Mortgage originations in the third quarter of 2013 fell to their lowest level since the end of 2011, pulling down industry earnings and expectations for next year. According to a new Inside Mortgage Finance ranking and analysis, lenders generated an estimated $460.0 billion in new home loans during the third quarter. That was down 18.6 percent from the second quarter, when production had rallied slightly. Compared to the first nine months of 2012, origination volume this year was...[Includes two data charts]
There’s more to federal regulators’ risk-retention proposed rule and qualified residential mortgage requirements than the 30 percent downpayment option that the industry has strongly pushed back against. Lenders are also concerned about proposed disclosure requirements, horizontal risk retention and sunset provisions for risk-retention requirements. In August, six federal regulators issued a revised proposed rule for risk-retention requirements mandated by the Dodd-Frank Act. Non-agency securities backed by mortgages that don’t meet QRM requirements will be subject to required risk retention of at least 5 percent by the issuer or contributing lenders. If regulators conform the definition for QRMs with the standards for qualified mortgages established by the Consumer Financial Protection Bureau, more than 95 percent of originations will meet...
Moody’s believes the servicers’ transitions into mortgage originations was positive, but raised concerns about declining refinance opportunities, competition with banks and the potential for nonprime originations.
“Our concern is whether companies have the resources internally to ensure that such arrangements are working as they should,” said one Ginnie Mae official. “Is the issuer adequately protecting itself and Ginnie Mae?”
According to a copy of an early prospectus provided to IMF, lenders originating loans for the security include Nationstar Mortgage, Stearns Lending, Freedom Mortgage, Fifth Third Mortgage, Real Estate Mortgage Network and RMR Financial.
Citadel, which raised $200 million earlier in the year, has funded $18 million so far this year, but 40 percent of that has come in October. Eventually, it hopes to securitize its production.
At press time, there were reports circulating that one mid-sized nonbank planning to enter the correspondent acquisition market had pulled the plug and laid off staff. The firm is expected to talk to IMFnews Thursday morning.
CFPB chief Richard Cordray believes "the QM space has been drawn quite broadly" and estimates that more than 95 percent of the loans made in the current market will be deemed qualified mortgages.
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