Mortgage Banking Profitability
Browse articles from all of our Newsletters related to Mortgage Banking Profitability.
May 18, 2012 - Inside Mortgage Trends
New Lender Makes 1st Loan After 7 Months
Seven months after launching as a new wholesale and retail mortgage firm with national ambitions, Bexil American Mortgage originated its first loan, highlighting the current barriers to entry in the mortgage industry. The company, founded by industry veteran John Robbins, has obtained 18 state licenses with others pending, as well as approval from the Department of Housing and Urban Development, the FHA, Veteran’s Administration and the Department of Agriculture. Although he has started and sold two previous mortgage companies, he said “it’s a significantly different environment. It’s been more challenging...
May 18, 2012 - Inside Mortgage Trends
Banks Finding Willing ARM Borrowers
Despite the immense popularity of fixed-rate mortgages in an environment of once-in-a-lifetime low interest rates, adjustable-rate mortgages still hold a significant chunk of the mortgage marketplace. In 2011, ARMs accounted for 19 percent of banks’ total loan originations, an American Bankers Association 2012 report on real estate lending showed. Last year’s ABA survey showed that ARM products are still being actively marketed by lenders even though the fixed-rate products dominated the mortgage marketplace. ARM lending is extremely popular with community banks, which hold such loans in...
May 18, 2012 - Inside Mortgage Trends
Lenders Rethink Servicing-Retained Loan Sales
The sharp pullback by wholesale lenders from the correspondent market has forced many originators to reconsider keeping mortgage servicing rights when they sell loans in the secondary market. As Bank of America and other wholesalers shut down their correspondent programs, bids for mortgage servicing rights began to deteriorate, several market participants noted during the Mortgage Bankers Association Secondary Market Conference in New York last week. To many originators, MSR prices don’t reflect the value in the asset given the high credit quality of current production and expected slow...
May 18, 2012 - Inside Mortgage Trends
Buyback Activity Slowed Sharply in 1Q12, But Massive Overhang Remains
Mortgage buybacks may have declined significantly during the first quarter of 2012, but a new Inside Mortgage Trends analysis shows that the volume of unresolved repurchase demands continued to set new record highs. Bank call-report data show that financial institutions reported a total of $4.12 billion in mortgage repurchases and indemnifications during the first quarter of this year. That was down 23.0 percent from the fourth quarter of 2011 and the lowest quarterly volume since the beginning of last year. It is particularly encouraging since the first-quarter data...(Includes two data charts)
May 18, 2012 - Inside The GSEs
FHFA Sees a Future Role for FHLBanks
The “scalability” of the nation’s 12 Federal Home Loan Banks as well as their demonstrated ability to access global markets could play a significant role in their favor as policymakers ponder the future of the FHLBank System in a post-Fannie Mae and Freddie Mac housing market, the FHLBanks’ chief regulator told bank directors and executives last week. During a speech at the annual Federal Home Loan Banks Directors Conference in Washington, DC, Federal Housing Finance Agency Acting Director Edward DeMarco noted the banks already have strong relationships, including a cooperative ownership structure, with their nearly 8,000 front-line local lenders.
May 18, 2012 - Inside The GSEs
Fannie Profits, Freddie Loses in 1Q12
The two GSEs divulged not so wildly divergent earnings during the first quarter of 2012. Fannie Mae posted its first free-and-clear profit since being drafted into government conservatorship some 3½ years ago while Freddie’s positive net income wasn’t enough to honor its dividend obligation and it was forced to ask taxpayers for further fiscal life-support. One year after it posted a $6.5 billion net loss, Fannie reported $2.7 billion net income during the first quarter, following to a net loss of $2.4 billion in the fourth quarter of 2011. Freddie actually reported net income in the first quarter and the fourth quarter, $577 million and $619 million respectively, but not enough to repay $1.8 billion in preferred stock dividends for the first three months of 2012.
May 18, 2012 - Inside MBS & ABS
Fitch Downgrades WaMu Covered Bond Program, Investor Demand in U.S. Continues to Expand
This week, Fitch Ratings downgraded Washington Mutual’s covered bonds to ‘AA-’ from ‘AA’ and placed them on rating watch negative, after last week’s downgrade of the issuer default rating of the program sponsor, JPMorgan Chase Bank. That rating action followed JPMorgan Chase’s disclosure last week of a $2 billion trading loss on its synthetic credit positions in its chief investment office. The positions were intended to hedge JPM's overall credit exposure, particularly during periods of credit stress. That loss estimate has since grown to $3 billion, it was reported this week. The JPMorgan...
