Bank Profitability

Browse articles from all of our Newsletters related to Bank Profitability.

September 12, 2014 - Inside FHA Lending

FHA Jumbo Production Slips Further in 2Q14

The first-quarter decline in FHA jumbo production spilled over into the second quarter as volume dropped another 21.7 percent, ending the first half of the year with $4.7 billion in new government-insured jumbo loans, according to an Inside FHA Lending analysis of agency snapshot data. On a year-over-year basis, volume fell 56.7 percent over the six-month period compared to the same period last year. Jumbo loans make up a tiny percentage of FHA’s overall portfolio. The FHA has been weaning itself away from jumbos after Republican members of Congress accused the agency of straying from its mission by subsidizing purchases of million-dollar houses. A statutory readjustment this year brought the FHA loan limit in high-cost areas down to $625,500, the same level as the high-cost loan limits for conforming mortgages in high-cost areas. The baseline loan limits for both conforming and FHA loans in 2014 ... [1 chart]


September 12, 2014 - Inside FHA Lending

Obama to Seek Solutions to Credit Access

Obama will meet with top banking executives and industry trade groups on Sept. 17 to explore potential solutions to lender overlays and other problems that hinder first-time homebuyers and other qualified borrowers from obtaining an FHA or conventional mortgage. The meeting is expected to touch on key lender issues, including credit overlays, government enforcement actions, regulatory burden and risk-based versus FHA pricing. Lenders say they are willing to originate single-family mortgages to qualified borrowers and first-time homebuyers but they feel the post-crisis environment has turned hostile against them. Repurchases and indemnifications have dampened their willingness to lend to moderate- and lower-income borrowers, they admit. Regardless of policy changes designed to increase lending in the lower credit score range (620 to 679), FHA enforcement actions to ...


September 5, 2014 - Inside Mortgage Trends

Bank Buybacks Decline, But Don’t Disappear

Banks and thrifts reported an 11.0 percent decline in the volume of mortgage repurchases and indemnifications they made during the second quarter of 2014, compared to the first three months of the year. An Inside Mortgage Trends analysis of call-report data found that bank and thrift repurchases and indemnifications totaled $1.012 billion in the second quarter, the lowest level since the first quarter of 2008. Buyback volume has been ... [Includes one data chart]


September 5, 2014 - Inside Mortgage Trends

Banks Continued Shedding MSRs In 2Q14; Valuations Drift Lower

Commercial banks and thrifts continued to reduce the amount of mortgage servicing they do on behalf of other investors during the second quarter of 2014, according to a new Inside Mortgage Trends analysis of bank call-report data. With declining interest rates during the period and the prospect of faster prepayments, most banks also wrote down the fair market value they placed on their mortgage servicing rights, the data show. Banks and thrifts serviced a total of ... [Includes one data chart]


September 5, 2014 - Inside MBS & ABS

Banks Increase Holdings of Residential MBS In Second Quarter, Thrift Holdings Slumped

Commercial banks held $1.386 trillion of residential MBS at the end of June, marking their second consecutive quarterly gain in MBS investment, according to a new Inside MBS & ABS analysis. The 0.7 percent increase in bank MBS holdings was enough to offset a 3.5 percent drop in thrift investment in the sector. On a combined basis, banks and thrifts saw an 0.3 percent increase in residential MBS during the second quarter, though the industry remained 0.2 percent below the level set at the midway point in 2013. All of the increase came...[Includes two data charts]


August 29, 2014 - Inside FHA Lending

Around the Industry

Revised HUD/VA Addendum to the Uniform Residential Loan Application. On July 30, the FHA has posted on its HUDCLIPS website a revised Addendum to the Uniform Residential Loan Application (Form HUD-92900-A/VA Form 26-1802). This form is used for both FHA and VA mortgage originations.The Department of Veterans Affairs has updated its form to clarify what constitutes a valid marriage for the purpose of obtaining VA benefits. Although the changes to the form do not apply to FHA-insured mortgages specifically, lenders should begin using the revised form for new FHA mortgage originations as soon as possible, the FHA recommended. Processing Request for Execution of VA Quitclaim Deeds. The Department of Veterans Affairs has issued guidance (Circular 26-14-19) for handling of requests for execution of quitclaim deeds. A quitclaim deed is a legal document that is used to transfer a person’s rights to real estate to ...


August 29, 2014 - Inside FHA Lending

Views Sought on Draft Appraiser Requirements

The Department of Housing and Urban Development is requesting feedback from stakeholders regarding proposed policy drafts covering appraiser eligibility and oversight, and conducting appraisals, among other things. The documents will be part of the FHA’s Single-Family Housing Policy Handbook, a consolidated and authoritative agency handbook that will make it easier for stakeholders to do business with the FHA. The drafts also cover appraiser requirements for performing an FHA appraisal, including property eligibility requirements for Title II forward and reverse mortgages, as well as forms and data delivery requirements. Comments must be submitted by Sept. 2, 2014. The Single-Family Policy handbook is a multi-phased initiative to develop a single, comprehensive source for FHA single-family housing policy using clear and direct language and an improved organization structure. In fall 2013, the FHA posted its first draft section, Application Though Endorsement for Title II Forward Mortgages. The FHA is finalizing ...


August 29, 2014 - Inside FHA Lending

State Legislatures Pass Reverse Mortgage Bills

Two states have passed legislation placing varying spins on the Department of Housing and Urban Development’s counseling requirements for lenders and borrowers of FHA-insured reverse mortgages. In California, the state Senate unanimously approved AB 1700, which would mandate a seven-day “cooling off” period between the time a borrower receives counseling and when an application is taken. AB 1700 passed the CA Assembly by a vote of 73 to 1. In addition, the bill would require a lender to provide a worksheet guide that addresses certain issues the borrower should consider and discuss with the counselor, such as income and ability to repay as well as taxes and insurance. The counselor and the borrower are both required under the bill to sign the worksheet guide before any reverse mortgage application is taken. No schedule has been set for ...


