Mortgage Banking Profitability
Browse articles from all of our Newsletters related to Mortgage Banking Profitability.
June 14, 2013 - Inside FHA Lending
HUD Takes Second Furlough. The Department of Housing and Urban Development this week announced the second of seven furlough days employees are scheduled to take due to mandatory, government-wide budget cuts: June 14. Sequestration went into effect March 1 because Congress failed to pass legislation on balanced deficit reduction. HUD employees took their first forced leave on May 24. Approximately $85 billion will be slashed from the federal budget for the remainder of the fiscal year. The next furlough date is July 5. HUD, however, may not need to ...
June 14, 2013 - Inside FHA Lending
Wells Fargo Agrees to Settle REO Anti-Bias Charge
Wells Fargo has reached an agreement with the Department of Housing and Urban Development and fair housing advocacy groups to improve its handling of foreclosed and abandoned homes and resolve allegations of discrimination in the maintenance and marketing of real estate-owned properties. The National Fair Housing Alliance and several other fair housing groups filed a complaint with HUD in April last year after observing that Wells’ foreclosed homes in minority neighborhoods did not receive the same treatment and care as the bank’s REO properties in white neighborhoods. The NFHA, which conducted an ...
June 14, 2013 - Inside FHA Lending
FHA Questioned on Alleged MMI Audit Anomaly
Rep. Darrell Issa, R-CA, chairman of the House Committee on Oversight and Government Reform, is planning to quiz top FHA officials about an apparently deliberate effort by the agency to withhold important information from Congress regarding the true financial health of the FHA insurance fund. In a recent letter to FHA Commissioner Carol Galante, Issa said that the stress test employed by Integrated Financial Engineering in its FY 2012 actuarial review of the FHA Mutual Mortgage Insurance Fund yielded a more troubling result than what HUD reported to Congress in November last year. In the actuarial review, IFE reported that ...
June 14, 2013 - Inside FHA Lending
VA Plans to Raise Residual Income Requirement
The Department of Veterans Affairs is planning to raise the residual income limit requirement for home loan applicants by 15 percent – a move that could shut out many veterans who have limited income. The proposal is one of several measures under consideration for the VA’s Home Loan Program, said Carol Barnard, a loan production officer in the VA Regional Loan Center in Denver, during a recent webinar hosted by the Collingwood Group, a Washington-based advisory firm. Barnard is also a senior consultant with Collingwood. This change means that, for a family of four in the VA’s Northeast region, the required income residual could jump to ... [1 chart]
June 14, 2013 - Inside FHA Lending
FHA, DOJ Deliver Another FCA Blow
The FHA and the Department of Justice have ramped up enforcement actions against more than a dozen mortgage lenders in recent weeks for alleged agency rule violations. At least two of the lenders have received notices from the DOJ that they are in violation of the False Claims Act. According to the Collingwood Group, a Washington-based business advisory firm, the agencies have sent notices of enforcement or “administrative” actions to as many as 15 FHA direct endorsement (DE) lenders, some of whom could lose their DE status if found to have engaged in improper lending practices that resulted in huge losses for the FHA. The latest enforcement actions have ...
June 7, 2013 - Inside The GSEs
ICBA: Make Good GSE Preferred Stock Losses
When Fannie Mae and Freddie Mac were placed in government conservatorships in September 2008, roughly 600 banks and thrifts saw $8 billion of their preferred stock investments in the two GSEs evaporate. With both firms now wildly profitable, there is increasing hope and speculation that buyers of the “junior” preferred stock are in for an eventual payday. No one is more optimistic about that happening than the Independent Community Bankers of America. For the ICBA, the question boils down to how much on the dollar its members will receive for the shares they still own. It’s also a complicated question. When Fannie and Freddie hit the skids at the nadir of the housing bust, many banks and thrifts sold their preferred shares at market rates, that is, at something close to zero. In other words, they no longer have the stock certificates and any ownership rights. Speculators and bottom feeders do.
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
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]
June 7, 2013 - Inside MBS & ABS
Judge Narrows U.S. Bank’s $1.75 Billion MBS Lawsuit Against BofA, AIG Drops Maiden Lane II Action
U.S Bank may proceed on a limited basis in its legal claim against Bank of America and Countrywide Financial in connection with a soured $1.75 billion MBS deal after a New York state judge ruled last week to narrow the case to just a fraction of the loans in dispute. Judge Eileen Bransten dismissed a breach of contract claim against BofA that sought to force the bank to repurchase some 4,400 loans in the pool due to “pervasive breaches” in the representations and warranties of the securities. U.S. Bank, in its capacity as trustee for HarborView Mortgage Loan Trust, sued BofA and Countrywide in August 2011 seeking repurchase of non-performing loans from the underlying residential MBS. The judge said...
