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Volume 2014 - Number 32

August 14, 2014

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Private MI Market Share Reached Post-Crash High In 2Q14; Industry Profitability Continues Climbing

Private mortgage insurance companies continued their roll during the second quarter of 2014, capturing a larger share of the primary MI market away from the faltering FHA program, according to a new Inside Mortgage Finance analysis. Private MIs reported a total of $44.19 billion of new primary mortgage insurance written during the second quarter, a 38.0 percent jump in new business from the first three months of 2014. Private MIs accounted for 41.4 percent of total primary MI new business, the industry’s highest share of the market since the second quarter of 2008, when the housing market landslide was gaining speed. The Veterans Administration’s home loan guaranty program is also building...[Includes three data charts]

Fannie, Freddie Post $5.0 Billion Profit in 2Q14 As GSEs ‘Substantially Achieve’ Repurchase Goals

Fannie Mae and Freddie Mac reported a combined $5.0 billion in net income during the second quarter of 2014, down 46.2 percent from the first three months of the year as the two government-sponsored enterprises reported a significant downshift in repurchase activity. Through the first six months of the year, GSE profits were down nearly 81.7 percent from the first half of 2013. But Fannie and Freddie reaped huge profits in 2013 through hefty legal settlements, the capture of deferred tax assets and seller buybacks. “When you look back on 2013, our goal was...

Incentives for Bank Portfolio Holdings a Factor in Effort to Increase Non-Agency Mortgage Activity

Banks need incentives to issue non-agency mortgage-backed securities instead of holding loans in portfolio, according to boosters of the non-agency MBS market. The Federal Reserve’s monetary policies and capital requirements set by federal regulators have played a role in the shift from non-agency MBS issuance to banks holding loans in portfolio. “Historically, major banks were the predominant sponsors of private-label securities transactions, especially for 30-year jumbo fixed-rate loans, which are not a good asset/liability match for their balance sheets,” officials at Redwood Trust noted in a comment letter submitted to the Treasury Department. In June, the Treasury issued a request for comments on how to increase non-agency activity in the mortgage market. In 2013, only 4.8 percent of the estimated $272.0 billion in non-agency jumbo originations were included...

Galante Departing FHA Amid Gripes About Premiums; IG Says HUD Missed Opportunities on Indemnifications

FHA Commissioner Carol Galante is slated to depart the agency in a few weeks, leaving in her wake a healthier Mutual Mortgage Insurance Fund, but her withdrawal comes amid gripes from some lenders that agency premiums are too high, hurting the first-time homebuyer market. Several industry officials give Galante high marks for not caving to industry pressure on reducing FHA premiums, and for trying to build bridges to originators at a time when the Inspector General of the Department of Housing and Urban Development and Justice Department continue to target lenders for their “legacy” production. One consultant who represents FHA lenders said...

Delinquencies Increase in Second Quarter, Servicers Grapple with Regulatory Issues

Mortgage delinquencies increased slightly in the second quarter of 2014 compared with the previous quarter, according to the Inside Mortgage Finance Large Servicer Delinquency Index. However, delinquency rates adjusted for seasonal factors showed a decline from the first three months of the year, and the unadjusted rate was down from a year. The total delinquency rate for 23 large servicers, with no seasonal adjustment, hit 6.59 percent at the end of the second quarter, up from 6.52 percent the previous quarter but down from 7.33 percent in the second quarter of 2013. “We have returned...[Includes one data chart]

The ‘Legacy’ MSR Market is Drying Up And It’s Not All Tied to Regulatory Scrutiny

The market for “legacy” mortgage servicing rights has been on ice since earlier this year because of regulatory scrutiny, but there’s a new school of thought that suggests the halcyon days of mega transactions might be over for good. Servicing advisors who work in the MSR market note that the “Lawsky effect” is still being felt by Ocwen Financial and some of its peers, but as time goes on it will be less of a factor. “There’s...

Wells Fargo Wins Latest Round in RESPA Class Action Involving Affiliated Business Arrangement

The U.S. Fourth Circuit Court of Appeals has ruled in favor of Wells Fargo and co-defendant Long & Foster in a class-action dispute involving an affiliated business arrangement. In Minter v. Wells Fargo Bank, NA et al, plaintiffs/appellants Denise Minter, Jason and Rachel Alborough, and Lizbeth Binks brought suit on behalf of a group of consumers alleging that Wells Fargo and Long & Foster Real Estate violated the Real Estate Settlement Procedures Act. Specifically, the plaintiffs alleged that defendants created a joint venture, Prosperity Mortgage Co., to skirt RESPA’s prohibition on kickbacks in exchange for the referrals of settlement service business while failing to disclose this business arrangement to its customers. Here’s...

Mortgage Market at a Glance

Weekly mortgage rates and application survey data as well as indexes for ARMs.


Home-equity lending is beginning to show new life. My company (pick one):

Plans to enter this market over the next 12 months.


Is already making home equity loans and hopes to increase the offerings.


Is in the market but don’t expect much growth.


Is not making second liens and has no plans to do so.


Housing Pulse