Earnings reports from nine mortgage banking operations suggest that servicing operations played a major part in the industry’s sharp downturn in profitability during the first quarter. But a new Inside Mortgage Trends analysis also identifies weakness in loan production operations and declining origination volume as key factors. The nine lenders, including the three largest firms and seven of the top 10 originators, posted a combined $1.726 billion in net servicing income during the first quarter of this year. That was down ... [includes one data chart]

Mortgage banking income was hit hard by rising expenses and declining production during the first quarter of this year, with more companies failing to generate a net profit from their business, according the Mortgage Bankers Association’s most recent performance report. The average firm participating in the MBA survey reported $617,000 in pretax income during the first quarter, down 60 percent from the fourth quarter’s average $1.56 million. Only 63 percent of lenders reported a net profit for the first quarter, down from 84 percent in the final three months of 2010. Mortgage bankers reported ...

Fannie Mae made a splash this week with the announcement that it has recruited a Capital One executive to be the company’s new chief financial officer — the GSE’s third CFO since its government takeover in September 2008.Fannie named Susan McFarland executive vice president and CFO to replace David Johnson, who resigned at the end of last year.

Purchasers of distressed mortgages or residuals seeking to service their own portfolio but not wanting to build or buy a servicing platform may take advantage of Ocwen Financial’s new product, PlatformPlus. PlatformPlus is a turnkey servicing operation specially designed for investors in nonperforming mortgages or residuals of non-agency securities that want to get more value from their loans. In discussions with hedge funds and other investors in distressed assets, Ocwen Financial found a desire among these entities for special servicing technology and expertise without having to ...

Occupancy fraud risk increased by 25 percent during the first quarter of 2011, wiping out four straight quarters of decline, according to a quarterly report released by Interthinx. Occupancy fraud occurs when investors say they intend to live at a certain property, but maintain their primary residence elsewhere. The goal is the lower downpayment and lower interest rate that comes with living in a home. The Miami and Detroit metro areas are the riskiest in terms of occupancy fraud – and have been for the last five quarters. Reno, NV, Orlando, and Charleston, SC, round out ...

Fannie Mae and Freddie Mac shareholders would fall to the very back of the line of creditors under the terms of a new rule submitted to the Federal Register by the Federal Housing Finance Agency.The FHFA’s final rule follows up on its proposed rule released last year to codify the Finance Agency’s terms of conservatorship and receivership operations for Fannie, Freddie and the Federal Home Loan Banks.

Fannie Mae and Freddie Mac’s management and decision making authority, both present and past, would be subject to special Congressional scrutiny under a bill filed by Rep. Marcy Kaptur, D-OH, earlier this month.The bill, H.R. 2093, would establish the Fannie Mae and Freddie Mac Investigative Commission, composed of eight congressional lawmakers, to examine the practice, decisions and policies of the two GSEs that affect the financial stability of the mortgage firms.

A bill that would create a legislative framework for a covered bond market in the U.S., as well as a potential competitor for the Federal Home Loan Bank system, cleared committee this week following some fine-tuning by its sponsors and is headed to the full House for consideration.The House Financial Services Committee voted 44-7 in favor of H.R. 940, the U.S. Covered Bond Act of 2011.

Expect the $11 trillion residential mortgage market to continue struggling to find its footing as market watchers anxiously await for an improved economy and employment picture to revive the sector from recession-induced stupor, according to the Aite Group. Although the residential mortgage market will “eventually” come back as the economy improves, the ease and speed with which the mortgage-backed securities market recovers is highly dependent on the structural and regulatory forces governing MBS securitization, particularly as it relates to ...

Fannie Mae is sweetening the incentives for its HomePath properties to both homebuyers and real estate agents in an effort to hasten the sales pace of the GSE’s real-estate owned inventory.Through Oct. 31, Fannie is offering homebuyers up to 3.5 percent of the final sales price to put toward closing costs while selling agents representing the owner-occupant buyer would receive a $1,200 bonus under the incentive plan.