Bank Profitability

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

June 14, 2013 - Inside Nonconforming Markets

Banks Add Nonconforming Mortgages to Portfolio

Bank and thrift holdings of mortgages were higher in the first quarter of 2013 compared to a year ago, driven by originations of nonconforming loans. While two banks have started to securitize jumbo mortgages, the vast majority of jumbo originations remain in portfolio. Bank holdings of first-lien mortgages hit $1.78 trillion at the end of the first quarter of 2013, up 2.2 percent from the first quarter of 2012, according to a new ranking and analysis by Inside Nonconforming Markets ... [Includes one data chart]


June 7, 2013 - Inside Mortgage Trends

MSR Valuations Begin to Climb in Early 2013

With a turning point in mortgage interest rates and refinance activity in view in the first quarter of this year, banks and thrifts began to mark up the valuations they put on mortgage servicing rights. A new Inside Mortgage Trends analysis of bank call report data shows that the industry serviced some $5.181 trillion of home mortgages for other investors as of the end of the first quarter of 2013. That was down 3.1 percent from the end of last year. As a group, the industry estimated a ... [Includes one data chart]


June 7, 2013 - Inside Mortgage Trends

Opposition to Change for Credit Loss Accounting

Mortgage industry participants are largely opposed to changes to accounting for credit losses proposed by the Financial Accounting Standards Board in December. FASB proposed replacing the current impairment model, which reflects incurred credit events, with a model that recognizes expected credit risks and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. FASB also aims to reduce complexity by replacing the numerous existing ...


June 7, 2013 - Inside Mortgage Trends

Banks Alone More Reliant on Short Sales

Reports of short sales being the new “order of the day” for servicers appear to be overblown. The proclamations were prompted by a report last week from Fitch Ratings. Banks have indeed increased their use of short sales in lieu of loan modifications when completing loss mitigation on non-agency mortgages. Meanwhile, special servicers largely avoid short sales and short sales on agency mortgages are declining. Short sales performed by the bank servicers on mortgages in non-agency mortgage-backed ...


June 7, 2013 - Inside Mortgage Trends

BofA Settlement Sends Bank Repurchase Activity to Second Highest Level Ever

Mortgage repurchases and indemnifications soared to a whopping $12.83 billion during the first quarter of 2013, a huge anomalous blip in an otherwise moderating trend. As has been the case over the past few years, industry-wide buyback figures were dramatically skewed by one institution’s settlement. Bank of America recorded a whopping $10.45 billion in mortgage repurchases and indemnifications during the first quarter of 2013, according to a new Inside Mortgage Trends analysis ... [Includes one data chart]


May 31, 2013 - Inside FHA Lending

Lawmakers to Strengthen HUD’s HECM Oversight

The prospect of legislation being offered that would grant the Department of Housing and Urban Development greater authority to manage the Home Equity Conversion Mortgage program has improved significantly after two House lawmakers declared their intention to introduce a bipartisan bill. Reps. Michael Fitzpatrick, R-PA, and Denny Heck, D-WA, announced during a recent hearing by the House Financial Services Subcommittee on Housing and Insurance that they will co-sponsor legislation to give the FHA the authority it needs to swiftly implement HECM reforms by mortgagee letter. Fitzpatrick expressed his support for ...


May 31, 2013 - Inside FHA Lending

GNMA Finds No Dissent Against ‘One MBS’ Plan

Wall Street raised no objections to a Ginnie Mae proposal to consolidate its two mortgage-backed securities programs, indicating the move would be good for securitization and result in other positives. However, there appeared to be no consensus among players on how to get there. Representatives of Ginnie Mae and the Securities Industry and Financial Markets Association met early this month to discuss the agency’s proposal. Analysts agreed it is far too early in the game to discern a clear path towards a single Ginnie Mae MBS program and that implementation is likely years away. Nevertheless, there were ...


May 31, 2013 - Inside Nonconforming Markets

Firm Comes Up With a Twist on 80-10-10 Loans

FirstREX is offering a slight wrinkle on “80-10-10” loan structures by taking an equity stake in the home, recording a second lien, while foregoing monthly payments from the borrower. It remains to be seen whether its “HomeBuyer” product will catch fire nationally. The privately held firm is helping consumers buy a home by providing up to half the downpayment. In marketing materials, the company is careful to point out that it isn’t a lender and that its program shouldn’t be construed as being part of a ...


May 31, 2013 - Inside Nonconforming Markets

Non-Agency MBS Pricing Close to Agency Delivery

An increase of 10 basis points in the guaranty fees charged by the government-sponsored enterprises would make pricing for agency execution comparable to pricing for non-agency mortgage-backed security issuance, according to industry analysts. Agency g-fees averaged about 50 bps at the end of 2012, with plans for further increases this year. “The economics of non-agency securitization are much closer to GSE securitizations today than they were two years ago,” according to analysts at Barclays Capital ...


May 17, 2013 - Inside FHA Lending

Policy Change Could Put Loans in HPML Category

Changes to the FHA’s mortgage insurance premium cancellation policy, which take effect on June 3, could ultimately cause some FHA loans closed after the effective date to become a “higher-priced mortgage loan” that no investor would want to purchase, lenders warned. Eliminating the MIP cancellation and requiring insurance to be kept for the life of the mortgage loan will raise the annual percentage rate 150 basis points above the average prime offer rate (APOR) index. This will trigger a higher-priced mortgage loan (HPML) designation for some ...


May 17, 2013 - Inside FHA Lending

SunTrust Negotiates Settlement of FCA Case

SunTrust Mortgage is in settlement discussions with the Department of Housing and Urban Development and the Department of Justice over alleged violation of the False Claims Act in connection with the bank’s origination of FHA loans. The Atlanta-based mortgage lender disclosed the ongoing talks in a recent regulatory filing after being notified by the agencies of the results of their preliminary investigation during the first quarter of 2013. Even with the ongoing settlement talks, SunTrust continued to deny any wrongdoing, making clear its disagreement with the government’s analysis and methodology. It gave no further ...


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What is the single biggest threat to the mortgage industry in the months ahead?

Rising mortgage rates that will cut off refinance activity as well as curb home purchases.
New regulations like the CFPB’s ability-to-repay/qualified mortgage rule that will make it harder to originate mortgages and will limit consumer choices.
The inability of Congress to address the federal budget and economic problems.

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