Up To Date Mortgage News $45 Billion in Alt-A Downgrades A loss to one of the classes drove a downgrade of two tranches for less than $0.1 billion from Banc of America Funding 2006-7 Trust, an Alt-A transaction, Moody's Investors Service reported. During the past two months, Moody's said it downgraded 1,363 tranches of Alt-A securities that were issued between 2005 and 2007. The dollar value of the impacted tranches were $45.6 billion. FHA Short Refis Go Live The FHA Short Refinance option was announced by the U.S. Department of Housing and Urban Development. The option is available on owner-occupied transactions with case numbers issued on or after Sept. 7. To qualify, the mortgage must close by Dec. 31, 2012. Reverse Originations Gaining Steam The PNC Financial Services Group Inc. expects to hire more than 200 new mortgage employees, a spokesman told Mortgage Daily. The new jobs are being added in Jacksonville, Fla., he said. The positions are for PNC's mortgage servicing operation. Deterioration in Delinquency Projected More than half of bankers project mortgage delinquency will increase over the next six months. That was the finding of a quarterly survey of 235 bank risk professionals conducted for FICO. But the outlook was better than in the previous report. LOS Offerings Integrate Servicing Systems A "seamless process" has been developed for boarding loans directly from Mortgage Builder Software's loan originations system to sub-servicer Cenlar FSB's servicing platform, a July news release indicated. A Cenlar executive explained that lenders are learning about the potential profits from maintaining servicing rights, and Cenlar's subservicing helps prevent layering on fixed operational costs. Calyx Software also sees revenue opportunities for its customers in loan servicing based on a recent news release unveiling an alliance with Servicing Solution LLC.

Many changes are coming to FHA Mortgages this spring. Some are already in practice.

At a recent meeting at the Exchequer Club in Washington, D.C, David H. Stevens, Assistant Secretary for Housing and FHA Commissioner spoke about the reforms:

 
"First, there will be new loan-to-value and credit score requirements. Loans to borrowers with a FICO score of less than 580 will require a minimum 10 percent downpayment. Loans to borrowers with a FICO score of 580 or above will require the traditional minimum down payment of 3.5 percent.

Second, the upfront mortgage insurance premium will increase to 2.25 percent.

We will also pursue legislative authority to increase the statutory cap on the annual Mortgage Insurance Premium. We will ask for conditional authority, triggered either by a decline in the capital ratio below the two percent requirement, or by a certification by the Secretary that the higher cap is necessary to ensure the health of the MMI fund. When we receive legislative approval, the upfront annual premium structure will be adjusted, with some of the upfront premium shifted to the annual premium. This shift will allow for an increase to the capital reserve with a lower up-front cost to the consumer.

Third, we will reduce allowable seller concessions from six percent to three percent to conform to industry standards. This will also reduce potential value inflation.

Fourth, we will increase enforcement efforts to ensure compliance with FHA guidelines and standards. We will use a scorecard system to evaluate and report lender performance. This will compliment the current information available from the Neighborhood Watch data. This change will make the information more user-friendly.

We will also enforce indemnification provisions through section 256 of the National Housing Act.

This is in addition to changes to enhance enforcement announced last month by Secretary Donovan in testimony on Capitol Hill. There he asked for legislative authority to apply section 256 to require indemnification provisions for all Direct Endorsement Lenders. This would require all approved mortgagees to assume liability for all the loans they originate and underwrite...."

To view these remarks in their entirety, please click here

More to come as it develops.