August 29, 2014 - Inside FHA Lending

U.S. Court Upholds HUD Suspension of Lender

A decision by the Department of Housing and Urban Development to suspend a Texas mortgage firm and its top executive was not “arbitrary and capricious” and did not violate due process, according to a recent Houston district court ruling. The court granted HUD’s motion for summary judgment and dismissed all of the plaintiffs’ claims with prejudice. In Allied Home Mortgage Corp. v. Donovan, (No. H-11-3864, 2014 WL 3843561, S.D. Tex. Aug. 5, 2014), a U.S. Attorney’s Office sued Allied Home Mortgage Corp. and its chief executive officer, James Hodge, in Manhattan federal district court for allegedly lying about its compliance with FHA requirements. Specifically, the former Houston-based mortgage net branch operator (currently doing business as Allquest Home Mortgage Corp.) allegedly violated the False Claims Act and the Financial Institutions Reform, recovery and Enforcement Act by ...


August 29, 2014 - Inside FHA Lending

Over $65B in FHA Loans Securitized in 1H14

An estimated $65.5 billion of FHA-insured mortgages, excluding reverse and modified loans, were included in Ginnie Mae mortgage-backed securities issued during the first six months of 2014, according to an Inside FHA Lending analysis of agency securitization data. Ginnie Mae FHA MBS issued during the first half of the year nearly matches the total number of new FHA loans originated over the same period (see related chart, p. 4-5). FHA purchase home mortgages served as collateral on 76.3 percent of Ginnie Mae MBS issued over the six-month period, while loans to first-time homebuyers accounted for 63.0 percent of Ginnie MBS issued during the period. The FHA loans in Ginnie pools over the last two quarters showed an average FICO score of 681, a loan-to-value ratio of 92.5 percent and an average loan amount of $169,093. Except for fifth-ranked Freedom Mortgage, the rest of the top five ... [1 chart]


August 29, 2014 - Inside FHA Lending

FHA Volume Drops in First Half of 2014

FHA loan volume continued to decline in the first half of 2014 despite continuing improvement in the quality of new originations and a high demand for purchase mortgage loans, according to Inside FHA Lending’s analysis of agency data. Overall, FHA production for the first six months of the year, excluding reverse mortgages, totaled $61.1 billion. While originations were up 16.0 percent in the second quarter, it was down a hefty 51.8 percent on a year-over-year basis. Purchase loans accounted for $47.3 billion of new FHA-insured loans made over the six-month period while an estimated $58.4 billion of loans had fixed interest rates. For FY 2014, volume was down 19.0 percent. “In FY 2013, approximately 702,000 FHA-insured loans were originated and this year we’re running at 560,000 loans, which is roughly 20 percent of last fiscal year’s total,” said an FHA analyst. “In the first quarter, approximately ... [1 chart]


August 22, 2014 - Inside Mortgage Trends

Banks Report Solid Gains in Mortgage Banking Income During Second Quarter

A new Inside Mortgage Trends analysis of bank call-report data confirms that mortgage banking profits strengthened significantly during the second quarter of 2014. Banks reported a combined $4.910 billion in mortgage banking income for the second quarter of this year, a 45.5 percent increase over the first three months of the year. Earnings releases from 21 publicly traded banks and thrifts showed a 31.5 percent increase in ... [Includes one data chart]


August 15, 2014 - Inside FHA Lending

Private MIs, VA Overtake Faltering FHA Program

Weighed down by high premium costs and lender overlays, FHA lost more primary market share to private mortgage insurers and the Department of Veterans Affairs during the second quarter of 2014. Although June’s FHA endorsement numbers have not yet been released, the trend seen in April through May, along with Ginnie Mae securitization data, suggest that FHA business was up a modest 11.5 percent from the first quarter. But that increase provides no comfort to FHA, which saw its market share go down to 33.7 percent, a six-year low. From April to May, FHA forward endorsements rose by 2.4 percent to $10.61 billion. On a year-over-year basis, however, endorsements were down from $21.9 billion in May 2013, according to an Inside FHA Lending analysis of agency data. On the other hand, private MI companies reported a total of $44.19 billion of new insurance written (NIW) during the ... [2 charts]


August 15, 2014 - Inside FHA Lending

More Indemnification Demands Anticipated

The False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) not only have become strong enforcement tools in the fight against FHA mortgage fraud but also an efficient means of recovering taxpayer losses. Having used both federal statutes effectively to wrangle huge settlements from large banks, federal prosecutors now have their eyes set on mid-level banks, according to compliance experts during a recent webinar hosted by Inside Mortgage Finance Publications. “Because these FCA [and FIRREA] lawsuits have been a cash cow for the Department of Justice and the Inspector General of the Department of Housing and Urban Development, I think these agencies will target mid-level banks next,” said ...


August 8, 2014 - Inside The GSEs

Judge Orders BofA to Pay $1.27B For ‘Hustle’ of Fannie, Freddie

A federal judge in Manhattan last week ordered Bank of America to pay a $1.27 billion penalty for losses suffered by Fannie Mae and Freddie Mac from Countrywide Financial’s “Hustle” program for pumping dubious Alt A loans to the GSEs. The bank also is reportedly nearing a settlement with the Justice Department over other charges. Last October, the DOJ and the Securities and Exchange Commission successfully proved in court that Fannie Mae and Freddie Mac lost some $850 million from thousands of loans acquired through Countrywide’s “high-speed swim lane” program – known as HSSL or “Hustle.”


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Over the next six months we plan to hire this many more additional loan officers:

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