site, please contact Denise Petratos at 212-803-6557.

Drawing Up a Fannie Mae/Freddie Mac Blueprint Will Be Complex

By Paul Muolo

Within the next 90 days the White House is expected to release its blueprint on what to do with the nation's money losing — but much needed — Congressionally chartered mortgage giants, Fannie Mae and Freddie Mac. If you think the answer to this dilemma is going to be an easy one then I have some AIG bonds I'd like to sell you.

First, let's state what might not seem so obvious: Fannie and Freddie are really giant savings and loan institutions. They hold liabilities and assets. Instead of using deposits they tap the capital money markets using short- and long-term debt. Most of their assets aren't whole loans, but mortgage-securities backed by residential whole loans.

Together, they have $1.6 trillion of on-balance sheet assets and off-balance sheet guarantees of $3.6 trillion for a total exposure of $5.2 trillion. And even though both operate under federal conservatorships (with Treasury pumping money into them to keep their net worth positions north of zero) Uncle Sam has yet — as a technical matter — to put his "full faith and credit" sticker on them.

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Chase Losses First Round in HELOC Lawsuit

A U.S. district court judge in California has denied a motion by JPMorgan Chase Bank to dismiss a lawsuit that alleges the bank illegally reduced a couple's home equity line of credit.

Tourmalet Advisors, a Connecticut-based hedge fund, is in the process of raising $500 million to invest in nonperforming mortgages, according to an offering circular provided to National Mortgage News.

The sale of $11.5 billion in jumbo servicing rights belonging to the bankrupt Thornburg Mortgage of Santa Fe has cleared another hurdle but it's still unclear when bids will be taken.

"Several dozen" of the 1,200 to 1,500 fraud investigations currently underway within the Department of Housing and Urban Development's Inspector General's Office involve home equity conversion mortgages, a group of reverse mortgage specialists meeting in San Diego were told.

Credit scores on FHA single-family loans have risen steadily over the past three years with the average score reaching 689 at the end of September, a 10% improvement from a year ago.

The House Financial Services Committee has approved an amendment that cuts a 10% risk retention requirement on sales and securitizations of mortgages down to 5%.

Bank of America Hires JPM Mortgage Research Chief

Bank of America Merrill Lynch Global Research has hired Chris Flanagan — co-head of securitized products at JPMorgan Chase — to head its U.S. mortgage and structured finance group.

Bank of America plans to sell $460 million of mortgage securities backed by commercial real estate loans without relying on a Treasury program to aid lending in that market.

False and misleading advertising was described at the National Reverse Mortgage Lenders Association's annual conference in San Diego as a "cancer" on the reverse lending business.

The National Reverse Mortgage Lenders Association is in the final stages of "publicly naming" an overly aggressive third-party lead generation company which has consistently violated the group's ethics and standards policies.

Senate Banking Committee Chairman Chris Dodd abruptly abandoned his plan to press ahead with a partisan vote on his regulatory reform bill next month after running into bipartisan opposition.

Barclays Capital has entered into a joint venture with Goff Capital, Inc., to acquire Crescent Real Estate Equities LP from Morgan Stanley Real Estate Funding II.

The United Kingdom's year-to-year gross mortgage lending could slow down a bit on a monthly basis in coming months but it might start to look a little better on a year-to-year basis.