Mortgage Banking Profitability

Browse articles from all of our Newsletters related to Mortgage Banking Profitability.

June 30, 2016 - Inside Mortgage Finance

Faltering Mortgage Stocks Tough on Analysts as Well; No Nonbank Mortgage IPOs Until Next Year, If Then…

CRT Capital Group has begun winding down its mortgage research division, Sterne Agee CRT, casting a shadow over publicly traded residential stocks and dashing the hopes of any nonbanks that were hoping to pull off an initial public offering this year. As one equities researcher told Inside Mortgage Finance this week: “It’s not fun being a stock analyst these days.” And commenting on the recent – and unexpected – drop in rates, he added: “Some of these firms may get smoked.” Four years ago, Sterne Agee was...

June 24, 2016 - Inside Mortgage Trends

Pessimism About Housing Affordability on the Rise

In a finding with ominous implications for the mortgage lending industry, a significant majority, 81 percent, of respondents in a recent opinion survey continues to believe that housing affordability is a problem in the U.S. The concern for lenders is that the more Americans believe the cost of buying a home is out of their reach, the greater the odds are they won’t even bother to shop for a house or a mortgage or save for a downpayment. “Stable, affordable housing is viewed as ...

June 24, 2016 - Inside Mortgage Trends

Big Trade Groups: ‘All or Nothing’ on GSE Reform

The chance of Fannie Mae/Freddie Mac reform legislation passing Congress this year is virtually nil. But that hasn’t stopped industry trade groups from talking about the topic, or dispensing a barrage of advice for the Federal Housing Finance Agency about the withering capital cushions at Fannie and Freddie. The way things stand today, the largest industry trade organizations – and arguably the most powerful politically – are taking the position of “all or nothing” mortgage-finance ...

June 24, 2016 - Inside Mortgage Trends

Exchange Operator to Take Major Stake in MERS

Intercontinental Exchange will acquire a majority equity position in the owner of Mortgage Electronic Registration Systems and “modernize” MERS, according to the companies. Terms of the investment weren’t disclosed, though ICE said the price and terms of the transaction are “immaterial” to the company. The transaction is expected to be completed at the end of this month. MERS is owned by MERSCorp Holdings, a private corporation and member-based organization ...

June 24, 2016 - Inside Mortgage Trends

Mortgage Companies to Increase Tech Spending

A majority of mortgage companies plan to increase their spending on technology as part of their efforts to boost profit margins, according to the latest results from Fannie Mae’s quarterly survey of lenders. Some 56 percent of the 169 lenders surveyed by Fannie in the second quarter of 2016 listed technology investment as one of their top two strategies to increase profit margins, marking the first time a majority of respondents plan to increase tech spending to help profits since ...

June 24, 2016 - Inside Mortgage Trends

Banks Report Uptick in Mortgage Repurchases

Commercial banks and savings institutions reported a small increase in the volume of repurchases and indemnifications regarding single-family mortgages during the first quarter of 2016, according to an Inside Mortgage Trends analysis of call-report data. Banks reported $764.1 million of repurchases during the first quarter, a 3.9 percent increase from the previous period. That was down 23.3 percent from the first quarter of 2015, however, and sets a pace ... [Includes one data chart]

June 24, 2016 - Inside Mortgage Trends

GSE Repurchase Activity Fell to Record Low in Early 2016, Focus on New Loans

Mortgage lenders continue to face persistent repurchase demands from Fannie Mae and Freddie Mac, but a growing share of them end up being withdrawn, according to a new Inside Mortgage Trends analysis of disclosures made by the two government-sponsored enterprises. During the first quarter of 2016, lenders repurchased or replaced $315.0 million of mortgage loans for breaches of representations and warranties. That was a record low for ... [Includes two data charts]

June 17, 2016 - Inside FHA/VA Lending

Around the Industry

FHA Revises TOTAL Mortgage Scorecard. Effective on June 11, 2016, the FHA’s TOTAL Mortgage Scorecard no longer returns either upfront or annual mortgage insurance premium factors to an automated underwriting system. The FHA directs lenders to consult Appendix I of its Single Family Housing Policy handbook for applicable MIP factors. AUS vendors have been notified of the change and have adjusted their systems accordingly. HUD, First Citizens Bank Settle Fair Lending Complaint. A South Carolina bank has agreed to correct its lending practices and allocate funding to resolve allegations that it denied more loans to minorities compared to similarly-situated white loan applicants. The settlement agreement stemmed from a complaint filed by the Department of Housing and Urban Development against First Citizens Bank and Trust Co. in 2011 after an analysis of ...