May 17, 2012 - Inside Mortgage Finance
ResCap Bankruptcy Signals Ally’s Retreat From Home Mortgages, Could Provide Template for Large Banks
Residential Capital’s filing for bankruptcy early this week signaled Ally Financial’s exit from the mortgage industry, and though the transfer of its servicing and origination platforms will not change the market in a meaningful way beyond industry rankings, the legal situation could offer a paradigm for other beleaguered mortgage units to follow. “It wasn’t a monstrous event,” said one industry observer. “It was an unfortunate event. Everyone knew they missed an interest payment, so it wasn’t much of a surprise.” ResCap includes both GMAC Mortgage, Ally’s mainstream mortgage banking operation, and what’s...
May 17, 2012 - Inside Mortgage Finance
Flurry of Deals Scrambles Top Servicer Ranking In Early 2012, Nationstar to be Fourth Largest
While many of the largest mortgage lenders in the industry continue to scale back their operations in a somewhat precarious operating environment, a few companies see opportunity in the reshuffling and are hitting the gas pedal. None more than Nationstar Mortgage. Fresh off an initial public offering, the company has been on a buying spree for mortgage servicing and production capacity. Although Nationstar ranked as the 11th largest servicer in the market at the end of March, pending acquisitions would push it all the way to fourth place on a pro forma basis, according to a new...(Includes one data chart)
May 14, 2012 - Mortgage Beat
Facing increasing issues over loan repurchases and MBS litigation, Residential Capital filed for bankruptcy early Monday morning. The move creates wanted distance from parent company Ally Financial in the process. Despite the spin-off, Ally said ResCap will not stop...
May 11, 2012 - Inside MBS & ABS
Early Jumbo Securitizations Boost Redwood Trust’s 1Q12 Bottom Line, Next Transaction by Midyear
Redwood Trust saw steady progress in growing its residential mortgage business in the first quarter of 2012, which was highlighted by two securitizations totaling $745.0 million, according to the company’s recent filing with the Securities and Exchange Commission. The Mill Valley, CA-based real estate investment trust reported first quarter income of $30 million, compared to a loss of $3 million in the previous quarter and $18 million in profits a year ago. The increase resulted from a combination of Redwood’s new mortgage banking activities that include gains from the $416 million jumbo MBS...
May 10, 2012 - Inside Mortgage Finance
Rapid Changes Should Lead Portfolio Managers To Review Mortgage Investments, Consider Sales
Although agency mortgage securitization gobbles up a huge share of new home loan originations, jumbo mortgages, home-equity loans and nontraditional mortgage sectors are largely held in retained portfolios that have to be carefully managed, experts say. “Your loan portfolio is incredibly important,” said Jerry Hubbard, president of FTN Financial Capital Assets Corporation during a panel at this week’s Mortgage Bankers Association Secondary Market Conference. “Your consolidated portfolio is three to four times bigger than an investment portfolio. It’s the most important asset on the books...
May 10, 2012 - Inside Mortgage Finance
How to Limit Buybacks: Cultivate Clean Lending Processes and Business Culture
Although there are signs that the clouds may be lifting over the five-year housing recession, mortgage lenders face unrelenting pressure from investors to repurchase loans or cover their losses. Some buyback requests are legitimate and should be honored, said David Stevens, president and CEO of the Mortgage Bankers Association, during a speech at the trade group’s secondary market conference in New York this week. “But lenders are finding more and more loans being sent back for repurchase for minor, technical mistakes that had questionable relevance to loan performance,” he said. The threat of repurchases...
May 4, 2012 - Inside Mortgage Trends
HARP Gaining Ground, Key Role in 2012 Market
Mortgage lenders that were less than enthusiastic about the first version of the refinance program for underwater Fannie Mae and Freddie Mac borrowers now see the revised initiative as a significant opportunity for 2012 and beyond. A recent Federal Reserve survey of senior loan officers revealed that 39 percent of large banks have begun actively soliciting Home Affordable Refinance Program business, although participation rates are lower among smaller institutions. Officials from M&T Bank and SunTrust Mortgage said during a recent webinar sponsored by Inside Mortgage Finance Publications that they...
