February 16, 2017

Latest from Inside Mortgage Finance

Total conventional/conforming mortgage originations rose by 1.3 percent from the previous month according to estimates from Inside Mortgage Finance

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Private MIs Expanded Market Share in 2016 Despite Fourth-Quarter Surge by VA Guaranty Program

Private mortgage insurers grew their share of the primary mortgage insurance market during 2016 even though they lost some ground during the second half of the year, according to a new Inside Mortgage Finance ranking and analysis. Private MIs wrote an estimated $270.30 billion of new mortgage insurance last year, a robust 23.1 percent increase from 2015. The main engine was a 24.2 percent increase in traditional, or flow, MI business, coupled with a jump in bulk primary coverage – though such activity totaled just $860.0 million in 2016. Private MIs covered...[Includes three data tables]


CHOICE Act 2.0 Would Disembowel CFPB, Hensarling Would Use Budget to Push Through

A key Republican leader in the House of Representatives is looking to push legislation that would effectively neuter critical aspects of the Consumer Financial Protection Bureau that could lead to major changes in the agency’s oversight functions and capabilities, including mortgage rulemaking, supervision and enforcement. The congressman also indicated he might use a procedural technique related to the budget to ram his legislation past Democrat opponents in the Senate. The legislative vehicle of choice is...

The Time is Right for a Boom in Servicing Sales. Another Month or Two of Slow Prepayments Could Spur Market

The secondary market for bulk agency mortgage servicing rights is beginning to pick up a decent head of steam, but one factor is holding it back from a full-throttle: worries about prepayment speeds. “We’ve had one month of low prepayment numbers,” said Mark Garland, president of MountainView Servicing Group, Denver. “A couple of more months would be better.” According to investment bankers who work the market, although rates have been on a steady climb since the November election – the yield on the benchmark 10-year Treasury is...

Feature Stories

Inside FHA/VA Lending

Debt Burdens Crept Slightly Higher In 2016 for FHA and VA Borrowers

FHA and VA borrowers took on slightly greater payment obligations in 2016 than they have in previous years, according to a new analysis and servicer ranking by Inside FHA/VA Lending. The average debt-to-income ratio for FHA loans securitized in Ginnie Mae mortgage-backed securities last year was 40.4 percent, up about half a percentage point from 2015. The average VA DTI ratio nudged up slightly to 38.3 percent. Average credit scores in the FHA program drifted slightly lower, while climbing 1.9 points for VA loans. The differences in credit quality between the two programs remained substantial: the VA attracts borrowers with higher credit scores and lower DTI ratios who take on larger loans. Some 36.3 percent of VA loans backing Ginnie MBS issued last year had credit scores of 740 and up, while just 13.2 percent of FHA loans fell in that category. Meanwhile, 67.1 percent of FHA loans had ...

Inside Nonconforming Markets

Jumbo Originations Decline for Second Consecutive Quarter, Market Share Down

Originations of non-agency jumbo mortgages declined in two consecutive quarters to end 2016, according to a new ranking and analysis by Inside Nonconforming Markets. And while jumbo production was up last year compared with 2016, market share for the sector declined during that time. In recent years, jumbo originations and market share have been on a strong upward trend, though the momentum stalled in the second half of 2016. An estimated ... [Includes one data chart]

Inside MBS & ABS

Banks Up Their Holdings of Agency MBS During 4Q16 With Buying Spree in Ginnie Securities

Banks and savings institutions maintained their healthy appetite for agency single-family MBS during the fourth quarter of 2016, according to a new Inside MBS & ABS ranking and analysis. Banks and thrifts held a record $1.254 trillion of agency MBS, up 2.2 percent from the end of the third quarter and an increase of 12.4 percent from a year ago. The biggest gains were in holdings of Ginnie Mae MBS, which also happen to be the fastest-growing component of the agency securities market. Bank and thrift holdings of Ginnie pass-throughs jumped...[Includes two data tables]

Inside the CFPB

CHOICE Act 2.0 Would Retain, Restructure CFPB, Gut its Power

House Financial Services Committee Chairman Jeb Hensarling, R-TX, is looking to retain the CFPB, restructure key parts of the agency, and drastically limit its authority, Inside the CFPB has learned. According to a draft memorandum of the major changes to Hensarling’s Financial CHOICE Act, now dubbed CHOICE Act 2.0, the bureau “is to be retained and restructured as a civil law enforcement agency similar to the Federal Trade Commission, with additional restrictions on its authority,” as follows: Sole director, removable by the president at will. Rule-making authority limited to enumerated statutes. Unfair, deceptive acts or practices authority repealed in full. Supervision repealed. Consumer complaint database repealed.• Market monitoring authority repealed. Enforcement powers limited to cease-and-desist and civil investigative demand/subpoena powers....

Inside Mortgage Trends

GSE Sellers Edge Toward Higher-Risk Mortgages, Nonbanks More Daring

Mortgage lenders that deliver loans to Fannie Mae and Freddie Mac mortgage-backed securities continued to do gradually more business with borrowers with lower credit scores, according to an exclusive new Inside Mortgage Trends analysis of MBS data. In 2016, 21.4 percent of purchase mortgages securitized by the two government-sponsored enterprises had credit scores ranging from 620 to 699. That was up from 20.6 percent in 2015 and 20.5 percent ... [Includes two data charts]

Inside The GSEs

Are GSE Sellers Finally Easing Up On Credit Standards?

One month does not a trend make, but early indicators hint that mortgage lenders may be stretching the credit box to boost volume. Fannie Mae and Freddie Mac issued $91.71 billion of single-family mortgage-backed securities in January, a stiff 18.3 percent drop from the previous month. Some of the decline was the result of Fannie’s heavy volume in December, when its business flow was catching up from an unusually slow November. But mortgage interest rates have edged up, and there is widespread expectation in the industry that refinance volume in 2017 will drop sharply from last year. Higher rates could also tarnish a housing market that’s bumping up against affordability and supply issues.


With rates higher this year, there has been talk of lenders liberalizing their underwriting standards in an effort to increase volume and make up for lower refis.

Do you think your shop will loosen standards over the coming three months?

Yes, but not by much.
Yes, by a lot.
Yes and, heck, we may even do non-QM lending.
No, not at all.
No and we may even tighten credit.

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