January 22, 2015

Latest from Inside Mortgage Finance

Non-mortgage ABS issuance fell by 22.0% from the previous quarter according to estimates from Inside MBS & ABS

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SCOTUS Hears Oral Arguments in Disparate-Impact Case; Scalia’s Comments Suggest He May ‘Go Rogue’

Trying to handicap a forthcoming ruling from the highest court in the land is notoriously fraught with difficulty and unpredictability, given that the justices of the U.S. Supreme Court have a penchant for playing devil’s advocate on both sides of a legal issue. But comments made this week by one of the conservative justices, Antonin Scalia, during the high court’s consideration of the latest disparate-impact case to reach it made it clear he believes the legal doctrine of disparate impact is a part of the contemporary legal landscape. And that could prove to be pivotal to the ultimate outcome. The central legal question in Texas Department of Housing and Community Affairs, et al., v. The Inclusive Communities Project Inc. (No. 13-1371) is whether disparate-impact claims are cognizable under the Fair Housing Act of 1968. The state of Texas is challenging...


First-Time Homebuyers Account for 43 Percent of Agency Purchase Mortgages in 2014, Wells Dominates

First-time homebuyers accounted for close to half of all purchase mortgages in the agency market in 2014, according to a new ranking and analysis by Inside Mortgage Finance. Activity in the sector is also projected to increase, helped by low interest rates, a reduction in FHA premium and the government-sponsored enterprises’ low-downpayment programs. Some $224.35 billion in mortgages to first-time homebuyers were included in agency mortgage-backed securities issued in 2014. The loans accounted for 43.3 percent of all purchase mortgages included in agency MBS during the year. Wells Fargo had...[Includes two data charts]

CFPB’s Interest Rate Checker ‘No Substitute for Shopping,’ Bureau Rep Says as Fallout Continues

The Consumer Financial Protection Bureau this week countered mortgage-industry criticism about its recently launched interest-rate checker tool. “The rate checker is an educational tool and is not a substitute for shopping,” a spokesman for the bureau told Inside Mortgage Finance. “One of the findings of our survey was that consumers who said they were very familiar with available interest rates were almost twice as likely to shop, compared to those who were unfamiliar.” Further, before consumers make a final decision about a loan, they should compare...

Feature Stories

Inside the CFPB

Wells, JPMorgan Settle With CFPB Over Mortgage Kickback Claims

Wells Fargo and JPMorgan Chase settled with the CFPB and the Maryland Attorney General last week, resolving allegations of participating in an illegal marketing kickback scheme with Genuine Title, a title company that has since gone out of business. The government agencies alleged that Genuine Title gave the banks’ loan officers cash, marketing materials and consumer information in exchange for business referrals. The CFPB and the Maryland AG also took action against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen, both of Baltimore, for their alleged involvement. The two government agencies are seeking $24 million in civil penalties from Wells Fargo and $600,000 in civil penalties from JPMorgan Chase. They also want $10.8 million from Wells ...

Inside FHA Lending

Lenders Expect Modest Refinance Wave

FHA lenders are gearing up to meet an anticipated increase in demand for purchase and refinance loans with mortgage rates falling to near-historic lows coupled by a 50 basis point cut in FHA’s annual insurance premium. Lenders hope the combination of lower mortgage rates and the revised FHA pricing structure will create sufficient incentive for more borrowers to purchase a home or refinance an existing mortgage. For example, Freedom Mortgage, 32nd in Inside FHA Lending’s 2014 ranking of FHA lenders, is looking to hire as many as 500 new employees to handle the anticipated surge following the FHA action. Stanley Middleman, chief executive officer of Freedom Mortgage, expects a robust FHA refinance market during the first half of 2015, tapering off in the second half. “Lower rates, coupled with premium reduction, put a lot of FHA borrowers in a position to get their ...

Inside Nonconforming Markets

Jumbo MBS Characteristics Shifting a Bit But Underwriting Standards Still Strong

Mortgages included in jumbo mortgage-backed securities in 2014 showed some shifting characteristics while maintaining strong underwriting overall, according to a new analysis by Inside Nonconforming Markets. Looser underwriting on jumbo mortgages has largely been at the fringes: some MBS have included a cluster of mortgages with combined loan-to-value ratios of 80 percent, a few borrowers with credit scores below 680 and ... [Includes one data chart]

Inside MBS & ABS

2014 Ranked as Strongest Post-Crisis Year in ABS Issuance Despite Fourth-Quarter Slowdown

A total of $185.32 billion of non-mortgage ABS were issued in 2014, the highest annual production level for the market since 2007, according to a new Inside MBS & ABS analysis and ranking. ABS issuance was up 12.0 percent from the prior year, with solid gains in three of the market’s key sectors: auto finance, credit cards and business loans. The weakest link was the student loan ABS market, where annual production fell 25.4 percent from 2013 and slipped to its lowest level since 1999. Vehicle finance deals were...[Includes two data charts]

Inside Mortgage Trends

4Q14 First Glimpse: Originations and Mortgage Banking Income Off Slightly

Fourth-quarter earnings reports from the four megabanks in the mortgage industry suggest that loan production activity and mortgage banking income fell slightly at the end of 2014. On a combined basis, Wells Fargo, JPMorgan Chase, Bank of America and Citigroup originated $88.7 billion in home mortgages during the fourth quarter of 2014, according to a new Inside Mortgage Trends analysis of earnings reports released this week. That total was down ...

Inside The GSEs

Nonbanks Continue Claiming Larger Share of GSE Business

If 2015 is anything like 2014, Fannie Mae and Freddie Mac will be getting over half of their single-family business from nonbanks by the end of the year. A new Inside The GSEs analysis of loan-level mortgage-backed securities data reveals that nonbanks accounted for 44.8 percent of Fannie/Freddie MBS issued in the fourth quarter of 2014. That was up from a nonbank share of 37.2 percent during the fourth quarter of 2013 and just 28.1 percent back in the first quarter of that year. As a group, nonbank sellers increased their total GSE sales by 2.9 percent from the third quarter to the fourth quarter, while the overall market declined by 2.1 percent. The biggest ... [with two exclusive charts] ...


The FHA is cutting its annual premium by 50 basis points. How much of a difference will this cut make in your FHA business?

Not much at all—maybe 10 percent at best.
Modestly. We expect a 10 percent to 25 percent gain in applications.
This is a real game changer, 25 percent or better.
Hard to say. This cut may just steal business away from the new Fannie/Freddie 97 LTV effort.

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