May 31, 2013 - Inside FHA Lending
FHA Won’t be Part of Eminent Domain Scheme
A top official of the Department of Housing and Urban Development said the agency is as concerned as Congress and the industry about mortgages seized through the power of eminent domain and will not refinance any mortgage taken in this manner. Testifying at a recent hearing before the House Financial Services Subcommittee on Housing and Insurance, Charles Coulter, deputy assistant secretary for housing, said FHA leadership is very much concerned about the idea of seizing troubled mortgages held in private-label securitizations under the power of ...
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
Ginnie Mae Servicing Up a Notch in First Quarter
Ginnie Mae servicers reported a small increase in servicing volume during the first three months of 2013, with Ocwen Loan Servicing posting the largest gains from last quarter and from a year ago. Servicers held a total of $1.33 trillion in government-backed mortgage debt outstanding at the end of the quarter, up a notch from the fourth quarter and 8.2 percent more than the total Ginnie Mae servicing debt a year ago. Though Ocwen was fifth in the ranking with $36.08 billion, its servicing volume was up more than 1000 percent both from the last quarter and from the same period last year. Among the top Ginnie servicers, only ... [One chart]
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 24, 2013 - Inside Mortgage Trends
Mortgage Banking Operations Sold Less But Earned More in Early 2013
Banks and thrifts continued to generate very strong earnings from their mortgage banking operations during the first quarter of 2013, despite a slowdown in originations and loan sales. Banks and thrifts reported a total of $7.704 billion in mortgage banking income during the first three months of 2013, according to a new Inside Mortgage Trends analysis of recently released call-report data. That was up 15.5 percent from the previous quarter, and the early 2013 earnings fell just ... [Includes one data chart]
May 24, 2013 - Inside MBS & ABS
In NY State Court, Two MBS Putback Claims Under Same Statute of Limitations Decided Differently
Two repurchase lawsuits in the New York state court involving allegedly defective mortgage-backed securities and the state’s six-year statute of limitations have resulted in different outcomes for defendants, one of which could potentially limit MBS putback claims in the Empire State. In a May 13 decision, Justice O. Peter Sherwood of the Commercial Division of the New York Supreme Court dismissed with prejudice a $259 million MBS putback lawsuit against Nomura Credit & Capital. The decision was significant in part because it was the first among dozens of MBS putback cases currently pending in NY state court that was dismissed with prejudice on grounds that the six-year statute of limitations has expired, according to defense attorneys. Two affiliates of hedge fund Fir Tree Partners filed...
May 17, 2013 - Inside FHA Lending
HUD Announces New Note Sales Under DASP
The Department of Housing and Urban Development’s Office of the Inspector General has announced a second round of mortgage note sales for this year under the expanded Distressed Asset Stabilization Program. Separate sales of approximately 20,000 severely delinquent loans have been scheduled for June 26 and July 10 as part of HUD’s effort to reduce its bulging inventory of foreclosed residential properties and to target relief to areas hit the hardest by foreclosures. HUD estimates the total unpaid balance of the loans in this sale at ...
May 17, 2013 - Inside FHA Lending
FHA Delinquencies Down, Foreclosure Starts Up
FHA loans saw an improvement in delinquencies even as the mortgage industry reported an increase in the overall delinquency rate for single-family mortgages at the end of the first quarter of 2013, according to the Mortgage Bankers Association’s latest national delinquency survey. Among loan types, the FHA saw the largest improvement on a seasonally adjusted basis as its delinquency rate dropped to 10.97 percent in the first quarter, down 20 basis points from the previous quarter. This was good news for an agency that has been battling to reduce losses and stabilize its Mutual Mortgage Insurance Fund. However, the refreshing change was ...
May 17, 2013 - Inside FHA Lending
FHA Jumbo Production Picks Up in First Quarter
FHA jumbo loan originations increased in the first quarter of 2013 as well as from the same period last year pending hikes in the mortgage insurance premium and the required downpayment on loans above $625,500, according to Inside FHA Lending’s analysis of FHA data. FHA jumbo lenders produced an estimated $5.44 billion in loans over $417,000 during the first three months of the year, up 6.6 percent from the fourth quarter of 2012 and 14.0 percent higher compared to the volume from a year ago. Consumers continued to use the FHA jumbo product despite FHA’s decision to raise the annual mortgage insurance premiums on ... [2 charts]
May 17, 2013 - Inside FHA Lending
Sanctions for Failure to Use New Codes, Says HUD
FHA lenders now face more stringent default monitoring and reporting requirements as federal housing regulators try to keep close tabs on loan performance to reduce losses to the FHA insurance fund. New guidance issued by the Department of Housing and Urban Development requires FHA lenders to use new status codes in their monthly reporting of delinquent single-family mortgages, special forbearances and trial payment plans. At the same time, HUD announced a new reporting requirement for FHA loan modifications in which the servicer receives no incentives. The requirement to use the new codes and to ...
