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Volume 20 - Number 9

April 29, 2016

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Banks Report Modest Boost in Mortgage-Banking Income During Early 2016

Although many banks wrestled with hedges for their mortgage servicing rights and loan production was generally down, the industry posted a solid increase in mortgage-banking earnings in the first quarter. A new Inside Mortgage Trends analysis of earnings reports filed by 26 major banks showed a combined $3.450 billion in mortgage-banking income during the first quarter. That was up 12.3 percent from their fourth-quarter earnings of ... [Includes one data chart]

Bulk Servicing Transfers Slow in 1Q16

Declining interest rates introduced considerable uncertainty into the valuation of mortgage servicing rights during the first quarter of 2016, leading to a decline in bulk transfers of agency MSR, according to a new Inside Mortgage Trends analysis. Bulk sales of Fannie Mae, Freddie Mac and Ginnie Mae servicing rights totaled just $36.16 billion during the first three months of this year, a 37.2 percent drop from the fourth quarter of 2015. That was down ... [Includes one data chart]

MSR Investors Show More Interest in Hedging

An increasing number of financial institutions with a vested interest in mortgage servicing rights are showing a renewed interest in hedging against declining interest rates – something you might think they would already be doing. “You’d be surprised at who’s not hedging,” said Austin Tilghman, senior vice president of United Capital Markets, Denver. “Some mid-sized nonbanks just don’t get it.” Tilghman knows quite a bit about firms – banks included – that don’t ...

Moody’s Raises Concerns about Nonbank Servicers

The funding models used by prominent nonbank servicers subject the firms to significant risks, according to Moody’s Investors Service, which predicted that the companies’ profitability will improve only marginally in 2016. The Moody’s analysis focused on Nationstar Mortgage, Ocwen Financial and Walter Investment Management. “All three nonbank servicers’ reliance on confidence-sensitive, short-term funding heightens their liquidity and refinancing risk,” said Warren Kornfeld ...

Joint Mortgages Wrong Choice for Some Borrowers

Many borrowers who apply for a mortgage with a partner miss out on lower interest rates due to lenders’ standards regarding credit scores, according to research by economists at the Federal Reserve. Applying for a mortgage solo can lead to substantial cost savings, though determining whether to take that option can be complicated. Geng Li, Weifeng Wu, and Vincent Yao detailed their findings in a FEDS Notes article published by the Fed. The analysis was based on ...

Borrowers Like New TRID Forms, Despite Delays

Most borrowers are having a positive experience with the new loan estimate and closing disclosure forms now in use under the Consumer Financial Protection Bureau’s integrated disclosure rule known as TRID, according to a new survey from TD Bank. The rule integrates the consumer disclosures required under both the Truth in Lending Act and the Real Estate Settlement Procedures Act. Of those responding to the survey, 40 percent reported having had an “excellent” experience ...

Freddie Braces for Impact of Climate Change

Mortgage financing as it exists today might have to go through significant changes if the impact of climate change worsens, particularly in areas most exposed to the risk, according to new research from Freddie Mac. While flood insurance makes it possible for borrowers to obtain home loans in areas of high flood risk, other fallout from climate change – rising sea levels, changing weather patterns, increasing temperatures – may not be insurable. “As a result, some important features ...

Data: Top Sellers of TPO Originations - 3M2016

A ranking of the top 100 sellers of third-party originations in the first three months of 2016. Based on loan-level mortgage-backed security disclosures for MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae.


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