Volume 16 - Number 3
February 10, 2012
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Large Banks Appear Well Prepared For Foreclosure Settlement Agreement
The five large mortgage servicers that agreed to a $25 billion settlement with 49 state attorneys general this week have already established more than enough reserves to cover their costs, analysts say. Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial agreed to pay $20.0 billion in financial relief to homeowners and $5.0 billion to federal and state governments, of which $1.5 billion will be used to compensate some borrowers who have gone through foreclosure. Both the Federal Reserve Board and the Office of the Comptroller of the Currency levied separate monetary penalties...
Lenders Notch Gains in Mortgage Banking Profits
The boom in mortgage origination activity in the fourth quarter of 2011 carried mortgage banking profits to their highest level in nearly two years, according to a new Inside Mortgage Trends analysis of earnings reports from 22 companies. The group, which includes all the top originators and servicers, reported a combined $5.10 billion in mortgage banking income during the fourth quarter of 2011. That was up 20.0 percent from the previous three-month period and represented the most profitable quarter for the group since the first quarter of 2010. On a full-year basis, the results don’t...(Includes one data chart)
MSRs More Attractive to Smaller Firms, for Now
A number of small to mid-size mortgage firms appear to be taking a second look at holding onto their newly created mortgage servicing rights. There are a handful of forces at work driving this dynamic for smaller companies. First, some big servicers such as Bank of America are dumping their MSRs, in some cases because of the increasingly unattractive legal environment, while others are trying to align their portfolios for the upcoming Basel III capital framework or reacting to hedging strain in a low interest-rate environment. Additionally, the economics are developing in such a way as to encourage smaller...
Settlement Points to National Servicing Standards
One potential coup for the mortgage industry in the landmark multistate robosigning settlement announced this week is the detailed look at national servicing standards at a time when the states are racing to implement their separate foreclosure and servicing reforms. The terms for the $25 billion deal reached by 49 states, federal officials and the five major banks – Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial – have yet to be released. However, one document that immediately made its way onto the settlement’s new website was an overview of the new servicing...
Gearing Up for Increase in Foreclosures
The mortgage settlement agreement between state and federal law enforcement agencies and the country’s five largest loan servicers will unleash a new foreclosure wave that will cause real estate-owned properties and distressed home sales to increase, according to market observers. Having the Federal Housing Finance Agency’s REO Initiative ready will be useful when the foreclosure and REO tsunami comes rolling in, academics, economists and analysts agree. The number of properties classified by banks as “real estate-owned,” or REO, has declined over the past year. The reason: the robosigning scandals...
Mortgage Trends
With December data in, CoreLogic was able to show that the housing price index decreased by 4.7 percent in 2011 compared with December 2010, marking the fifth consecutive year of a downward trend. That number factors distressed sales into the index. Excluding distressed sales, home prices decreased by 0.9 percent from the previous year. While the number is in the red regardless of whether distressed sales are included, the difference between the two figures is distinct enough to demonstrate the intense effects of distressed sales on home equity. In December 2011, excluding distressed sales, the house...
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