Trends & Profitability

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December 2, 2016 - Inside FHA/VA Lending

Around the Industry

US Court Issues Injunction on DOL’s Overtime Pay Rule. A federal judge in Texas granted states’ motion to block the Department of Labor’s controversial overtime pay rule set to take effect on Dec. 1, 2016. In late breaking news, the Department of Justice said it will appeal the injunction. The decision handed down by Judge Amos Mazzant of the US District Court for the Eastern District of Texas would deprive approximately 4.2 million workers who stand to benefit from the rule. Twenty-one states, a coalition of business organizations and the Plano Chamber of Commerce challenged the rule in separate amici briefs, arguing they stand to lose money if the final rule takes effect. The final rule would require employers to pay a higher salary level for certain employees to be exempt from overtime. In addition, it would automatically update the minimum salary level every three years. In his decision, Mazzant determined that ...


December 2, 2016 - Inside FHA/VA Lending

Groups Favoring One-Unit Approval, Differ on Owner-Occupancy Rate

Stakeholders voiced support for an FHA proposal to revive the agency’s single-unit approval policy for condominium financing but differed on owner-occupancy requirements. Both items are part of a proposed rule which would give the FHA more wiggle room in formulating its condo rules. The proposed rule’s 60-day comment period ended on Nov. 28. Among other things, the FHA is proposing to reinstate “spot approval” financing on individual units in condo projects that are not currently approved for FHA insurance. The Department of Housing and Urban Development terminated single-unit approvals a few years ago in favor of mandatory condo-project approval. Ultimately, the current approval process proved to be more cumbersome, resulting in many condo projects opting out of FHA. Under the proposed rule, single-unit approvals are limited to a maximum of 20 percent of the units in the ...


December 2, 2016 - Inside FHA/VA Lending

CFPB Issues New Exam Procedures For Reverse Mortgage Servicing

The Consumer Financial Protection Bureau has ditched the antiquated method for assessing servicer compliance with reverse mortgage-servicing rules in favor of new examination procedures. Depending on the scope, each reverse mortgage-servicing exam will include one or more of eight modules covering various facets of reverse mortgage servicing. There are two kinds of reverse mortgages. The FHA, under the Home Equity Conversion Mortgage program, insures most reverse mortgages. As with other FHA mortgage products, it has a maximum loan amount. Some lenders also offer proprietary (non-HECM) reverse mortgages, which are designed generally for borrowers with higher home values and more equity, the CFPB noted. Proprietary reverse mortgages are not federally insured. However, companies that offer them copy the consumer protections found in the HECM program, including ...


December 2, 2016 - Inside FHA/VA Lending

FHA Raises Loan Limits for HECMs, Forwards; VA Follows Freddie Mac

The FHA this week announced higher “floor” and “ceiling” loan limits for forward and reverse mortgages for 2017, pushing loan limits upward in certain metropolitan statistical areas by as much as $162,500. The loan-limit changes will take effect on Jan. 1, spurred by rising median home prices. The Case-Shiller Home Price Index for September reported that home prices increased 5.5 percent year-over-year, driven by a tight supply of homes for sale, especially in the West. Each year, FHA recalculates its loan limits based on 115 percent of the median house price in the area. For counties located in MSAs, the loan limit is calculated based on the highest-cost county within the MSA. Under the 2017 changes, FHA will raise its nationwide “floor,” or low-cost area mortgage limits, for one-unit properties to $275,665 from $271,050, a difference of $4,615. In high-cost areas, the loan-limit ceiling for a ... [ 2 charts ]


December 1, 2016 - IMFnews

Refis Fueled 3Q16 Originations, but Purchase Business Remained Robust

One notable change in the market over the past three years has been the gradual increase in cash-out refi lending.