June 17, 2016 - Inside FHA/VA Lending

CA Realtors Seek Rule to Prohibit PACE Lien Seniority over FHA Lien

The California Association of Realtors renewed its push for rules addressing the proliferation of FHA-insured mortgages that have Property Assessed Clean Energy super liens. In a recent letter to Office of Management and Budget Director Shaun Donovan, the CAR requested that both FHA and the Department of Housing and Urban Development adopt policy that is consistent with the Federal Housing Finance Agency’s existing policy on PACE liens. Specifically, such a policy would prohibit the use of PACE encumbrances with a “super lien” priority over mortgage financing. The group also urged HUD to issue guidelines directing FHA lenders and servicers not to place PACE liens above any mortgage insured by FHA. The CAR expressed concern about how PACE liens might affect the FHA Mutual Mortgage Insurance Fund, which is currently recovering from years of losses. “If the ..

June 17, 2016 - Inside FHA/VA Lending

VA Servicer Reminders: Conveyance Guide, POC List, Compromise Sale

The Department of Veterans Affairs Home Loan Guaranty staff is reminding VA servicers of new title requirements taking effect this week for conveying properties to the VA. Under VA regulations, a conveyance or transfer of real property to the department is acceptable if the holders of the VA-guaranteed loan provide covenants or warranties against the acts of the holder and/or their agents. In addition, conveyances would be acceptable to the VA if it vests or entitles the agency to such title as is. In addition, the VA would take possession of collateral as long as it is acceptable to prudent lenders, informed buyers, title companies and attorneys in the community in which the property is located. However, the VA’s determination of clear and marketable title rests on state statutory requirements, the agency noted in its guidance. The VA is providing servicers a revised state-by-state list of ...

June 17, 2016 - Inside FHA/VA Lending

USDA Securitization Down in 1Q16, Agency to Lower Premium, Fees

Ginnie Mae securitization of rural home loans got off to a wobbly start in the first quarter of 2016 as securitization volume fell 13.8 percent from the prior quarter, according to an Inside FHA/VA Lending analysis of Ginnie data. Approximately $3.9 billion in loans with a USDA guarantee were securitized during the first three months, with the top five issuers accounting for $2.1 billion of mortgage-backed securities produced by the segment during the period. USDA securitization volume dropped 9.2 percent year over year. Top USDA issuer Chase Home Finance accounted for $1.2 billion of securitized rural housing loans, while PennyMac, in distant second place, finished the quarter with $378.5 million. Wells Fargo ($294.0 million), Pacific Union Financial ($122.8 million) and Amerihome Mortgage ($102.2 million), in sequential order, comprised the rest of the top five issuers. Pacific Union climbed over ...

June 17, 2016 - Inside FHA/VA Lending

FHA Production on a Positive Trend Despite Falling Endorsement Levels

FHA single-family forward endorsements fell by 8.0 percent in the first quarter of 2016 from the prior quarter, suggesting a continued slowing in endorsement in the latter part of 2015 and early 2016 compared to earlier quarters, according to the FHA’s latest quarterly report to Congress on the state of the Mutual Mortgage Insurance Fund. Overall though, the FHA MMIF report as well as FHA monthly production reports for March and April continued to show the very positive trends – rising volume, lower delinquencies and outstanding credit quality – that have been occurring in the FHA program since 2009. Endorsement volume for purchase and refinance loans was down to $53.5 billion during the first three months of 2016 from $58.1 billion in the fourth quarter of 2015, the MMI Fund report showed. Last year, forward endorsements soared in the second quarter and reached a record high in the ...

June 10, 2016 - Inside Mortgage Trends

Some Mortgage Lenders Are Hiring

Mortgage lenders of different charters and sizes are in a hiring mode as the summer approaches, thanks to continued low interest rates and a strong job market. Moreover, origination profits are picking up. All of this spells good news for anyone with mortgage experience – be it loan officers, underwriters and especially technology workers with software writing and compliance-related backgrounds. “Most of our hiring has been around the technology side of the business,” said ...

