November 20, 2014

Latest from Inside Mortgage Finance

Total primary mortgage insurance rose by 15.9% from the previous quarter according to estimates from Inside Mortgage Finance

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All Cylinders Firing in 3Q14, As Surge in Conventional- Conforming Market Led Increase in Total Originations

Mortgage originations increased in all the major product categories during the third quarter of 2014, although new adjustable-rate mortgage lending was down slightly. A new Inside Mortgage Finance analysis shows that conventional-conforming originations increased by 11.7 percent from the second quarter to the third. That was slightly faster than the 10.2 percent increase in jumbo production and the 10.1 percent rise in government-insured lending. The home-equity market showed...[Includes two data charts]

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FHA Mutual Mortgage Insurance Fund Capital Turns Positive, But No Change to Mortgage Insurance Premiums

The FHA Mutual Mortgage Insurance Fund has improved from a negative position to a positive $4.8 billion in FY 2014 after gaining nearly $6 billion in value over the last year, thanks to aggressive policy actions that led to improvements in key areas, according to an independent actuarial report sent to Congress this week. Overall, the fund showed a $21 billion improvement over the past two years due to changes the FHA implemented following the housing crisis, the report said. The changes led to improved underwriting standards for single-family mortgages, increased mortgage insurance premiums, stronger loss mitigation policies and higher recoveries, it noted. Aggressive policy actions also led...

CFPB Enforcement Actions Highlight What Mortgage Servicers Need to Look Out For

A careful examination of the big-ticket enforcement actions the Consumer Financial Protection Bureau has brought against leading mortgage servicers can help others in the space avoid the same fate and protect their bottom lines, according to top industry legal experts. During an Inside Mortgage Finance webinar earlier this week, Allyson Baker, a former CFPB attorney and partner at the Venable law firm in Washington, DC, discussed the importance of trends seen in a handful of servicing enforcement cases against Ocwen, SunTrust Bank and Flagstar Bank. “I think...

Feature Stories

Inside FHA Lending

MMIF Value, Capital Ratio Turns Positive

FHA Mutual Mortgage Insurance Fund ended fiscal 2014 in the black but was still far short of its statutory reserve requirement, prompting critics in Congress to renew their cries for FHA reform. An independent actuarial report sent to Congress this week showed that the MMI Fund now stands at $4.8 billion after a gain of nearly $6 billion over the last year. For the first time since 2009, the fund’s capital ratio also crossed into positive territory at 0.41 percent, up 52 basis points from the negative 0.11 percent posted in fiscal 2013. Overall, the economic value of the fund has risen by $21 billion over the last two years because of the aggressive steps the agency took to stabilize and strengthen the fund, the report said. Policy changes led to improved underwriting for single-family mortgages, increased mortgage insurance premiums, stronger loss mitigation policies and higher recoveries, it added. In addition, with ...

Inside Nonconforming Markets

Treasury Sees Multiple Sponsors, SFIG Standards in ‘Benchmark’ Jumbo MBS

The benchmark non-agency mortgage-backed security that the Treasury Department is organizing will vary significantly from recent non-agency MBS. Michael Stegman, counselor on housing finance policy to the Treasury, revealed new details about the planned transaction last week in New York City at the Private-Label RMBS Symposium hosted by the Structured Finance Industry Group and Information Management Network. Stegman said the benchmark non-agency MBS will ideally be ...

Inside MBS & ABS

Banks Report Modest Increase in MBS Holdings During 3Q14, Biggest Jump in Non-Agency MBS

Banks and thrifts held a combined $1.535 trillion of residential MBS at the end of September, a modest 0.6 percent increase from the previous quarter, according to a new Inside MBS & ABS analysis of bank call reports. Bank MBS holdings had spiked higher in the first quarter of this year, only to fall back in the following period. Compared to a year ago, the industry’s aggregate MBS portfolio was up 1.4 percent. Bank and thrift MBS holdings first crossed...[Includes two data charts]

Inside The GSEs

DeMarco: ‘Housing-Industrial Complex’ Inhibits GSE Reform

Effective and lasting GSE reform cannot be accomplished without Congress taking decisive action and the housing finance market’s status quo is unsustainable in the long term, according to the former head of the Federal Housing Finance Agency. Speaking at an American Enterprise Institute forum late this week, former FHFA Acting Director Edward DeMarco warned attendees to expect comprehensive and lasting housing finance reform to remain stalled unless lawmakers pass a bill that the president will sign.

Inside Mortgage Trends

Mortgage-Banking Income Softened In 3Q14 Despite Surge in Originations

Mortgage-banking income reported by a diverse group of 33 lenders fell 16.0 percent from the second quarter of 2014 to the third, according to a new analysis by Inside Mortgage Trends. The 33 publicly traded companies, which include most of the top originators and servicers in the industry, had a combined $3.547 billion in net mortgage banking income during the third quarter. That was only 12.0 percent above the dreary $3.166 billion the group earned during the first three months of 2014, which was one of the industry’s least profitable quarters ever. The tepid third-quarter results came at a time when origination volume was unexpectedly strong – up 36.7 percent from the first quarter of 2014 – and many lenders have put ...

Inside the CFPB

Industry Wants Lighter HMDA Burden, Groups Tells CFPB

Now that the mortgage lending industry has had about three months to comb through the details of the CFPB’s proposed expansion of reporting requirements under the Home Mortgage Disclosure Act, it has found more cause to dislike it than upon first glance. “While we support the purpose of HMDA – to provide information on the availability of credit in the home mortgage market – we are concerned that the proposal to markedly increase HMDA data reporting and coverage goes beyond the law’s purposes in some areas and will unduly harm competition and increase costs in others,” a handful of leading industry groups told the bureau in a joint comment letter last week. “At the same time, we do not believe that the ...

Poll

What is it going to take to convince lenders to loosen the credit box (i.e., remove underwriting overlays)?

The recent rep and warranty changes announced by the Federal Housing Finance Agency should go a long way in protecting lenders from future buybacks and help expand mortgage credit.
There won’t be any significant elimination of underwriting overlays until the government stops seeking huge mortgage-related penalties and settlements from lenders.
There shouldn’t be any expansion of the mortgage credit box since looser underwriting is what caused the recent mortgage crisis.

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