May 4, 2012 - Inside Mortgage Trends
Gains in Mortgage Banking Profits Widespread in 2012 First Quarter
Nearly all major lenders have reported increased earnings from their mortgage banking activities during the first quarter of 2012, according to a new Inside Mortgage Trends analysis of earnings reports from 25 companies. As a group, the 25 public companies posted an impressive $7.606 billion in mortgage banking income during the first three months of 2012. That was up 39.0 percent from the $5.471 billion these same firms earned over the final three months of 2011, and it was a huge 177.4 percent increase over the first quarter of last year. The group’s first-quarter mortgage banking...(Includes one data chart)
May 4, 2012 - Inside The GSEs
FHLBank Earnings Jump in First Quarter
The Federal Home Loan Bank Office of Finance announced this week that preliminary combined net income for the FHLBanks jumped 42.3 percent to $733 million in the first quarter of 2012, up from $515 million from the end of the fourth quarter and a whopping 104.7 percent increase from the same period last year. The FHLBank system’s $375 million year-over-year income increase was driven by lower other-than-temporary impairment charges, higher net gains on derivatives, hedged items and financial instruments carried at fair value, and lower assessments, partially offset by lower net interest income, said the Office of Finance.
May 4, 2012 - Inside The GSEs
Freddie Dividends Turn Black to Red in 1Q
Dividend payments paid by Freddie Mac to the U.S. Treasury for its continued financial support held down the GSE during the first quarter of 2012 as Freddie would have otherwise posted a profit. Freddie, which posted its first quarter results late this week, actually reported $577 million in net income during the first three months of this year before having to repay $1.8 billion in preferred stock dividends to the government. Under the terms of the GSEs’ purchase agreement, the Treasury is entitled to a dividend of 10 percent per year on a quarterly basis. Freddie’s first quarter dividend payment more than offset the company’s comprehensive income of $1.79 billion, prompting the GSE to seek another $19 million from taxpayers.
May 2, 2012 - Mortgage Beat
Fannie Mae Announces Changes to Pricing Terms
Fannie Mae is asserting its right to change pricing terms under standard purchase agreements, master agreements or mortgage securitization contracts, according to an alert issued on May 1. The government-sponsored enterprise made clear its right to change the pricing...
April 27, 2012 - Inside Nonconforming Markets
Option One Settles Non-Agency Claims with SEC
The company formerly known as Option One reached a $28.2 million settlement with the Securities and Exchange Commission this week regarding issuance of subprime mortgage-backed securities in early 2007. The SEC said Option One’s MBS “operated as a fraud or deceit” against non-agency MBS investors. “The offering documents misled investors about Option One’s precarious financial condition and, hence, its inability to fulfill its obligations on its own to repurchase ...
April 27, 2012 - Inside Nonconforming Markets
Non-Agency MBS Repurchase Requests Increase
Repurchase requests on mortgages in non-agency mortgage-backed securities increased for major banks during the first quarter of 2012 compared with the end of 2011, according to a new analysis by Inside Nonconforming Markets. However, the lenders have challenged the vast majority of the claims and a significant court decision appears to be heading toward ...
April 27, 2012 - Inside Nonconforming Markets
Non-Agency PPIP Profits Up Even as Invesco Quits
Invesco liquidated its fund in the Public-Private Investment Program this month, earning a strong 18.2 percent cumulative net internal rate of return on $2.3 billion in capital. “The PPIP program has resuscitated the private-label mortgage-backed securities market and, at least in our case, resulted in a handsome profit to the Treasury Department,” said Wilbur Ross, chairman of the Investment Committee of the fund and chairman and CEO of WL Ross & Co. “We are proud to have participated in it.” Among the seven non-agency public-private investment funds that were participating in the PPIP ... [Includes one data chart]
April 20, 2012 - Inside The GSEs
Senator Asks FHFA For ‘Clear’ GSE Repurchase Process
The Federal Housing Finance Agency should give consideration to creating a mechanism to allow small mortgage lenders to more easily appeal GSE repurchase demands, according to one U.S. senator.In a letter sent last week to FHFA Acting Director Edward DeMarco, Sen. Jeanne Shaheen, D-NH, said several of her small-business constituents have noted a “sharp increase” in repurchase demands over the last year.
April 20, 2012 - Inside Mortgage Trends
Mortgage Sales Rose Sharply in Late 2011
Mortgage banking operations owned by commercial banks posted a significant increase in loan sales during the fourth quarter, helping to push earnings higher. Bank mortgage banking units sold a total of $299.0 billion of single-family mortgages during the fourth quarter, up 20.2 percent from the previous three-month period. It was the industry’s second quarterly increase in sales volume after sinking to just $227.0 billion during the second quarter of last year. For the full year, mortgage sales came in 14.4 percent below the level reported during 2010, and the banking...(Includes one data chart)
April 20, 2012 - Inside Mortgage Trends
CFPB Rules Likely to Cut Servicing Profits
New mortgage servicing rules unveiled recently by the Consumer Financial Protection Bureau will likely result in higher mortgage servicing costs and reduced revenue for servicers although some analysts say the rules could have a positive effect on large banks. The CFPB recently previewed some of the servicing rules it plans to issue this summer and finalize by January 2013. Specifically, the rules would require monthly mortgage statements that include mortgage terms, detailed payment information, fee disclosures and loss-mitigation information for delinquent borrowers. They also call for...