June 10, 2016 - Inside Mortgage Trends

Production, Servicing Profits Fade in 1Q16

A new Inside Mortgage Trends analysis of publicly-traded lender earnings reports reveals that profitability fell on both the production side and loan servicing. A group of 12 major lenders reported a combined $1.15 billion in production-related income for the first quarter, a 3.1 percent drop from the previous period. That outcome doesn’t look so bad in light of the fact that the group’s total origination volume was down 5.3 percent from the fourth quarter ... [Includes one data chart]

June 10, 2016 - Inside Mortgage Trends

Mortgage Banking Profits Down in Early 2016

Upheaval in hedging mortgage servicing rights during the first quarter of this year damped what was otherwise a strong performance by the loan production side, according to data reported by the Mortgage Bankers Association. Participants in the MBA’s quarterly performance study reported average pretax income of $752,000 for the first three months of the year. That was down 36.8 percent from the fourth quarter, and represented the lowest reading since ...

June 10, 2016 - Inside Mortgage Trends

Banks Still Backpedaling Away From MSR Business as Valuations Tumble

The banking industry still hasn’t touched bottom in its years-long retreat from the mortgage servicing rights business. Banks and thrifts reported a total of $4.001 trillion of single-family mortgage servicing for other investors, most commonly mortgage-backed securities trusts, as of the end of March. That was down some $52.9 billion from the previous quarter, a 1.3 percent decline, according to a new analysis of call-report data by Inside Mortgage Trends ... [Includes one data chart]

June 10, 2016 - Inside MBS & ABS

CMBS Loss Severities Dip in First Quarter, But Are Still Higher Than Historical Average, Moody’s Finds

The weighted average loan loss severity for U.S. commercial MBS was 49.3 percent for the 139 loans liquidated in the first three months of 2016, versus 58.2 percent for 240 loans liquidated in the last three months of 2015, which was the highest quarterly loss severity since 2010, Moody’s Investors Service said in a new quarterly report. However, “In both quarters, severities topped the weighted average of 42.8 percent for loans liquidated between Jan. 1, 2000, and March 31, 2016,” the ratings service added. The Moody’s report tracks...

June 3, 2016 - Inside FHA/VA Lending

MRB Metes Severe Penalties to 14 Lenders; 48 Others Fail to Recertify

Eleven lenders paid a total of $152.1 million in civil penalties and settlements while three others lost their FHA approval for various violations of FHA requirements, according to the Mortgagee Review Board’s latest report on administrative actions taken against FHA-approved lenders. As required by the Department of Housing and Urban Development, the report summarizes the disciplinary actions imposed by the board on FHA lenders from Oct. 1, 2014, to Sept. 30, 2015. These actions include $151.7 million in settlements and $370,119 in civil money penalties, withdrawals of FHA approval, suspensions, probations and reprimands. Allied First Bank of Oswego, IL, agreed to pay a $17,000 civil money penalty for improper use of FHA’s name in certain correspondence and for failure to notify HUD of a consent order entered into by the bank and federal and state banking regulators. The MRB voted to ...

June 3, 2016 - Inside FHA/VA Lending

Maryland VA Lender Plans Growth Around Larger Purchase Platform

New Day USA, an exclusive VA lender, is building up its purchase mortgage-lending platform to help grow its VA business by the end of 2018, according to the firm’s top financial adviser.Based in Fulton, MD, New Day is developing its purchase-lending capability to help grow its overall VA business by 20 to 25 percent annually, said Joseph Murin, New Day’s chairman emeritus. “We’re growing slowly,” he said. “We’d rather walk before we run.” An approved VA lender, New Day’s focus has been almost entirely on cash-out refinancing. New Day currently ranks 21st among Ginnie Mae VA sellers for the first quarter of 2016, according to Inside FHA/VA Lending’s database. The company closed the first quarter with $463.1 million in VA loans, up 22.8 percent from 4Q15 and up a whopping 87.6 percent on a year-over-year basis. “We are spending a lot of time developing and understanding the ...

June 3, 2016 - Inside FHA/VA Lending

Banks’ New 3% Down Programs Could Steal FHA Market Share

Two major banks recently launched their own 3 percent downpayment programs, which stakeholders say could shift volume from FHA to the government-sponsored enterprises. How much volume though remains unclear, analysts say. Last week, Wells Fargo and JPMorgan Chase rolled out their respective low downpayment programs for first-time homebuyers and low-to-moderate-income families, which require only 3 percent down. Neither program involves the FHA, and they appear designed to pick up where Wells and Chase left off when they decided to cut back on their FHA business in order to reduce liability risk. Wells and Chase are among several major banks and nonbanks that have coughed up billions of dollars in settlements with the federal government in the last couple of years to resolve allegations of fraud under the False Claims Act and violations of ...

