September 18, 2014

Latest from Inside Mortgage Finance

Bank and thrift ABS holdings fell by 0.8% from the previous quarter according to estimates from Inside MBS & ABS

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Purchase-Mortgage Demand Drove 2Q14 Production Surge, But Lenders Brace for Seasonal Slowdown

Purchase-mortgage originations jumped 44.3 percent from the first quarter of 2014 to the second quarter, according to a new Inside Mortgage Finance analysis and ranking, with first-time homebuyers representing about 43.9 percent of agency activity in the sector. Purchase mortgages accounted for 64.1 percent of total mortgage production during the second quarter. That’s the highest purchase share since 1995, when financing for home purchases represented 67.2 percent of total originations. At the midway point of 2014, purchase-mortgage originations were up...[Includes four data charts]

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FHFA Rejects Inspector General’s Call to Review Fannie’s, Freddie’s Rep and Warrant Framework

The Federal Housing Finance Agency is pushing back against the findings of its Inspector General that the agency rushed a mandated new representation and warranty framework “despite significant and unresolved operational risks” to Fannie Mae and Freddie Mac. Announced in September 2012 and implemented Jan. 1, 2013, the framework relieved sellers from certain reps and warrants, including those relating to credit underwriting and eligibility of the borrower and the property that were formerly effective for the life of the loan. It allowed for repurchase relief to seller/servicers if mortgages acquired by the government-sponsored enterprises after the effective date had acceptable payment history for 36 months. And the GSEs apparently weren’t...

Experts Say Tougher Legal Liability Under TILA Is One of the Treacherous Shoals Awaiting Under TRID

Among the many challenges associated with the Consumer Financial Protection Bureau’s pending integrated disclosure rule is expanded legal liability for lenders based on the more threatening Truth in Lending Act, as opposed to the more palatable liability framework of the Real Estate Settlement Procedures Act. During a webinar sponsored last week by Inside Mortgage Finance, Rich Horn, a partner with the Dentons law firm and one of the architects of the rule while a regulator at the CFPB, noted there is no private right of action for integrated disclosures under RESPA. On the other hand, with TILA liability, “there is...

Feature Stories

Inside Mortgage Trends

Concerns About Buybacks, Legal Woes Continue to Keep Credit Box Narrow

A tremendous amount of uncertainty is causing mortgage lenders to be more restrictive with credit than they otherwise might be – mostly stemming from conflicts with investors, increased regulation and the ambiguity from major legal settlements. “Lenders are running scared,” said Paulina McGrath, president of Republic State Mortgage, during a conference sponsored by the Bipartisan Policy Center this week in Washington, DC. “It’s not just the regulation that’s causing a dramatic increase in ...

Inside The GSEs

Groups Petition Congress to Seek Transparency in GSE Profit Sweep

Congress should put the screws to the Treasury Department to disclose all documents pertaining to the origins of the Obama administration’s controversial “net-worth sweep” of Fannie Mae and Freddie Mac profits, according to a coalition of right-leaning public policy groups. In a letter dispatched late this week to the top Republican and Democrat of the House Financial Services Oversight and Investigations Subcommittee, the 17 groups led by the Competitive Enterprise Institute urged lawmakers to intervene to impose transparency over what GSE shareholders consider an extra-legal maneuver by the executive branch.

Inside MBS & ABS

FOMC, As Expected, Will End Reinvesting Into MBS Sometime After It Raises the Fed Funds Target Rate

The Federal Reserve’s Open Market Committee this week met Wall Street’s expectations that it will continue to plow principal payments from its holdings of agency MBS back into agency MBS until sometime after the central bank decides to raise its federal funds target range. “The timing will depend on how economic and financial conditions and the economic outlook evolve,” said the FOMC after its two-day meeting concluded Wednesday afternoon. In the meantime, the Fed’s tapering of its quantitative easing program will continue...

Inside the CFPB

Mortgage Lenders Need to Get With The TRID Now, Antonakes Urges

CFPB Deputy Director Steve Antonakes told attendees at the North Carolina Bankers Association’s mortgage conference last week that lenders need to start prepping for the bureau’s impending TILA/RESPA Integrated Disclosure rule, known in bureau-speak these days as the “TRID.” While the use of the TRID’s new Loan Estimate and Closing Disclosure forms is not required until August 2015, “mortgage lenders should already be working on the new rule and getting ready now,” Antonakes urged. “Significant changes to business operations and technology platforms will require close collaboration with third-party service providers. “While many mortgage institutions are already deep into implementing these changes, we want to make sure that everyone understands the need to be focusing on August 2015 now,” Antonakes emphasized...

Inside Nonconforming Markets

Bank First-Lien Portfolios Grow As Lenders Stock Up on Jumbos

Banks large and small continue to add mortgages to their portfolios, with new additions outpacing runoff from refinances and foreclosures. The new additions to bank portfolios are largely jumbo mortgages, though some lenders are retaining agency-eligible loans. Banks and thrifts held a total of $1.76 trillion of first-lien mortgages in portfolio as of the end of the second quarter of 2014, according to an Inside Nonconforming Markets analysis of call reports. The first-lien holdings were up 1.4 percent compared with the previous quarter and level compared with the second quarter of 2013. Among the four largest holders of first liens, only Bank of America decreased its portfolio in the second quarter. Compared with the second quarter of 2013, JPMorgan Chase was the only bank among the big four to increase its first-lien holdings.

Inside FHA Lending

Obama to Seek Solutions to Credit Access

Obama will meet with top banking executives and industry trade groups on Sept. 17 to explore potential solutions to lender overlays and other problems that hinder first-time homebuyers and other qualified borrowers from obtaining an FHA or conventional mortgage. The meeting is expected to touch on key lender issues, including credit overlays, government enforcement actions, regulatory burden and risk-based versus FHA pricing. Lenders say they are willing to originate single-family mortgages to qualified borrowers and first-time homebuyers but they feel the post-crisis environment has turned hostile against them. Repurchases and indemnifications have dampened their willingness to lend to moderate- and lower-income borrowers, they admit. Regardless of policy changes designed to increase lending in the lower credit score range (620 to 679), FHA enforcement actions to ...

Poll

Over the next six months we plan to hire this many more additional loan officers:

1 to 10 (We're being careful.)
11 to 30 (We're optimistic.)
More than 30 (We're in a growth mode as the banks get out.)
We're cutting back. (Are you nuts? It's ugly out there.)

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