May 18, 2017

Latest from Inside Mortgage Finance

Total conventional conforming mortgage originations fell by 36.6 percent from the previous quarter according to estimates from Inside Mortgage Finance

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Major Product Categories All Saw Big Drops In 1Q17 Originations; GSE Market Pounded

Nonprime products such as subprime and non-qualified mortgage loans held up better than industry mainstays during the sharp drop in origination volume in the first quarter of this year, according to a new Inside Mortgage Finance ranking and analysis. Conventional conforming remained the biggest component of the market, accounting for 53.0 percent of first-lien mortgage originations in the first three months of 2017. But the estimated $204.0 billion of such loans produced during the period was down 36.6 percent from the fourth quarter. Government-insured lending was...[Includes two data tables]

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The MSR Sales Market Heats Up: More Buyers And Prices Firm Up. What Could Go Wrong?

Although bulk transfers of mortgage-servicing rights were down somewhat in the first quarter, sales advisors are reporting strong activity for the period including more buyer interest and a firming up of prices, even on Ginnie Mae product. According to affiliated newsletter Inside Mortgage Trends, bulk agency MSR transfers that closed in the first quarter were down 35.9 percent from the fourth to $77.3 billion. The biggest downturn was in Fannie Mae product, due to a temporary freeze on bulk transfers as servicers adjusted to new investor reporting requirements. Freddie Mac transfers were actually up from the fourth quarter. More banks and consortiums are extending...

Delinquencies Resume Downward Trend in 1Q17, Slight Uptick in Foreclosure Starts

Mortgage performance improved in the first quarter of 2017, recovering from a somewhat unexpected increase in delinquencies at the end of 2016. The total delinquency rate in the Inside Mortgage Finance Large Servicer Delinquency Index was 4.28 percent as of the end of March, down from 5.05 percent at the end of the previous quarter and improving on the 4.95 percent delinquency rate recorded in March 2016. Among the 32 servicers in the large delinquency index, only two reported...[Includes one data table]

Feature Stories

Inside the CFPB

Hensarling Slams Cordray for Appearing at Democrat Event

CFPB Director Richard Cordray, in an unusual move, attended the weekly caucus meeting of the Democrats in the House of Representatives last week. That prompted his chief GOP antagonist, House Financial Services Committee Chairman Jeb Hensarling of Texas, to say Cordray’s appearance shows that Democrats use the CFPB as a political war machine. “Everyone knows Mr. Cordray will likely leave the CFPB soon and pursue political office in Ohio again, but his attendance at what amounts to nothing more than a Democrat pep rally shows just how partisan and politicized he and his supposed ‘independent’ agency truly are,” the Republican said. According to Hensarling, liberal elites in Washington, DC, want to keep the bureau unaccountable to the American people so ...

Inside Mortgage Trends

Legacy Buyback Issues Fade Further Into the Rearview Mirror in Early 2017

Mortgage originators and the government-sponsored enterprises in the first quarter of 2017 continued to distance themselves from the contentious sparring over repurchase demands related to loans sold to Fannie Mae and Freddie Mac prior to the housing market collapse. An exclusive Inside Mortgage Trends analysis of GSE repurchase disclosures shows a spike upward in total repurchases during the first quarter, but the move was linked to ... [Includes two data charts]

Inside MBS & ABS

REIT MBS Holdings Grew Slightly in 1Q17, and Change in CRT Programs Could Boost It Further

Real estate investment trusts that focus on the MBS market recorded a modest increase in their MBS holdings during the first quarter of 2017, according to an Inside MBS & ABS analysis. And observers say a pending change in how Fannie Mae and Freddie Mac structure their credit-risk transfer programs may boost REIT participation further. The 15 mortgage REITs tracked by Inside MBS & ABS reported a combined $230.82 billion of MBS investment at the end of March, including assets held in the to-be-announced market. That was up 1.6 percent from the end of 2016, though it was still off from year-ago levels. Some 91.8 percent of REIT MBS holdings are...[Includes one data table]

Inside The GSEs

FHFA’s Capital Buffer Plan Draws Praise, Criticism and Questions

Federal Housing Finance Agency Director Mel Watt’s comments last week that he’s prepared to allow the GSEs to build a capital buffer to avoid a Treasury draw was met with both applause and concern. But this week, Bob Ryan, special director to Watt, clarified the comments stating that the plan would entail delaying the dividend payments to the U.S. Treasury Department and not suspending them. Ryan, speaking during a credit-risk transfer symposium in New York City, kicked off the first five minutes of a panel discussion about GSE reform by talking about the potential capital buffer plan. He said that it would be done strictly for the purpose of avoiding draws on the “limited resources of the preferred stock purchase agreement.”

Inside Nonconforming Markets

Jumbo Lending Fell 29% in Early 2017, Refinance Slowdown a Factor

Originations of non-agency jumbo mortgages in the first quarter of 2017 were down by 29.0 percent from the previous quarter, according to a new ranking and analysis by Inside Nonconforming Markets. A decline in refinance activity contributed to the sharp drop in jumbo funding. An estimated $71.00 billion of non-agency jumbos were originated during the quarter. Not only did volume fall significantly from the fourth quarter of 2016, production was ... [Includes one data chart]

Inside FHA/VA Lending

Nonbanks Dominate FHA Primary Market; Volume Slowed in 1Q17

Nonbank lenders far out-produced depository institutions in originating FHA mortgages during the first quarter of 2017. A new Inside FHA/VA Lending analysis reveals that nonbank lenders produced over 83 percent of FHA forward loans endorsed during the first quarter. With over 8,000 entities listed as originators and sponsors in FHA loan-level data, the overwhelming majority of them were independent mortgage banks, mortgage brokers and other nonbank lenders. The 14 largest FHA originators were all nonbanks, led by Quicken Loans, Freedom Mortgage and loanDepot. One sign of the overwhelming fragmentation in the FHA primary market is the fact that these three lenders accounted for just 11.3 percent of first-quarter endorsements. The largest depository originator of FHA loans was PrimeLending, an affiliate of PlainsCapital Bank. It ranked 15th in production with a ... [charts ]

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