June 3, 2016 - Inside FHA/VA Lending

FHA Securitization Spikes in 1Q16, VA Activity Drops Year-over-Year

FHA originations rose significantly in the first quarter of 2016 from the same period last year even as VA loan production decreased slightly, according to an analysis of Ginnie Mae data. Lenders delivered $54.4 billion of FHA-insured loans to Ginnie Mae for securitization during the first three months, up 36.2 percent from the previous year. In contrast, the volume of VA loans securitized over the same period, $35.0 billion, fell 1.5 percent compared to the same period a year ago. A strong purchase-mortgage market drove FHA activity from January to March. The reduction in FHA’s annual insurance premium in January 2015 continued to have an impact on FHA’s purchase-loan market share. In 2015, FHA purchase originations accounted for $151.0 billion of the estimated $881.0 billion in total purchase originations (conventional and government single-family forward originations), according to ... [ 2 charts ]

June 3, 2016 - Inside MBS & ABS

Trustee Plans $420 Million MBS Suit Versus BAML, FDIC Settles Countrywide MBS Charges With Eight

HSBC Bank has filed a summons with notice in the New York State Supreme Court on Bank of America and Merrill Lynch to appear and face charges alleging complicity in the origination and sale of toxic mortgage loans that led to millions of dollars in losses to investors. Filed last week, the summons alleges that BofA, Merrill Lynch and Countrywide Home Loans were aware of the defects in approximately 1,359 residential mortgage loans that were securitized and sold to investors in 2007. The loans had an aggregate principal balance of $564.8 million. According to filing documents, Merrill Lynch purchased...

May 27, 2016 - Inside Mortgage Trends

Industry Tries to Keep Up With Demographic Change

Battered by a landslide of new regulations and the aftermath of an historic meltdown in the housing market, the mortgage industry also faces a dramatic shift in market demand from demographic changes and new generational attitudes. Although the overall U.S. homeownership rate has been sinking, the ownership rate for Hispanics actually went up in the fourth quarter of last year, said Marisa Calderon, executive director of the National Association of Hispanic Real Estate Professionals ...

May 27, 2016 - Inside Mortgage Trends

Private Equity Keeps Strong Interest in Fix & Flip

Private investors – and even some public ones – are maintaining a strong interest in nonagency/nonprime lenders as well as “fix-and-flip” financers, but that doesn’t always mean raising capital is easy. California Capital Real Estate Advisors, or CALCAP, has been trying to raise $100 million since late last year, but recently ended talks with an investor based in San Francisco, said company principal Mark Mozilo. Mozilo, though, hardly seems worried, telling Inside Mortgage Trends ...

May 27, 2016 - Inside Mortgage Trends

Bank Mortgage-Banking Profits Tumbled in 1Q16

Commercial banks and savings institutions reported a sharp decline in mortgage-banking income during the first quarter of 2016, according to a new analysis of call-report data by Inside Mortgage Trends. In aggregate, banks earned $3.31 billion on mortgage banking during the first quarter. That was down 26.8 percent from the previous period and it marked the lowest quarterly profit in nearly five years. Back in the second quarter of 2011 ... [Includes one data chart]

May 27, 2016 - Inside Mortgage Trends

Funding for Nonbanks a Growing Concern

Large losses suffered by nonbank mortgage companies in the first quarter of 2016 have contributed to concerns about the companies’ ability to fund their operations. In a report published last week, analysts at Bank of America Merrill Lynch noted that mortgage servicing rights are the primary assets for nonbank servicers. Low interest rates have prompted markdowns to MSRs under generally accepted accounting principles. “Lower MSR valuations ... [Includes one data chart]

May 27, 2016 - Inside Mortgage Trends

Whole-Loan Market Is So Deep and Varied That Sellers Have to Be Careful

The whole-loan trading market has become more dynamic as more loan originators get approval to sell directly to the agencies while still having the option to deal with aggregators, industry insiders said during a panel at the recent secondary market conference sponsored by the Mortgage Bankers Association. “It’s an over-saturated market for correspondent buyers,” said Michael Quinn, executive vice president for correspondent products at PennyMac Financial. There are about ...

