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Volume 2017 - Number 8

February 23, 2017

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Wholesale-Broker Channel Saw Drop in Volume During 4Q16, Retail and Correspondent Steady

The relatively strong mortgage origination volume late in 2016 propped up production levels in all three major channels, according to a new Inside Mortgage Finance ranking and analysis. Mortgage brokers saw the biggest decline in volume during the fourth quarter, as production slipped 6.7 percent from the previous three-month cycle to an estimated $56.0 billion. But even with the late-year decline, the wholesale-broker market had...[Includes four data tables]

PHH Court Battle With CFPB Goes to Full Appeals Court, With Focus Still on Constitutional Issues

The Consumer Financial Protection Bureau late last week won a fresh hearing of its lawsuit with PHH Mortgage, with the attention likely to center on constitutional issues rather than the agency’s aggressive interpretation of the Real Estate Settlement Procedures Act. The U.S. Court of Appeals for the D.C. Circuit accepted the CFPB’s request for an en banc hearing of its lawsuit with PHH. In October, a three-judge panel of the appeals court ruled in favor of PHH, rejecting the agency’s RESPA interpretation regarding captive mortgage-insurance practices that had for years been widely accepted as legal, even though such programs have been in run-off mode since the housing meltdown. The issue that’s...

Warehouse Finance Sector Had a Good Year in 2016, But Storm Clouds Hover and Usage Rates May Dive

Warehouse providers ended 2016 with roughly $62.0 billion of commitments on their books, a 21.6 percent improvement from the same period a year earlier, according to new survey figures compiled by Inside Mortgage Finance. For the most part, warehouse finance continued to be a healthy business for the megabanks and regional banks that play in the sector – especially with nonbank originators stealing market share away from many of the institutions they’re receiving lines of credit from. Few warehouse managers interviewed by this publication cited...[Includes one data table]

Hensarling Says Delinquency Surge Justifies Suspension of FHA Premium Cut; Consultant Says Spike May be a Fluke

A spike in FHA delinquency rates in the fourth quarter of 2016 has prompted a top House Republican leader to laud the Trump administration for its decision to suspend a 25 basis point cut in FHA mortgage insurance premiums, though some say the increase might be a fluke. Last month, an analysis by Inside FHA/VA Lending, an affiliated newsletter, revealed that delinquency rates were up across the board for FHA loans backing Ginnie Mae mortgage-backed securities. The share of current FHA loans as of the end of the fourth quarter slipped from 94.2 percent to 93.2 percent, while the share of loans 90 days or more past due rose to 0.82 percent, the highest it’s been since June 2014. The figures are based on loan count and are not seasonally adjusted. The Mortgage Bankers Association two weeks ago reported...

PHH Shifts Gears to ‘Capital Light’ Focus On Subservicing, Dumping PLS Business

Nonbank mortgage giant PHH Corp. – which posted combined losses of $347 million the past two years – is betting its future on subservicing, a business it describes as being “capital light” and one that could lead to riches down the road. As outlined by senior management during a recent call with analysts, the company will focus on processing loans for other shops, splitting the underlying servicing fee – 25 basis points on Fannie Mae/Freddie Mac loans – with the owner of those receivables. PHH CEO Glen Messina described...

GSEs’ Combined Earnings Total Almost $10 Billion In 4Q16, Gains Driven by Rising Rates, G-fee Income

The U.S. Treasury doesn’t get to invest in the booming stock market, but its stake in two guarantors of mortgage-backed securities is making a killing. Fannie Mae and Freddie Mac posted $9.9 billion in combined profits for the fourth quarter of 2016, and $20.2 billion for the full year. It was up 16.1 percent from 2015 and the fourth best year ever for the two government-sponsored enterprises. Their all-time high was...

Demographics, Tight Underwriting Limiting Home-Equity Loans and Cash-Out Refis

The aggregate dollar volume of homeowner equity in real estate has almost returned to pre-crisis levels, but borrowers are no longer using their homes as ATMs, according to industry analysts. Between 2003 and 2007, homeowners were extracting more than $350.0 billion in home equity per year via home-equity loans and cash-out refinances, according to researchers at the Federal Reserve Bank of New York. While home prices and equity have largely recovered, equity extraction remains below $50.0 billion per year. William Dudley, president and CEO of the NY Fed, said...

Private Mortgage Insurers Raise Concerns About Differences in QM Standards for GSEs and FHA

The U.S. Mortgage Insurers trade group is seeking to eliminate differences in standards for qualified mortgages. USMI detailed its policy priorities for 2017 late last week. While the priorities largely rehash previous points of emphasis that could increase business for private mortgage insurance companies, USMI said it has particular concerns about how some QM standards vary on mortgages delivered to the government-sponsored enterprises compared with FHA mortgages. As required by the Dodd-Frank Act, the Consumer Financial Protection Bureau established...

Mortgage Market at a Glance

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


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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