November 28, 2016 - IMFnews

Final 3Q16 Tally: Brokers and Correspondents Gained Market Share, Retail Declines

In the broker/wholesale channel, United Wholesale Mortgage and Caliber Home Loans posted strong growth rates…


November 23, 2016 - Inside Mortgage Trends

Owner-Occupancy Threshold for Condos Too High

The FHA can be more flexible in insuring condominiums without increasing risk to the Mutual Mortgage Insurance Fund, according to a new analysis from the Urban Institute. The FHA proposed a rule in September that would give it more flexibility in formulating its condo rules. Specifically, FHA proposed to establish a permissible, minimum owner-occupancy range of 25 to 75 percent, while keeping the option of setting a minimum threshold within that range as ...


November 23, 2016 - Inside Mortgage Trends

Big Data Can Boost LO Productivity

Mortgage lenders are beginning to harness the power of big data to improve the increasingly expensive and often inefficient loan origination process, according to experts speaking on a panel at the recent Mortgage Bankers Association annual convention. Loan officer productivity has declined overall and varies greatly, according to Garth Graham, senior partner at the Stratmor Group. The top 40 percent of LOs generate 78 percent of mortgage originations, according to ...


November 23, 2016 - Inside Mortgage Trends

Bank Repurchases Up Again in Third Quarter

Bank mortgage repurchase activity rose again in the third quarter of 2016, although most of the increase is tied to Bank of America clearing up old buyback issues. Commercial banks and savings institutions reported $884.4 million in single-family mortgage repurchases and indemnifications during the third quarter. That was up 10.0 percent from the previous period and marked the third consecutive quarterly increase in repurchase activity ... [Includes one data chart]


November 23, 2016 - Inside Mortgage Trends

FICO Official Disputes Rival’s Mortgage Claims

A recent white paper from VantageScore Solutions claiming that millions of potential mortgage borrowers have been restricted from receiving loans due to “conventional” credit scoring models has prompted a strong response from officials at Fair Isaac. Joanne Gaskin, a senior director in Fair Isaac’s scores and analytics group, published a “truth squad” post on a FICO-related website addressing VantageScore’s claims. “Scoring sparse and old data may give more ...


November 23, 2016 - Inside Mortgage Trends

Infrastructure Key to Retaining Productive LOs

When deciding which lender to work for, high-performing loan originators put an emphasis on companies that have the infrastructure to help originate mortgages, according to a survey of LOs by Floify. The company, which provides a communication portal for lenders, borrowers and others involved in the origination process, recently surveyed LOs on recruitment and retention issues. The findings focused on LOs with at least $21.0 million in annual origination volume ...


November 23, 2016 - Inside Mortgage Trends

Many Mortgage Borrowers Feel ‘Buyer’s Remorse’

Just over one fifth – 21 percent – of homebuyers this year regret their choice of mortgage lender, according to a new survey by J.D. Power. For first-time homebuyers, that number jumps to 27 percent. “Overall satisfaction scores have increased year over year, but a high percentage of home buyers are remorseful about their mortgage lender selection,” J.D. Power said. Of those homebuyers who regret their decision, the firm found two distinct scenarios have unfolded ...


November 23, 2016 - Inside Mortgage Trends

Banks and Thrifts Report Surging Profits on Mortgage Banking in Third Quarter

Commercial banks and savings institutions recently wrapped up their best quarter in over a year in terms of mortgage-banking income, according to a new Inside Mortgage Trends analysis of call-report data. The industry racked up $5.18 billion in mortgage-banking income during the third quarter, a huge 44.6 percent increase over the three-month period ending in June. It was the best quarter in mortgage-banking income since the April-June cycle in 2015, when ... [Includes one data chart]


November 23, 2016 - IMFnews

Short Takes: Mortgage Apps Up, Mortgage Rates Up, Existing Home Sales Up

Mortgage applications rose 5.5 percent for the week ending Nov. 18, 2016, versus the prior week, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. The Refinance Index declined 3 percent from the previous week to its lowest level since January 2016. The seasonally adjusted Purchase Index increased 19 percent from one week earlier. …


November 23, 2016 - IMFnews

U.S. Court Issues Injunction Blocking DOL’s Overtime Pay Rule

In a development of keen interest to mortgage loan officers, a federal judge in Texas this week granted states’ motion to block the Department of Labor’s controversial overtime pay final rule set to take effect on Dec. 1, 2016.


