Commercial banks reported a robust $4.91 billion in mortgage banking earnings during the third quarter of 2011, according to a new analysis of bank call report data by Inside Mortgage Trends. Mortgage banking income was up 52.8 percent from the three months ending in June, reaching the industry’s highest level since the end of 2009. Despite the improvement, year-to-date mortgage banking earnings were still down 4.8 percent from the first nine months of 2010. The surge in mortgage banking earnings resulted from increased loan origination and secondary market activity. Banks reported...(Includes one data chart)

A proposed radical shift in how lenders are paid for servicing Fannie Mae and Freddie Mac mortgages would make the business less feasible and skew the competitive landscape even more than it is, according to the Mortgage Bankers Association. In a comment letter to the Federal Housing Finance Agency, the MBA said the regulator and the two government-sponsored enterprises ought to shelve their controversial plan to reform servicing compensation. The FHFA and the GSEs have focused on two alternatives: a fee-for-service model favored by the agencies, and an industry proposal to reduce the...

The number of settlement problems as an overall percentage of market closings has increased in past months as on-time settlements plunged to 47 percent from 65 percent, according to the latest survey by the National Association of Realtors. Respondents to a monthly NAR survey cited problems with obtaining mortgages along with appraisal and inspection problems as causes of settlement delays and cancellations. The inability to obtain a mortgage was reported by 9 percent of respondents in October as causing a settlement cancellation, up from 4 percent in September. Asked whether they had any problems in...

This week, the Mortgage Bankers Association announced it was bringing the Mortgage Industry Standards Maintenance Organization back into its fold after a more than two-year stint with Mortgage Electronic Registration Systems Inc., a move likely to benefit the mortgage lending industry at large as well as the three participating entities. Management of MISMO transferred back to the MBA on Dec. 1, 2011, under the terms of a deal announced back in September by MERSCorp. and the MBA. “MERSCorp successfully managed MISMO during an important period of technical and technological development for...

Some large banks may be re-thinking their commitment to the mortgage business and creating opportunities for a number of mid-sized firms, according to analysts at FBR Capital Markets. Servicing problems and mounting repurchase demands have pushed some large banks to allocate less capital to mortgage banking and slowed their originations, FBR analysts said. “This has created an opportunity for smaller players to step up and fill the void while still attaining healthy margins,” the company added. FBR specifically pointed to PHH Mortgage, U.S. Bank, Quicken Home Loans, Provident Funding, BB&T and...

Home prices remain under stress. The CoreLogic Home Price Index shows that home prices have decreased 1.3 percent from September to October, making it the third consecutive month in which home prices have been on a downward slide. Looking at it from a wider scope, national home prices (including distressed sales) have decreased 3.9 percent from Oct. 2010 to Oct. 2011. Excluding distressed sales, Oct. 2011 posted a 0.5 percent yearly decline. States in the best shape, when including distressed sales, are West Virginia, with 4.8 percent price appreciation; South Dakota, with 3.1 percent...

Refinance originations increased sharply during the third quarter, but relatively little of the gain came from the government’s streamlined program for borrowers with little or no equity. Analysts do expect an uptick in activity under the revamped Home Affordable Refinance Program, but many are braced for lackluster results. A total of $192.0 billion of refi loans were originated during the third quarter, up 31.5 percent from the previous three-month period. While that was significantly greater than the 7.3 percent growth in purchase-money...(Includes three data charts)

The Department of Housing and Urban Development is weighing a number of options, including raising insurance premiums for the FHA Mutual Mortgage Insurance Fund as political concerns grow that the program may need a taxpayer bailout. Testifying before the House Financial Services Committee last week, HUD Secretary Shaun Donovan said he plans to include premium increases and other proposals in the department’s fiscal 2013 budget proposal to bring the FHA’s excess capital reserves back to the required level. Donovan said the FHA continues to evaluate policy options to...

The dust is starting to settle over an increasingly complex landscape of agency loan limits for 2012 that features 83 defined metro markets where the FHA can insure loans that are too big to be financed by Fannie Mae or Freddie Mac. The Department of Housing and Urban Development this week released guidance on FHA loan limits that changed twice in calendar 2011. On Oct. 1, a new set of FHA loan limits based on a $625,500 maximum went into effect, and they will apply to loans with FHA case numbers assigned between that date and Nov. 17, said...(Includes one data chart)

President Barack Obama and his Democrat allies on Capitol Hill initiated a multi-prong attack against their Republican opponents this week in an effort to put them on the hook in the 2012 election over their refusal to allow an up-or-down vote on Richard Cordray, the president’s nominee to head the controversial Consumer Financial Protection Bureau. The initiative started this weekend, when the White House released a report and began an accompanying media blitz, warning of the dangers American consumers face in the financial marketplace without a director at the...