January 19, 2017

Latest from Inside Mortgage Finance

GSE purchase mortgages with private MI fell by 18.1 percent from the previous month according to estimates from Inside Mortgage Finance

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The Beat Goes On. Banks Backpedal from Agency Servicing Market in 4Q16, Especially Ginnie Sector

The evolution of the agency mortgage-servicing market isn’t over, though it appears to have settled into a long-term transition by attrition. At the end of 2016, depository institutions serviced some $3.584 trillion of single-family home loans committed to mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. That was down 1.0 percent from September, a period during which the supply of agency MBS debt outstanding was growing. The depository share of agency MBS servicing fell...[Includes two data tables]


Trump Administration Expected to Freeze Cut in FHA Mortgage Insurance Premiums

The Trump administration is expected to put a temporary freeze on the 25 basis point cut in FHA annual premiums that is scheduled to take effect Jan. 27. One industry source noted: “On Jan. 20, President Trump will be issuing an executive order that freezes all past actions over a certain period of time. The FHA premium reduction gets swept into this.” Sources told...

A Mixed Quarter for the Banks: Decent Production, Sweet MSR Marks but Unclear Road Ahead

The nation’s largest banks revealed better-than-expected residential origination figures (for some) and mouth-watering markups on the value of their servicing portfolios. That’s the good news. But it wasn’t all wines and roses. On the servicing front, BOK Financial revealed that fourth quarter income was reduced by $17.4 million because it left servicing-related hedges on the books for too long, betting that rates would stay low for an extended period of time. PNC Bank saw...[Includes one data table]

Feature Stories

Inside FHA/VA Lending

FHA/VA Default Rates Spike Up In 4Q16, Nonbanks Still Growing

Mortgage default rates appeared to spike higher in the fourth quarter of 2016, according to a new analysis and servicer ranking by Inside FHA/VA Lending. Some 5.51 percent of FHA loans in Ginnie Mae mortgage-backed securities pools were reported as 30- to 60-days past due at the end of December. That was up 80 basis points from the previous quarter and was easily the highest default rate in the past three years. FHA default rates were also up in more serious delinquency categories: loans 60- to 90-days past due and those over 90-days late. The figures are based on loan count and are not seasonally adjusted. Similar trends occurred in the VA home loan guaranty program. The 30-60 category was up 41 bps, while 90+ delinquencies jumped 19 bps. The supply of Ginnie single-family MBS outstanding continued to set new records. The total, not including multifamily and FHA home-equity conversion ... [4 charts]

Inside Nonconforming Markets

Investors Bid Up New Redwood Jumbo MBS Despite Partial Due Diligence

The jumbo mortgage-backed security Redwood Trust is set to issue on Jan. 20 received improved pricing compared with the company’s previous deal issued in October. The new MBS is fairly similar to the prior bond, indicating stronger demand from investors. The $343.28 million Sequoia Mortgage Trust 2017-1 priced last week. The super-senior tranche priced 1-20 back of Fannie 3.5s, which was four ticks tighter than Redwood’s previous offering, according to an analysis by Wells Fargo Securities ...

Inside MBS & ABS

Despite Some Rebound in Credit Cards and Student Loans, ABS Issuance Was Flat in 2016

A soft fourth quarter resulted in a modest uptick in non-mortgage ABS in 2016, according to a new Inside MBS & ABS ranking and analysis. A few sectors posted solid gains, however. The market produced $174.71 billion of new ABS last year, up just 0.6 percent from the total for 2015. New issuance turned decidedly soft in the fourth quarter with only $34.24 billion in volume. That was down 36.7 percent from the previous period and represented the second-lowest quarterly output since the third quarter of 2012. All the major components of the ABS market saw...[Includes two data tables]

Inside the CFPB

Trump Administration Signals Intention to Sack CFPB’s Cordray

Is this the last week on the job for CFPB Director Richard Cordray? Speculation is suddenly growing fast and furiously that the director’s time is about over, that President-elect Trump will use his signature line from his Apprentice television show, “you’re fired” shortly after he is inaugurated on Jan. 20, 2017. What took this once-peripheral issue abruptly into overdrive are press reports that retired U.S. Congressman Randy Neugebauer, R-TX, met with the president elect at Trump Tower in New York City last week to discuss becoming the new head of the CFPB. Neugebauer, the former chairman of the House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee, reportedly has not been offered the job, as of press time, and ...

Inside Mortgage Trends

Correspondent Share of GSE Business Edged Higher in 4Q16, Brokers Slumped

Correspondent-originated mortgages accounted for 30.7 percent of home loans delivered into Fannie Mae and Freddie Mac mortgage-backed securities during the fourth quarter of 2016, according to a new analysis from Inside Mortgage Trends. Lenders sold $90.96 billion of correspondent-originated loans to the two government-sponsored enterprises, an 11.6 percent increase over the third quarter. The volume of retail originations rose 3.6 percent in the fourth quarter ... [Includes two data charts]

Inside The GSEs

Fannie Gained Share in Surging GSE 1-Family Business of 2016

Heavy refinance activity at the end of the year lifted single-family business at Fannie Mae and Freddie Mac to a three-year high in 2016, according to a new Inside The GSEs analysis and ranking. The two firms guaranteed $973.72 billion of single-family mortgage-backed securities during 2016, up 18.1 percent from the previous year. That included a 5.7 percent increase from the third to the fourth quarter that was fueled by a 24.5 percent jump in refi loans delivered into new GSE MBS. While both companies saw solid gains from 2015 activity, Fannie’s 23.3 percent increase was more than double the 11.0 percent rise in Freddie volume. [includes two charts]


HUD has announced a 25 basis point cut in FHA premiums, which is slated to take effect in late January. Is your lending shop for or against a cut in FHA premiums?

For. It should help lending volumes.
Against. The private MI sector should take on this risk, not the government.
Too early to say.
I believe the new White House may scuttle the idea so it doesn’t matter.

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