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Volume 18 - Number 23

November 14, 2014

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Mortgage-Banking Income Softened In 3Q14 Despite Surge in Originations

Mortgage-banking income reported by a diverse group of 33 lenders fell 16.0 percent from the second quarter of 2014 to the third, according to a new analysis by Inside Mortgage Trends. The 33 publicly traded companies, which include most of the top originators and servicers in the industry, had a combined $3.547 billion in net mortgage banking income during the third quarter. That was only 12.0 percent above the dreary $3.166 billion the group earned during the first three months of 2014, which was one of the industry’s least profitable quarters ever. The tepid third-quarter results came at a time when origination volume was unexpectedly strong – up 36.7 percent from the first quarter of 2014 – and many lenders have put ...

Favorable Delinquency Trends Continued in 3Q14

Mortgage delinquency rates kept falling across the country in the third quarter of the year, according to data provided by the Mortgage Bankers Association, Fannie Mae and Freddie Mac. The delinquency rate for mortgages on one- to four-unit residential properties declined 19 basis points, on a seasonally adjusted basis, to 5.85 percent of all loans outstanding as of Sept. 30, 2014, according to the MBA. This is the lowest level seen since the fourth quarter of 2007 and represents the sixth straight quarterly decrease, according to the trade group. In terms of product mix, the seasonally adjusted delinquency rate slipped 15 bps to 3.05 percent for prime fixed loans and decreased 45 bps to 4.83 percent for prime adjustable-rate mortgages. ...

New Jersey Lender Moving Forward

Freedom Mortgage recently broke into the top 10 ranking of mortgage originators and doesn’t look to be stopping there. Through the first nine months of 2014, Freedom produced $16.4 billion in originations, a 28.5 percent increase over the same period last year. That’s a huge increase at a time when overall mortgage origination volume dropped a whopping 44.2 percent. Last week, Freedom announced a deal to acquire Continental Home Loans, a retail lender focused on the New York metro market. Freedom officials said the deal, structured as an asset acquisition transaction, will boost its monthly production volume to $2 billion. That would raise the firm a notch or two in the rankings. Beefing up its retail presence was one reason ...

Mortgage Employment Outlook: Partly Cloudy

Usually, the winter isn’t the best time to be looking for a job in the mortgage industry, especially if you happen to be a loan officer facing the dead months of December through February. But thanks to the recent downdraft in interest rates – and some hope that lending outside the qualified mortgage bucket will start to grow – the immediate outlook for mortgage employment isn’t so bad after all. According to figures compiled by the Bureau of Labor Statistics, mortgage brokerage firms added 1,700 workers during September, one of the best hiring sprees in some time. Compared to the same month a year ago, employment is up by 400 positions to 73,000. Mortgage banking firms, which are listed under the BLS ...

Real Estate Agents Gone by 2030, Report Predicts

By 2030, artificial intelligence will have transformed businesses and the work that people do to the extent that certain jobs, such as real estate agents, will become extinct, according to a new report from realty consulting firm CBRE and property developer Genesis. The ideas, trends and behaviors that will shape work and the workplace in 2030 are already noticeable today, said the report. When that time comes, “where we work and live will be diverse and intertwined,” it said. The report was based on interviews with 220 experts, business leaders and young people in Asia, Europe and North America on how these observed trends will impact business and evolve work practices and the workplace. The report predicts that process work, ...

Third-Party Originations Grow in 3Q14

Mortgage brokers and correspondents helped fuel the surge in agency mortgage-backed securities issuance during the third quarter of 2014, according to a new Inside Mortgage Trends analysis of loan-level MBS data. Correspondents originated 35.0 percent of the loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae during the third quarter, up slightly from the first two quarters of the year. Likewise, the share of broker originations edged up to 11.3 percent in the most recent three-month period. Wells Fargo ranked as the biggest seller of third-party originations during the first nine months of the year. The company pulled out of the broker market, although a few such loans trickled into agency MBS this year, but correspondents accounted ...


What is it going to take to convince lenders to loosen the credit box (i.e., remove underwriting overlays)?

The recent rep and warranty changes announced by the Federal Housing Finance Agency should go a long way in protecting lenders from future buybacks and help expand mortgage credit.
There won’t be any significant elimination of underwriting overlays until the government stops seeking huge mortgage-related penalties and settlements from lenders.
There shouldn’t be any expansion of the mortgage credit box since looser underwriting is what caused the recent mortgage crisis.

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