April 20, 2012 - Inside Mortgage Trends
Mortgage Banking Earnings Surge in 2012, But Production Volume Flat
Mortgage bankers are reporting solid gains in profitability during the first quarter of 2012 without seeing any major increase in production volume compared to the end of last year. A new Inside Mortgage Trends analysis of earnings reports from eight of the largest bank-held mortgage operations shows a solid 22.5 percent increase in mortgage banking earnings compared to the fourth quarter. All eight companies reported net profits for early 2012, including two – JPMorgan Chase and PNC Financial – that posted losses in the previous quarter. The combined $6.50 billion in first-quarter mortgage banking earnings...
April 20, 2012 - Inside MBS & ABS
Lack of Procedures for Resolving Buyback Disputes A Credit Negative for Any MBS Transaction
Lack of procedures for resolving repurchase conflicts between non-agency MBS investors and providers of representations and warranties could negatively affect the rating for any newly issued residential MBS, according to a new analysis by Moody’s Investors Service. The volume of unresolved repurchase conflicts between MBS investors and reps and warranties providers can be gauged by the number of lawsuits and the growing dollar value of settlements, said Moody’s analyst Kathryn Kelbaugh. The issue was thrust into the spotlight recently because 82 percent of the loans backing the $746 million non-agency...
April 20, 2012 - Inside MBS & ABS
New Financial Instrument Offers Tool To Hedge Range of Housing Asset Risks
A data and analytics firm has developed a method to hedge exposure to the underlying risk associated with fluctuating real estate values. The Chicago Board Options Exchange has approved the RPX Futures for its futures exchange. The RPX Composite Index, designed by Radar Logic, calculates the daily value of home prices by determining the price of housing per square foot. “The RPX is a translation of price per square foot gathered from public source records,” explained Michael Feder, CEO of Radar Logic. “We look at all closing transactions with enough information to observe.” The index numbers...
April 19, 2012 - Inside Mortgage Finance
Ally Financial Inc. is cutting back significantly on its wholesale mortgage business and moving away from its correspondent and broker channel so that it can focus more on originations through the retail and direct channels. In recent filings with the Securities and Exchange Commission, Ally said the shift to the higher-margin retail and direct channels will not have a significant impact on profitability overall if both channels can assume the current volume of government-backed mortgages coming through the correspondent and broker wholesale conduits. “We will continue to evaluate this...
April 19, 2012 - Inside Mortgage Finance
Major Banks Reclassify More Second Liens as Nonaccrual, Though They Continue to Perform
Wells Fargo and JPMorgan Chase reclassified more than $3 billion of second-lien mortgages as nonperforming loans in the first quarter of 2012, a move other banks have copied. Both Wells and JPMorgan said that federal guidance from late January was behind the change. Wells characterized $1.7 billion of subordinate home-equity loans as nonperforming and JPMorgan assigned $1.6 billion to that status. “We do not view this as a material shift in the performance of these loans or the reserving methodology,” Fitch Ratings wrote. “However, increased regulatory scrutiny of second liens may continue to...
April 19, 2012 - Inside Mortgage Finance
HARP 2.0’s ‘Captured Audience’ Boosts Mortgage Bankers’ Near-Term Earnings
Lenders should expect at least a short-term boost in profits from the Federal Housing Finance Agency’s recent tweaks to the Home Affordable Refinance Program, analysts say, but HARP 2.0’s long-run effectiveness to the pool of underwater borrowers remains an open question. Since January, the industry’s largest mortgage servicers, including Wells Fargo and JPMorgan Chase, have seen a significant uptick in new refinance applications for HARP 2.0. “This quarter should be one of the strongest quarters for mortgage banking we’ve seen in quite some time,” said FBR Capital Markets’ Paul...(Includes one data chart)
Webinars
Mortgage Beat
Industry Reports
Poll
Most Popular Stories
- Ocwen Officials Surprised by Nationstar Bids
- Flurry of Deals Scrambles Top Servicer Ranking In Early 2012, Nationstar to be Fourth Largest
- CFPB Taking on Origination Points and Fees
- Mortgage Originations Slow Modestly in Rapidly Changing Market of Early 2012
- Freddie Hires a New Chief Executive Officer and Other Things Affecting the GSEs
