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June 1, 2011

What we are hearing...

There are growing concerns that the recent decline in foreclosures does not bode well for the housing market. Home prices in most parts of the country are sliding even with major servicers cutting back on foreclosures as they deal with fallout from the robo-signing controversy. One reason is that real estate owned sales are going on at a brisk pace despite the slowdown in foreclosures. Real estate agents report that Fannie Mae and Freddie Mac have been dominating REO sales in many markets during recent months, although banks are expected to increase their REO sales in the months ahead.

Banks Report Increase in Mortgage Banking Income

Banks reported an unexpected increase in mortgage banking income during the the first quarter of 2011, but the aggregate figure was skewed by huge gains at the top two lenders in the industry.

Refinances Drove Smaller Mortgage Market in Early 2011

Despite a big drop in mortgage originations between the fourth quarter of last year and the first quarter of 2011, refinances continued to drive the mortgage market. Refis accounted for 72 percent of new mortgages made in 1Q11, according to numbers compiled by Inside Mortgage Finance. While that was down from the near-record 78 percent refi share seen in 4Q10, it was way up from the 64 percent level recorded a year ago in 1Q10. Wells Fargo dominated the ranks of both refinance and home purchase mortgage producers. In 1Q11, Wells accounted for 24 percent of all refinance mortgages and 32 percent of all home purchase mortgages.

The articles below are from the latest issues of newsletters published by Inside Mortgage Finance Publications. Full-text access is available via newsletter subscription or pay per view.

Servicer Sells Stocks to Fund Subservicing Growth
Nationstar Mortgage Holdings aims to raise $400 million through the sale of common stock to finance new growth opportunities in subservicing delinquent home loans, as well as in originating and securitizing new mortgages. Texas-based Nationstar, the home finance unit of Fortress Investment Group, announced the filing of an initial public offering with the Securities and Exchange Commission. Nationstar said it sees opportunities in the current residential mortgage market for non-bank servicers to grow their portfolios by acquiring mortgage servicing rights, entering into subservicing contracts and by assuming responsibilities for... More...

Credit Card Titan Ventures Into Mortgage Market
Credit card giant Discover Financial Services is adding mortgages to its menu of financial products and services with the acquisition of Home Loan Center, a subsidiary of Tree.com. The sale price for Home Loan Center, which operates as LendingTree Loans, is up to $56.0 million. LendingTree, a correspondent lender, originates and processes home loans in all 50 states and the District of Columbia. The acquisition includes substantially all of HLC’s operating and related assets as well as LendingTree’s lead-generation system, adding a residential mortgage origination component to Discover’s direct lending system. Discover, a direct banking and... More...

Fannie, Freddie Hustle to Unload REOs
Fannie Mae and Freddie Mac are pulling out all the stops to speed along sales of their ample real estate owned inventory of homes by offering special sweeteners to buyers and sellers alike even as REO dispositions for the two GSEs reached record levels during the first three months of 2011, according to an Inside The GSEs analysis. At 218,383 units, the combined REO inventory for Fannie and Freddie decreased by 7 percent during the first quarter of 2011. It’s the second straight quarter of declines following the record peak of 241,684 units during the third quarter 2010. Both Fannie and Freddie posted record levels of REO disposition during... [Includes one data chart] More...

May 25, 2011

What we are hearing...

Federal lawmakers - and perhaps the Obama Administration - are gearing up to debate the merits of hiking FHA's minimum downpayment requirement from 3.5 to 5 percent. The issue is expected to surface this week at hearing before the Housing Subcommittee of the House Financial Services Committee. House Republicans clearly favor an increase while Democrats are expected to resist the change. One compromise may be to couple any increase in the FHA downpayment with a reduction in premiums.

Fannie and Freddie Repurchases Fall Sharply in 1Q11

Repurchases and indemnifications of Fannie Mae and Freddie Mac mortgages by their seller/servivers declined in the first quarter of 2011, although the volume of pending, unresolved cases continued to grow.

Jumbo Market Share Jumps to 8% in Early 2011

The jumbo share of new mortgage originations, helped by a decline in government lending, rose to 7.7 percent in the first quarter of 2011, according to new numbers released by Inside Mortgage Finance this week. This was up from the 6.0 percent jumbo market share found in the fourth quarter and way up from the 4.7 percent share recorded a year ago. The first quarter's 7.7 percent jumbo share was the highest recorded since the mortgage crisis of 2008.

The articles below are from the latest issues of newsletters published by Inside Mortgage Finance Publications. Full-text access is available via newsletter subscription or pay per view.

No Compromise in Sight Over Warren, CFPB
There is "not even a whiff of a hint of a compromise" between Congressional Republicans and President Obama and his fellow Democrats in Congress over the possible appointment of Harvard law professor Elizabeth Warren to be director of the Consumer Financial Protection Bureau, according to some industry insiders... More...

Two Harbors Investment Plans To Issue Jumbo MBS in 2011
Two Harbors Investment Corp. announced this week that it plans to issue a $250.0 million jumbo non-agency mortgage-backed security this year. "We believe we can create mortgage credit investments at attractive yields resulting from high-quality loan origination and securitization while further extending the runway for the non-agency allocation in our portfolio," said Thomas Siering, president and CEO of Two Harbors, a real estate investment trust. He said Two Harbors took its first step toward setting up a securitization issuance program by partnering with Barclays Bank this week to close on a $100 million mortgage loan warehouse facility, subject to... [Includes one graph] More...

FHA Lenders Warned of Rising FCA Cases
Industry attorneys are warning FHA lenders and other users of federal funding to carefully screen loans they originate, or risk a government lawsuit for violation of the False Claims Act. First enacted during the Civil War against government contractors gouging the Union Army, the FCA has expanded beyond defense contractors and health care providers and is now being used aggressively to challenge improper FHA lending practices, according to panelists on a recent webinar hosted by the Washington law firm BuckleySandler. With government insurance increasingly on the hook, federal enforcement along the lines of the recent Department of Justice lawsuit against ... More...

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