November 23, 2016 - IMFnews

Banks and Thrifts Report Surge in Mortgage Banking Profits

Commercial banks and savings institutions racked up $5.18 billion in mortgage-banking income during the third quarter of 2016, a huge 44.6 percent increase over the three-month period ending in June, according to a new Inside Mortgage Trends analysis of call report data.


November 22, 2016 - IMFnews

Mortgage Market Missed Out on 1.1 Million Loans Last Year Due to Stringent Underwriting

The HFPC noted that most of the potential mortgages would have gone to borrowers with credit scores below 660, and to a lesser extent, to borrowers with credit scores between 660 and 700.


November 22, 2016 - IMFnews

Prices on Non-Distressed Properties Declined for Second Consecutive Month in October

Average prices on non-distressed properties sold in October were down 1.8 percent from the September and off 4.1 percent August.


November 21, 2016 - IMFnews

Short Takes: AIG to Acquire Mortgages / Interest Rates Under Trump / Ginnie Servicing Fee 'Inadequate' / $100,000 in MBA Scholarships

American International Group's plan to acquire residential mortgages is part of AIG’s effort to “rebalance” its exposure to mortgages after the sale of mortgage insurer United Guaranty to Arch Capital Group.


November 21, 2016 - IMFnews

Community Groups Help Convince Fifth Third to Increase Commitment for CRA-Related Mortgage Originations

Mortgage originations account for a large portion of the $2.50 billion increase to the $30.00 billion “community development plan.”


November 21, 2016 - IMFnews

Ellie Mae Dominant Among Providers of Loan Origination Systems

There were 159,523 active users of Ellie Mae's Encompass loan origination system in the third quarter, up 18.0 percent from a year ago.


November 18, 2016 - Inside FHA/VA Lending

Around the Industry

Industry Groups Urge Congressional Leaders to Pass ‘Tax Extenders’ Legislation. Three industry groups called upon House and Senate leaders to pass “tax extenders” legislation, including two critical tax provisions that are scheduled to expire at the end of 2016. In a joint letter this week, the Mortgage Bankers Association, National Association of Realtors and the National Association of Home Builders called for the “rapid enactment” of a broad “tax extenders” package, including mortgage-debt forgiveness and tax deduction for mortgage insurance premiums. Passing a legislative package of tax extenders that includes the two provisions would provide much-needed certainty to the residential real estate markets, the letter said. Federal Agencies Propose Rule to Expand Access to Private Flood Insurance. Federal banking and credit union regulators and the Farm Credit Administration have published a ...


November 18, 2016 - Inside FHA/VA Lending

Overall Delinquency Rate Improves For FHA, VA Loans in Third Quarter

FHA and VA loan performance improved in the third quarter of 2016 as the delinquency rate on government-backed loans declined on a seasonally adjusted basis, according to the Mortgage Bankers Association’s latest mortgage delinquency survey. The FHA delinquency rate fell by 16 basis points to 8.30 percent, its lowest level since 4Q97, with all categories – 30-days, 60-days and 90 days + past due – reflecting the decline. Over the quarter, the delinquency rate of FHA loans with payments 30 days past due dropped 4 bps from the previous quarter. Insured loans that were 60 days behind on their payments saw a 6 bps drop in their delinquency rate, while that for seriously delinquent loans fell 9 bps during the period. FHA mortgages showed some declines in performance on a non-seasonally adjusted basis. Approximately 8.70 percent of outstanding FHA loans were past due as of the end of the third quarter, up 25 bps from the ...