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 ...
May 16, 2013 - Inside Mortgage Finance
Fannie Mae and Bank of America resolved a huge portion of the whopping $19.04 billion in disputed buyback requests facing the mortgage industry at the beginning of 2013, but both government-sponsored enterprises will remain aggressive in hunting for repurchase opportunities. In fact, new repurchase requests increased by a whopping 87.8 percent in the first three months of this year compared to the fourth quarter of 2012, reaching a record $12.14 billion, according to an analysis of GSE quarterly reports by Inside Mortgage Finance. The biggest increase was at Fannie Mae, where new buyback requests soared to $9.91 billion, while Freddie Mac reported a more modest 5.2 percent increase. The jump in new buyback demands occurred...[Includes one data chart]
May 10, 2013 - Inside Mortgage Trends
Real Estate Agents Seek Useful Mobile Apps
Sixty-five percent of real estate agents would be more willing to recommend a lender if they were provided a mobile “app” to track the status of scheduled mortgage closings, according to a new survey by Campbell Surveys and Inside Mortgage Finance Publications. “Most lenders today are not keeping us advised of the status of the loan and, more frustrating, they are requiring additional documents piecemeal,” according to one real estate agent that responded to the survey. “Instead of a ...
May 10, 2013 - Inside Mortgage Trends
Ocwen Slams Competition’s Accounting
Officials at Ocwen Financial were highly critical of the accounting methods used by other servicers that have acquired significant holdings of mortgage servicing rights recently. Ocwen might also soon have more cash than necessary for its planned acquisition opportunities, with officials considering initiating a stock buyback. William Erbey, Ocwen’s chairman, said his company is considerably less leveraged than other servicers. He noted that Ocwen carries most of its MSRs at market value rather than ...
May 10, 2013 - Inside Mortgage Trends
Is PennyMac the New Countrywide?
When Countrywide Financial Corp. chairman and CEO Angelo Mozilo gave then company president Stanford Kurland the heave-ho in the fall of 2006, little did Kurland know at the time that it would be the best thing to ever happen to him professionally. Six years later, Kurland sits atop a growing mortgage empire fueled by the activities of PennyMac Mortgage Investment Trust, a publicly traded real estate investment trust with a market capitalization rate just north of $1.5 billion. To boot ...
May 10, 2013 - Inside Mortgage Trends
Forecasters See Originations Swoon in 2013
Mortgage industry economists widely agree that loan origination volume is going to drop sharply in 2013 – and again next year – although there is some variation in when they expect the downturn to take hold. The consensus view of economists at Fannie Mae, Freddie Mac and the Mortgage Bankers Association is that new originations in 2013 will drop 13.6 percent from last year’s level, falling to $1.635 trillion. The consensus – a simple average calculated by Inside Mortgage Trends – predicts ... [Includes one data chart]
May 10, 2013 - Inside Mortgage Trends
Earnings Boost in Production Activity Offset Downturn in Servicing in 1Q13
A jump in production income during the first quarter spurred a sharp increase in profitability that more than made up for a downturn in servicing earnings for a group of 10 lenders, according to a new Inside Mortgage Trends analysis of earnings reports. The 10 companies, which accounted for nearly half of the mortgages originated in the first three months of 2013 and over 60 percent of capitalized servicing rights, reported a hefty $4.29 billion in production-related income ... [Includes one data chart]
May 10, 2013 - Inside The GSEs
GSE Earnings Soar in 1Q, Fannie Claims DTA
Fannie Mae hit an earnings home run in the first quarter while revealing that it has released $50.6 billion in “deferred tax assets,” an allowance that sets up a massive cash payment to the U.S. Treasury by the end of June. Fannie estimates that based on a net worth of $62.4 billion at March 31, it will have a dividend obligation to Treasury of $59.4 billion, a cash payment that appears all but certain. Following an edict from Treasury last summer, the GSEs cannot build retained earnings and can only maintain a small “buffer” of net worth. The rest of their earnings must be given to Treasury, which controls their preferred stock.
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