Mortgage bankers of all sizes continued to report strong earnings on their mortgage banking operations during the fourth quarter of 2012, but the salad days may be over.
The mortgage banking industry’s record level of profitability may have peaked, as gain-on-sale margins have already begun to slip and more dark clouds appear on the horizon, according to industry analysts.
Lenders One, the nation’s largest mortgage cooperative, is telling its members they need to get their Fannie Mae servicing approvals by the end of January to be eligible for discounts under an affinity deal it has with the GSE.
Nationstar Mortgage this week priced $300 million of asset-backed notes in what the company called “the first ever” securitization of collateral backed by agency servicing advances, a sign that nonbanks are beginning to see more liquidity for mortgage servicing rights. The yield on the Nationstar paper is an attractive 1.46 percent. The term is three years. And in another development in the same market, Home Loan Servicing Solutions, which is affiliated with Ocwen Financial, has signaled...
Fannie Mae and Freddie Mac have taken different positions on how to deal with new seller/servicers that haven’t been approved for very long. While Fannie has set purchase limits on how much production newly approved seller/servicers can sell to the GSE, Freddie Mac has shied away from such caps. A spokesman for Freddie told Inside The GSEs that it treats all its customers equally. “We don’t have a limit on new customers,” he clarified. Lenders must meet the net worth minimum, which is roughly $2.5 million. Fannie Mae, on the other hand, is tying loan sale volume to net worth. The lower a lender’s net worth, the less it can sell to Fannie. According to a recent message posted to Fannie’s website by executive vice president and chief risk officer John Nichols, Fannie placed limits on new customers –primarily nonbanks – because the company saw what it called a “significant shift in the composition of our customer base and the emergence of many new originating institutions with whom we have done little or no business.”
New rules set to take effect next month that would permit eligible underwater homeowners holding Fannie Mae and Freddie Mac mortgages to leave behind the home and the remaining loan debt are designed to make the best out of a bad situation, say the GSEs. Starting March 1, GSE servicers will have expanded authority to approve a deed-in-lieu of foreclosure to non-delinquent Fannie or Freddie borrowers who can no longer stay in the home and can demonstrate a “hardship.”Although deed-in-lieu servicing guidelines were issued by Fannie and Freddie in November, a published report this week gave it renewed attention and speculation that the GSEs were letting borrowers off too easily.
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