November 18, 2016 - Inside FHA/VA Lending

CFPB Study Finds Aggressive Refi Lenders to be Vets’ #1 Complaint

Aggressive refinance solicitation can be a double-edged sword for lenders: It could either result in increased VA refi business or, as the Consumer Financial Protection Bureau found out, consumer complaints. Since the CFPB began taking mortgage-related complaints in 2012, it has received more than 12,500 complaints from servicemembers, veterans, and their families. Of those complaints, 1,800 were related to VA refinancing. The VA offers two types of refinancing options to eligible borrowers – the VA cash-out refinance and the VA streamline refi, or Interest Rate Reduction Refinance Loan (IRRRL). In a cash-out refi, the veteran homeowner can refinance a VA or non-VA loan into a lower-rate VA loan and take cash out of home equity to pay off a debt, finance an educational pursuit or pay for a home improvement. The VA will guaranty up to the full value of the home. On the other hand, an IRRRL can only refinance a ...


November 18, 2016 - Inside FHA/VA Lending

U.S. Court Orders Quicken’s FHA Case Moved to MI District Court

The Department of Justice lost its bid to have an FHA lawsuit against Quicken Loans heard in the nation’s capital after a federal judge this week ordered the case transferred to federal district court in Michigan. Judge Reggie Walton of the U.S. District Court for the District of Columbia agreed with Quicken that the proper forum for adjudicating the government’s False Claims Act case is the Eastern District Court in downtown Detroit. While the court agreed that the case has national implications, it also noted the “strong local interest in this matter in the Eastern District of Michigan,” where “Quicken Loans underwrote the FHA loans at issue, endorsed those loans, and certified its compliance as to those loans.” While certain factors weighed against the transfer, the alleged unlawful activity occurred in or near Detroit, where the lender is headquartered and most of its employees are located. The case, U.S. v. Quicken Loans, ...


November 18, 2016 - Inside FHA/VA Lending

MMI Fund Continues Upward Arc, MIP Reduction Remains Uncertain

The FY 2016 Actuarial Review showed a stronger FHA mortgage insurance fund, thanks to a surging forward loan portfolio, but the prospect of a price adjustment remains unlikely. Review results were a mixture of good news and bad news. The good news is the Mutual Mortgage Insurance Fund’s economic net worth grew by $3.8 billion to $27.6 billion – $4.2 billion short of what last year’s actuarial report projected. The capital ratio rose to 2.32 percent, exceeding the 2.0 percent minimum established by Congress to cover future losses. Observers said the increases demonstrate steady but modest growth in the fund. The Department of Housing and Urban Development’s top officials credited the fund’s growth to a stronger forward-mortgage portfolio, which increased by $18 billion to $35.3 billion – $10.1 billion above projections – with a capital ratio of 3.28 percent. The report attributed the increase to a ...


November 18, 2016 - Inside FHA/VA Lending

Vibrant Purchase Market Fuels FHA, VA Originations in 3Q16

A strong purchase market helped push FHA and VA originations in the third quarter of 2016, according to an Inside FHA/VA Lending analysis of agency data. FHA forward originations increased by 17.4 percent from the second quarter for a total of $72.3 billion. That brought total FHA-insured loans originated over the first nine months to $187.3 billion, up 3.9 percent from the same period last year. Purchase mortgages comprised 70.0 percent of FHA’s total origination over the last three quarters. Quicken Loans reported only a 3.3 percent increase in FHA originations in the third quarter but still managed to retain its top ranking with $10.8 billion in FHA originations in the first nine months of 2016. Freedom Mortgage worked extra hard, ending the nine-month period with $5.0 billion on the strength of refinances. Third-quarter originations were up 69.6 percent from the prior quarter, and up 51.4 percent for the ... [ 4 charts ]


November 14, 2016 - IMFnews

A Downside of the Trump Election: Rising Rates; IMA: MSR Sales May Boom

Rising interest rates – as long as they don’t rise too much – could spark a boom in servicing sales, predicted Tom Piercy of Incenter Mortgage Advisors.


November 14, 2016 - IMFnews

Publicly Traded Nonbanks See Improvement in 3Q16 Earnings – But Not All Share in the Good Times

Stonegate Mortgage, Ocwen Financial and Nationstar Mortgage all recovered from second-quarter losses with net profits during the most recent cycle.


