An entirely new mortgage market was formed on Jan. 10, 2014, but it remains to be seen who is in it, who will get in and what the sector will be made of. The landing of the ability-to-repay rule two weeks ago created two categories of qualified mortgages – prime and nonprime – plus a non-QM market. The new rule is going to limit the opportunities for lenders to move beyond the ultra-conservative standards of the past few years, but it won’t prevent a gradual expansion of credit ...

With residential loan production expected to decline by at least 30 percent this year, bank originators are looking at ways to cut costs without damaging their ability to handle an unexpected uptick in applications should rates unexpectedly fall. According to both lending executives and outsourcing firms, inquiries are picking up at vendors that process, underwrite and close residential mortgages. “The banks are tired of ramping up and then cutting back,” said Jeffrey Taylor, managing partner at Digital Risk ...

The fee increases and stiffer mortgage-insurance requirements implemented on FHA mortgages in the past year have helped reduce the agency’s share of originations to first-time homebuyers. First-time homebuyers have traditionally been heavily reliant on FHA financing and that continues to be the case, though the FHA’s dominance has declined significantly in the past year. At the start of 2013, FHA mortgages were used in about one of every two home purchases by a first-time buyer ... [Includes one data chart]

Fannie Mae and Freddie Mac combined did less business in single-family mortgage-backed securities in 2013 than the previous year while a growing share of business came from small and mid-sized lenders, according to an Inside The GSEs analysis. For the year, the two GSEs produced $1.161 trillion in single-family MBS, down 8.4 percent from their overall production in 2012.

Fannie Mae’s and Freddie Mac’s home-retention activity declined for the most part during the third quarter of 2013, according to a new analysis of Federal Housing Finance Agency data by Inside The GSEs. Total loss mitigation activity – total home-retention efforts and foreclosure activities combined – declined 8.3 percent during the third quarter to 152,101 and was down 21.3 percent from a year-ago.

A steady decline in GSE refinances throughout 2013 coupled with faltering purchase mortgage activity during the final third of the year helped contribute to an overall dip in the volume of single-family mortgages securitized by Fannie Mae and Freddie Mac both on a month-to-month and year-end basis, according to a new Inside The GSEs analysis. Fannie and Freddie issued $55.8 billion in single-family mortgage-backed securities in December, a 4.9 percent decline from November.

FHFA Launches ‘Servicing Project’ to Watch Counterparty Risk. The Federal Housing Finance Agency has launched what industry officials have labeled “a servicing project” to keep an eye on all large servicing sales where the underlying collateral is guaranteed by Fannie Mae and Freddie Mac. Sources briefed on the effort said the FHFAis now officially asking that the GSEs get agency approval for any sales of mortgage servicing rights where 25,000 or more in loans are being transferred. This translates into deal sizes of at least $5 billion.

Fannie Mae and Freddie Mac are poised to see enhanced competition in the multifamily mortgage-backed securities market in 2014, but it remains to be seen whether the GSEs’ regulator will follow through on proposed restraints on their multifamily footprint. The two GSEs await fresh direction from the FHFA in terms of any possible further constriction of their multifamily activity, after they were directed in 2013 to reduce their multifamily loan purchases by 10 percent from the previous year.

Fannie Mae has signed a definitive agreement to buy $10.3 billion of mostly delinquent mortgage servicing rights from Citigroup for an undisclosed sum. Roughly 64,000 Fannie-backed loans are involved in the transaction. The GSE confirmed the sale last week. It plans to transfer the receivables to one of its specialty servicers, but declined to say which one. It has about five, including the IBM-owned Seterus and Walter Investment.

Fannie Mae’s process for paying for servicer property inspections has “significant control deficiencies,” prompting the official watchdog of the Federal Housing Finance Agency to conclude that additional agency oversight is required, according to a new report. The audit by the FHFA’s Office of Inspector General estimated that some 9.5 percent of claims for pre-foreclosure property inspections in 2011 and 2012 resulted in $5 million in overpayments by Fannie. GSE guidelines require servicers to perform a monthly inspection on all delinquent properties.