Just when you thought the debate over fair value and historical amortized cost has faded into the sunset, along comes a new empirical study that reinforces the view that fair-value calculations are a better predictor of bank failure. Published by the American Accounting Association, the study suggests that leverage based on fair value provides the earliest signal of financial trouble – at least two to three years prior to failure compared to other measurements. This finding is consistent with ...
Officials at Redwood Trust took pains last week to defend differences in the real estate investment trust’s business model compared with other REITs that focus on investing in mortgage-backed securities. Some investors have been critical of low dividend payments from Redwood, but the REIT said its dividend payments are not directly comparable to other REITs. “Analysts and investors puzzle about how to categorize Redwood and how to value our company,” Martin Hughes and Brett Nicholas ...
It shouldn’t be a surprise if mortgage lenders are suffering from loan originator compensation regulation fatigue. “The industry has been in a constant state of implementation regarding LO comp and LO qualification since 2009,” said Amy Thoreson Long, senior counsel in the consumer lending division of Wells Fargo’s law department, during a webinar hosted yesterday by Inside Mortgage Finance, an affiliated newsletter. The bad news is, things will get much worse in that regard before they get better, thanks to ...
Although JPMorgan Chase plans to chop 15,000 mortgage-related positions by the end of 2014 and Wells Fargo has closed roughly 90 residential lending joint ventures in the past 12 months, the immediate future for employment is actually decent. Keep in mind that hiring trends are specific to industry niches. Vendors that work on due diligence and foreclosure reviews – such as Allonhill LLC, The Clayton Group and Promontory Financial – have been cutting contract workers for months as ...
During the height of the housing boom, “80-10-10” loan structures became very popular and caused headaches for mortgage insurance firms that lost business to these arrangements, which dodged the need for traditional MI coverage. As the mortgage and housing markets continued on a downward spiral, a new variant emerged that allowed borrowers to take out a conforming first mortgage for 80 percent of the house value and finance the rest with a 20 percent home equity loan. Both versions went the way of the dinosaur ...
Mortgage banking operations owned by banks and thrifts – and that’s most of them – posted their most profitable year ever in 2012, but the tide clearly appeared to be turning in the fourth quarter. A new Inside Mortgage Trends analysis of call report data shows that banks reported a whopping $31.925 billion in non-interest income from their mortgage banking operations. That was more than six times the $5.240 billion they earned back in 2011, a year when industry-wide results were ... [Includes one data chart]
Many mortgage bankers are bracing for a slowdown in originations this year, but they have an even larger concern on their hands: whether Fannie Mae and Freddie Mac will hike their net worth minimum currently set at $2.5 million. The GSEs and their regulator have said little on the subject, but there is rampant speculation that it’s only a matter of time before higher net worth minimums are introduced – it’s just a matter of when,…
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