November 11, 2016 - Inside The GSEs

GSE Earnings Up Again in 3Q, Groups Renew Recap Calls

Fannie Mae and Freddie Mac posted combined net income of $5.53 billion for the third quarter of 2016, representing their strongest cycle since the second quarter of 2015. Despite a mandated declining portfolio, the GSEs are beneficiaries of strong guarantee fees, which help drive income. Freddie more than doubled its net profit from the previous quarter to $2.33 billion. This was the company’s best performance since the $4.17 billion earned in the second quarter of 2015. Freddie attributed the gain to robust g-fee income and a steep reduction in hedging losses. Fannie’s net income was up for the quarter to $3.20 billion, also its strongest since earning $4.64 billion back in the second quarter of last year, and up from...


November 11, 2016 - Inside Mortgage Trends

Tech Opportunities and Regulatory Challenges

Balancing technological advances in the mortgage space with safety and soundness can be challenging, but it should be considered a priority, according to industry experts on a recent panel in Washington, DC, sponsored by the Urban Institute and CoreLogic. Quicken Loans launched its Rocket Mortgage early this year at a time when an avalanche of new regulations had the industry back on its heels. “While many in the industry were playing a lot of defense, and rightfully so ...


November 11, 2016 - Inside Mortgage Trends

Tough Market for Younger First-Time Homebuyers

The average age of first-time homebuyers tied a record high this year, and many potential first-time homebuyers are having difficulties finding affordable properties and saving for a downpayment, according to the National Association of Realtors. NAR’s annual profile of homebuyers and sellers found that the median age of first-timers was 32, up from 31 over the past five years. First-time homebuyers accounted for 35.0 percent of home purchases in 2016, up from a ...


November 11, 2016 - Inside Mortgage Trends

Growth Market Seen in Borrowers 55 and Older

Homebuilders are optimistic about the rising trend in the housing market for persons 55 years of age and over. The National Association of Home Builders’ 55+ Housing Market Index showed an increase of two points to 59 in the third quarter from the previous quarter. That marks the 10th consecutive quarter in which the index has risen above the break-even point of 50, according to the trade group. The two-point increase suggests that more builders view housing-market conditions ...


November 11, 2016 - Inside Mortgage Trends

Loan Officers Need to Adopt Social Media

Social media and mobile-digital communications have already reshaped a number of industries, and mortgage banking isn’t going to be any different, according to a leading guru in the field. Many of today’s loan officers are going to become obsolete unless they adapt to rapidly shifting consumer expectations, said Clara Shih, CEO and founder of Hearsay Social, during a session at the recent annual convention of the Mortgage Bankers Association. Although there are some ...


November 11, 2016 - Inside Mortgage Trends

Some Mortgage Firms Continue to Hire

As yearend approaches, growth-minded nonbank mortgage firms continue to hire new workers while commercial banks are taking a cautious “wait-and-see” approach, according to interviews conducted by Inside Mortgage Trends over the past two weeks. “We continue to grow and are currently hiring across the board – technology, mortgage banking, underwriting, marketing and more,” said Jordan Fylonenko, a spokesman for nonbank Quicken Loans, the nation’s second ...


November 11, 2016 - Inside Mortgage Trends

Slight Shift to Less Risky GSE Loans in 3Q16

Mortgage lenders delivered a slightly less risky assortment of single-family loans into Fannie Mae and Freddie Mac mortgage-backed securities during the third quarter of 2016, according to a new Inside Mortgage Trends analysis. Some 11.62 percent of purchase mortgages securitized by the two government-sponsored enterprises had low credit scores and high loan-to-value ratios during the third quarter, down from 11.79 percent in the previous ... [Includes two data charts]


November 11, 2016 - Inside Mortgage Trends

PennyMac Pins Higher Profits on Hedging Strategy

PennyMac Financial Services continued to excel in terms of profitability in the third quarter, as officials cited a “distinctive” hedging strategy, among other efforts. PennyMac had $122.3 million in net income in the third quarter of 2016, up 64.6 percent from the previous period and nearly double the net income it reported a year ago. While interest-rate volatility tends to wreak havoc on earnings, Stanford Kurland, PennyMac’s chairman and CEO, said better-than-expected hedging ...


