The mortgage servicing industry is continuing to sift through the massive new mortgage servicing final rulemaking issued last week by the Consumer Financial Protection Bureau. But one week into the review process, it seems clear that the cost of compliance and any strategic advantage between players is going to vary company to company, based less on size of the entity and more on the degree to which servicers have read the tea leaves ahead of time and started to prepare. “The reality is that there is lots of work to be done as an industry, regardless of your size or your portfolio mix,” said Michael Waldron, a partner and practice leader of the mortgage banking unit at the Ballard Spahr law firm. On the heels of the recent settlement of top bank servicing obligations under the consent orders related to robosigning practices, there has been...

It may be too early to declare an end to the cycle of servicers marking down the value of their mortgage servicing rights, but a new Inside Mortgage Finance analysis suggests that some large banks began raising their valuations in the fourth quarter. Across the board, all of the nation’s top five servicers – Wells Fargo, JPMorgan Chase, Bank of America, Citigroup, and U.S. Bancorp – increased the asset value of their MSRs in the fourth quarter of 2012, even though none of them reported significant growth in the unpaid principal balance of home loans serviced for other investors. Wells Fargo, the nation’s largest servicer with a market share of almost 19 percent, saw...[Includes one data chart]

Industry participants have mixed views on the outlook for joint ventures between lenders and real estate agents and homebuilders. Wells Fargo ended a significant number of its joint ventures in the second half of 2012, citing regulatory concerns, while just this week KB Home and Nationstar formed a mortgage company, suggesting the joint venture model is not exactly finished. In previous years, Wells had hundreds of joint ventures with Realtors but the lender said it dissolved most of them in the second half of 2012. “After careful analysis of market conditions and the impact of the regulatory environment on the business, Wells Fargo decided to dissolve several of its joint venture alliances,” a Wells spokesman said, noting that the lender would not comment on specific numbers for privacy reasons. Wells noted that it will not completely abandon...

Stringent appraisals have hindered home sales, limiting purchase-mortgage originations and constraining home prices, according to real estate agents responding to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Appraisers counter that they are accurately pricing homes and cite burdensome regulations along with new requirements from lenders trying to avoid buybacks. In certain circumstances, appraised home prices have been set well below listing price, frustrating sellers that have received multiple offers. “Appraisals continue to cause problems as the market is trying to recover value, but tight appraiser guidelines are not keeping up with the agreed sales prices between buyers and sellers,” according to a real estate agent in Michigan. The sales-to-list price ratio has trended...

The private mortgage insurance landscape is shifting in 2013 with the entry of a new MI provider, Genworth Financial’s announced plan to revamp its mortgage insurance business, and reports of a plan by Essent Guaranty to go public later this year. Fannie Mae and Freddie Mac last week approved National Mortgage Insurance Corp. as an eligible insurer, clearing the company’s entry into the U.S. mortgage insurance market with a scheduled launch in the first quarter of 2013. NMIC’s entry brings to seven the number of companies that are currently active in the MI market while three other companies are in a runoff mode. Earlier last year, NMIC parent NMI Holdings, Inc., raised...

The Consumer Financial Protection Bureau followed another mandate from the Dodd-Frank Act late last week, promulgating a final rule that requires mortgage lenders to provide applicants with free copies of all appraisals and other home-value estimates, and to inform consumers within three days of receiving an application for a loan of their right to receive copies of all appraisals. An applicant may waive the timing requirement for providing these copies, but must be given a copy of all appraisals and other written valuations at or prior to closing or account opening or, if the transaction is not consummated, within 30 days after the creditor makes a decision. While the rule prohibits...

Fannie Mae is informing the mortgage cooperatives it works with that going forward that all the different affinity groups doing business with the government-sponsored enterprise will be treated the same when it comes to guaranty fees and charges for its Desktop Underwriter program, Inside Mortgage Finance has learned. One executive close to the situation told Inside Mortgage Finance that action by Fannie essentially “equalizes” all cooperatives in terms of the pricing breaks they receive from the GSE. Some affinity relationships have been in place...

The non-agency jumbo MBS market in 2012 posted its best year since the cratering of the U.S. housing market and financial market collapse back in 2008, and increased regulatory clarity may spur the recovery further in 2013. A total of $3.46 billion of non-agency jumbo MBS were issued last year, according to a new ranking and analysis by Inside MBS & ABS. In the pre-crash years, that level of issuance didn’t add up to a decent week in productivity. But last year’s prime non-agency MBS issuance was...[Includes three data charts]

The ability-to-repay “qualified mortgage” final rule released last week by the Consumer Financial Protection Bureau will likely impair access to and the cost of jumbo and nonprime mortgage loans, in spite of the market clarity and certainty it provides, according to many market observers. Wall Street MBS analyst Laurie Goodman and the rest of her MBS strategy group at Amherst Securities said the implications for jumbo mortgage is that loans with debt-to-income ratios greater than 43 percent will not be made by most lenders, as these mortgages will not qualify for QM status. “The penalties for making non-QM mortgages can be...

Recent changes announced by the Basel Committee for pending capital standards will increase demand from private capital for non-agency MBS, according to industry participants, but some say the benefit may be muted. Last week, the Basel Committee adjusted the liquidity coverage ratio for Basel III capital requirements by expanding the definition for “high quality liquid assets” to include Level 2B assets. Among the assets newly eligible are certain residential MBS rated AA or higher, subject to a 25.0 percent haircut. “The Basel Committee made...