February 4, 2016

Latest from Inside Mortgage Finance

Total agency MBS issuance fell by 1.4 percentage points from the previous month according to revised estimates from Inside MBS & ABS

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GSEs Launch Independent Dispute-Resolution Process As Final Determination on Loan Eligibility Disputes

Fannie Mae and Freddie Mac this week announced the final piece of a multiyear process to relieve seller anxiety about potential buybacks, an independent dispute-resolution process for the most difficult to resolve repurchase demands. As a last resort, the new IDR process may not see that much activity, especially since seller repurchases of government-sponsored enterprise mortgages have been declining sharply. For a buyback dispute to get to a final determination by a third-party arbitrator, it will have to go through three normal steps in the buyback process. The IDR process began...[Includes one data table]

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Lower, Sustained Interest Rates Causing Headaches In the Bulk MSR Market; A Pullback by PE Firms?

The ongoing decline in interest rates is wreaking havoc on the sale of “bulk” mortgage servicing portfolios, causing investors to pull back on pricing, and sending some bidders to the exits, at least for a little while. Servicing advisors who play in the space confirmed to Inside Mortgage Finance that pricing isn’t what it used to be, and is off peaks seen a year ago when bids – in retrospect – were too aggressive and later resulted in write-downs. Mark Garland, president of MountainView Servicing Group, Denver, admitted...

Servicing Market May Be Nearing $10 Trillion Mark Despite Further Declines in Top Tier of Servicers

Steady growth over the course of 2015 may have taken the long-suffering mortgage servicing market close to the $10 trillion mark at the end of the year, according to a new analysis and ranking by Inside Mortgage Finance. The top 50 companies at 2015 serviced a combined $7.326 trillion in home mortgages, a slight 0.3 percent increase from the end of the third quarter. If the rest of the industry followed their lead, the supply of servicing outstanding rose to $9.982 trillion by the end of December. Based on trends during the first nine months of 2015, as reported by the Federal Reserve, the supply of home loan debt outstanding may have trickled...[Includes one data table]

Feature Stories

Inside the CFPB

Life Under TRID: Is TRID Suddenly Driving Mortgage Merger and Acquisition Activity?

Normally during this time of year, the mergers and acquisitions game is somewhat quiet in the mortgage industry, but concerns over compliance with the CFPB’s integrated disclosure rule known as TRID are sparking some lenders to consider selling and getting out. That’s the opinion of Chuck Klein, managing partner of Mortgage Banking Solutions, who said, “I’m as busy as I’ve ever been this time of year.” Speaking on the Internet radio program “Lykken on Lending” recently, the M&A advisor noted that mortgage company owners are “disturbed about the cost and risk of noncompliance.” He added that the TRID rule promulgated by the CFPB “has gotten everyone’s attention,” in particular, owners of nonbanks who have all their personal net worth tied ...

Inside Mortgage Trends

Banks Report Decline in Mortgage Banking Income in 4Q15, Year Ends Up From 2014

Mortgage banking income generally declined for commercial banks and thrifts in the fourth quarter, although 2015 was generally more profitable than the previous year, according to a new Inside Mortgage Trends analysis of earnings releases. A diverse group of 25 banks reported a total of $3.046 billion in mortgage-banking income for the fourth quarter. That was down 14.8 percent from the previous three-month period, and it marked the group’s lowest ... [Includes one data chart]

Inside MBS & ABS

Agency MBS Issuance Down Slightly in January Despite Increase in Purchase-Mortgage Activity

Fannie Mae, Freddie Mac and Ginnie Mae produced a combined $88.96 billion of single-family MBS in January, a modest 1.4 percent decline from December, according to a new ranking and analysis by Inside MBS & ABS. Ginnie production was actually up 7.2 percent from the previous month, while both the government-sponsored enterprises posted declines in new issuance. January’s agency MBS production included...[Includes two data tables]

Inside The GSEs

GSE MBS Production Slipped in January. A TRID Ice Patch?

Fannie Mae and Freddie Mac issued $56.56 billion of single-family mortgage-backed securities in January, a modest 5.6 percent decline from the previous month, according to a new Inside The GSEs ranking and analysis. December, however, may have been an anomaly. Many mortgage originators reported delays in loan closings in October as the primary market adopted a significant change in mortgage disclosures and closing requirements under the so-called TRID rule. Those delays, ranging from a few days to a week or more, pushed some October closings into November. Given the normal lag between primary market origination and securitization – especially for correspondent originations – the TRID traffic jam may have accounted for the sharp...

Inside Nonconforming Markets

FHFA Decision on FHLBanks and Captive Insurers Seen as a Blow to Non-QM Funding

The Federal Housing Finance Agency’s recent final rule limiting membership in the Federal Home Loan Bank system will reduce funding for originations of non-qualified mortgages and other non-agency activity, according to industry analysts. In recent years, many real estate investment trusts gained access to FHLBank advances via captive insurance companies. A final rule from the FHFA this month closed that so-called loophole, with the regulator claiming that Congress didn’t ...

Inside FHA/VA Lending

GNMA Servicing Stable in 4Q15, Performance Improves Slightly

The FHA and VA mortgage servicing markets saw relatively little growth but steady performance trends during the fourth quarter of 2015, after a turbulent market early in the year. A new Inside FHA/VA Lending analysis of Ginnie Mae disclosure data shows delinquency rates edged slightly lower at the end of last year, although virtually all of the improvement was in the less-severe category of loans 30-60 days past due. The 60-to-90-day delinquency rate was unchanged for FHA loans but up slightly for VA loans. And both programs saw modest increases in loans more than 90 days past due. The data provide a mixed view of growth in the outstanding supply of FHA and VA servicing. According to Ginnie’s monthly summary, the outstanding balance of single-family mortgage-backed securities (excluding home-equity conversion mortgage pools) was $1.495 trillion at the end of ... [ 4 charts ]

Poll

A lot has been written lately regarding loan closing delays tied to the new TRID rule. What’s been the average delay at your lending shop, if at all? (Report in business days, not calendar.)

TRID has caused no delays whatsoever because we were prepared.

30%

1 to 4 days.

27%

5 to 10 days.

13%

11 to 15 days. It’s been a nightmare.

11%

We’re too embarrassed to tell you.

20%

Housing Pulse