With balances on non-agency MBS issued before the financial crisis falling to levels where clean-up calls can be initiated, clean-up call activity is rising with prospects for further growth. Rights to clean-up calls on non-agency MBS can typically be exercised when the outstanding balance of the MBS is lower than 10.0 percent of the original balance. The owner of the call rights (typically the master servicer) can purchase loans from the pool at par plus expenses and make a profit by selling or re-securitizing performing loans at a premium and retaining distressed loans to modify or liquidate. According to Bank of America Merrill Lynch, about 37 deals have been called this year totaling about $800 million in unpaid principal balance ...
The average daily trading volume in agency MBS totaled $219.3 billion in July, the best reading in 18 months, according to the Securities Industry and Financial Markets Association. However, the sequential improvement was a mere 3.30 percent. Then again, any gain is better than none. For all of 2016, the worst reading came in March at $189.4 billion. The strong showing (relatively speaking) comes as the primary market has produced a better-than-expected $890 billion for the first six months of 2016. Some industry executives believe loan originations could top $2 trillion this year, which would increase the supply of outstanding MBS. For the past few years there has been a debate in the industry about the significance of lower trading ...
A New York State Supreme Court judge recently signed off on JPMorgan’s proposed $4.5 billion settlement with a revised list of MBS trusts, while three other Wall Street banks lost in separate bids to have MBS claims against them dismissed. On Aug. 12, Justice Marcy Friedman of the New York State Supreme Court approved JPMorgan’s representation-and-warranties settlement offer for 319 MBS trusts. She concluded that the trustees exercised their discretionary power reasonably and in good faith in accepting the settlement. JPMorgan and a group of 20 large institutional investors that hold approximately 32.5 percent of the securities issued by the MBS trusts negotiated the settlement. Among these prominent investors were Fannie Mae, Freddie Mac and the Federal Home Loan Bank ...
The Treasury Market Practices Group recently changed its recommended fails-charge trading practice for agency debt securities and U.S. Treasury securities by altering how the minimum threshold in these markets is applied, effective as of next month. “Instead of applying the exemption on a per trade basis, the TMPG recommends aggregation of fails charges between two counterparties for a given calendar month,” the group said in an announcement after its latest meeting. “A claim is made if the aggregate charges for fails with a counterparty for a given calendar month exceed $500.” In other words, the TMPG recommends an exemption for aggregate cumulative fails charges of $500 or less for U.S. Treasury securities fails, agency debt securities fails, and agency MBS ...
Recent rulings in Nevada favor the mortgage industry when it comes to super-liens imposed by homeowners associations on loans in foreclosure. Twenty-two states have super-lien laws that allow HOAs to take priority over first mortgages and foreclose the property to collect up to six months of unpaid fees. In 2014, the Nevada Supreme Court ruled that an HOA could extinguish a senior mortgage. But the Ninth Circuit Court recently ruled that an HOA foreclosure sale extinguishing the first deed of trust is unconstitutional. In the case of Bourne Valley Trust v. Wells Fargo Bank, the court ruled that Bourne Valley seeking to purchase the property at an HOA foreclosure sale violated the first-lien holder’s due process rights. Attorneys at Bradley ...
Commercial banks and savings institutions reported a combined $3.581 billion in mortgage-banking income during the second quarter of 2016, according to a new Inside Mortgage Trends analysis of call reports. That was up 8.3 percent from the $3.307 billion the industry reported for the first quarter of 2016. For the first six months of the year, banks reported $6.888 billion in mortgage-banking profits, down 31.7 percent from the same period in ... [Includes one data chart]
Publicly traded nonbank mortgage companies had widely varying results on their mortgage-banking operations during the second quarter as heavy losses reported by two firms pulled the group’s earnings underwater. Nine nonbanks reported a combined net loss of $339.5 million on mortgage-banking activity for the second quarter. That was actually an improvement over the $510.0 million the group lost in the first three months of the year. Nationstar ... [Includes one data chart]
The mortgage lending industry continues to lag behind the level at which proponents of electronic mortgages – otherwise known as eMortgages – think lenders should be in adopting the technology. A recent survey by Fannie Mae and Freddie Mac reveals that there are still plenty of obstacles across a range of issues and pain points. “We found that eMortgage adoption continues to gain traction with lenders; however, the adoption has been slow due to ...
With residential origination costs constantly rising, should rank-and-file loan officers worry that their jobs will eventually be automated away thanks to advances in technology? The thinking goes like this: Lenders are spending hundreds of million dollars a year in software upgrades to automate as many LO functions as they can. The ultimate goal is to reduce the number of loan officers and whittle down costs. Depending on where they work, mortgage loan officers can earn ...
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