May 20, 2016 - Inside FHA/VA Lending

VA Clarifies Guidance for Conveying Titled Properties to VA Secretary

The Department of Veterans Affairs has clarified the type of documents lenders would need to provide clear and marketable title for conveyed properties to the VA in all states and U.S. territories. Under VA rules, each conveyance or transfer of real property to the VA shall be acceptable if “the holder covenants or warrants against the acts of the holder and those claiming under the holder (e.g. by special warranty deed).” In addition, the conveyance would be acceptable if it entitles the VA Secretary to such title as is or if it is acceptable to prudent lenders, informed buyers, title companies and attorneys, generally in the community in which the property is located. The VA said its determination of clear and marketable title depends on state statutory requirements. As a general requirement, documents for proper conveyance of clear and marketable title to the VA include the ...

May 20, 2016 - Inside FHA/VA Lending

VA Issues New Servicing Guidance, Reminders on Foreclosures, Others

The Department of Veterans Affairs has issued new guidance and some servicing reminders in connection with mobile-home foreclosures, consent judgments, servicer transfers, liquidation appraisal fees and others. VA servicers must specifically refer to the mobile home in foreclosure declaration documents to ensure that both the home and the land are properly foreclosed, the VA said. Many states require two separate foreclosure procedures for every transaction – one to foreclose the interest on the land and the other to foreclose on the title of the mobile home. The VA said foreclosure on the title of the mobile home may have to be filed with state’s Department of Motor Vehicles (DMV). When a VA loan on a home on wheels is referred to foreclosure, the servicer must inform the foreclosing attorney that it is a mobile home and whether a DMV filing is required. The VA will reconvey the mobile home to the ...

May 20, 2016 - Inside FHA/VA Lending

Trade Groups Urge Congress to Reevaluate Appraisal Oversight

Trade groups representing lenders, homebuilders and appraisers have asked Congress to hold a hearing this year on the future of appraisal regulation. In a joint letter, five industry groups urged the Senate Committee on Banking, Housing and Urban Affairs to reevaluate oversight of the appraisal industry and the current federal regulatory structure for real estate appraisal. The committee last held an appraisal oversight hearing in 2004. Federal appraisal regulations have been untouched since the enactment of the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, the trade groups noted. In addition, the groups asked that both federal and state responsibilities be reassessed to see if they continue to serve consumers and market participants well, as well as promote competition in the marketplace. In addition to federal regulation, states regulate appraisers as well. The groups want to know from Congress whether federal oversight of appraisers is still necessary.

May 20, 2016 - Inside FHA/VA Lending

Attorneys See Potential Defense In Recent Circuit Court Rulings

Recent circuit court rulings may bolster FHA lenders’ defense against the government’s heavy use of the False Claims Act in FHA lending cases, according to industry attorneys. In the years following the financial crisis, the Department of Justice and the relators bar have used the FCA aggressively to target banks and nonbank mortgage lenders for losses incurred by FHA due to poor underwriting and false certifications. The DOJ and the Department of Housing and Urban Development have recovered billions of dollars through settlements with various mortgage lenders and servicers, using increasingly creative theories of liability to hold them responsible for FHA losses. This week, the DOJ filed a lawsuit in federal court in Washington, DC, accusing Guild Mortgage of improper origination and underwriting of FHA-insured mortgage loans from January 2006 through December 2011. As in ...

May 20, 2016 - Inside FHA/VA Lending

FHA Originations Decline in 1Q16, Production Improves Year-over-Year

FHA activity was lackluster in the first three months of 2016 as loan originations fell 7.8 percent from the prior quarter, according to Inside FHA/VA Lending’s analysis of agency data. The weak first-quarter production of $53.5 billion appeared to continue a trend from 2015, which saw the fourth quarter close with $58.1 billion, down significantly from $73.7 billion in the third quarter. In contrast, FHA originations fared better year-over year. Loan production was up 35.6 percent in the first quarter compared to the same period last year. Purchase lending totaled $36.5 billion in the first three months with overall production trending downward during the period. Borrowers in the 640-679 and 680-719 credit score ranges made up the bulk of new endorsements for January and February, the latest FHA data show. It is unlikely that trend will change even if March endorsements were added. Between all ... [ 2 charts ]


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