November 11, 2016 - Inside Mortgage Trends

Public Nonbanks See Improvement in Mortgage Banking, But Some Struggle

The nine major publicly traded nonbanks active in mortgage banking saw a significant improvement in earnings during the third quarter, but two firms continued to book losses, according to a new Inside Mortgage Trends analysis of quarterly earnings reports. As a group, the nine nonbanks generated $129.7 billion in mortgage-banking income during the third quarter, a major improvement from their combined $339.5 million loss in the previous period ... [Includes one data chart]


November 11, 2016 - IMFnews

RE/MAX Releases Details on Mortgage Brokerage Launch. Initial Fee of $20K

RE/MAX promises that its new loan brokerage franchise concept is RESPA compliant...


November 10, 2016 - IMFnews

NY Regulators Fine PHH $28 Million for Origination and Servicing Problems

PHH officials say the company has improved its servicing operations in recent years and agreed to the consent order “to avoid the distraction and expense of litigation.”


November 10, 2016 - IMFnews

MI Industry on Track for Best Year Ever. Arch Posts Strongest Growth Rate Among the PMIs

FHA endorsements rose 16.6 percent from the second quarter and VA loan guaranty production increased 20.3 percent…


November 9, 2016 - IMFnews

Walter Investment Posts $101 Million Loss for 3Q; Originations Increase 13 Percent

Walter also agreed to sell $5 billion in servicing rights to New Residential Mortgage LLC.


November 8, 2016 - IMFnews

Shellpoint Plans First Non-Agency MBS in More than a Year

Shellpoint is the parent of New Penn Financial and Shellpoint Mortgage Servicing, both top-50 players…


November 8, 2016 - IMFnews

Redwood Boosts 3Q Income with Above-Average Margins on Jumbo Operations

Redwood sold $774.0 million of home mortgages into a welcoming whole loan market along with a $358.00 million jumbo MBS…


November 8, 2016 - IMFnews

Jumbo Originations Show Signs of Decline at Certain Banks

EverBank – which is in the process of being sold to TIAA – originated $869.8 million of jumbos in 3Q16, a 1.5 percent sequential decline, and down 28.7 percent from the third quarter of 2015.


November 7, 2016 - IMFnews

As the Holidays Approach, Mortgage Bankers Still Hiring ‘Like Crazy’?

“We’re still hiring a lot,” said United Wholesale CEO Mat Ishbia.


November 7, 2016 - IMFnews

Florida Supreme Court Sets Precedent Favoring Servicers in Foreclosure Case

Almost six years after the initial foreclosure complaint was filed, the same borrower was facing a subsequent foreclosure action due to another default on the mortgage…


November 4, 2016 - IMFnews

PennyMac Financial Sets Company Record on Correspondent Volume; Will Use Brokers by Mid-Year 2017

By midyear 2017, PennyMac Financial will be table funding mortgages through third-party loan brokers.


November 4, 2016 - IMFnews

The Key to the New Fannie/SoFi Cash-out Refi: Cutting the G-Fee

Early next year, Fannie Mae will open up the program to other seller/servicers…


November 4, 2016 - IMFnews

Agency MBS Issuance Slumped in October, but Still Healthy Overall

Wells Fargo once again ranked first among all agency sellers with $17.6 billion sold to Fannie, Freddie and Ginnie. Quicken was second with $8.46 billion.


Poll

In 2016, what have you been paying your retail residential loan officers, on average, as a commission?

25 to 50 basis points per loan
51 to 75 bps
76 to 100 bps
101 to 150 bps
More than 150 bps
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