Marc Savitt, who runs The Mortgage Center in West Virginia, said he recently worked on a mortgage that had 4.5 points of LLPAs. “It was a cash-out refi,” he noted.
Since that story appeared, we’ve talked to a few mortgage company CEOs who have said – tongue in cheek – that just about every mortgage firm is for sale.
A significant number of independent mortgage bankers failed to turn a profit during the first quarter of 2014, but many firms are tightening their belts and hanging on, thanks to a strong market for mortgage-servicing rights. According to the Mortgage Bankers Association’s annual performance report due out late this week, mortgage bankers saw their net profit margin on production and secondary marketing slump to a negative 9 basis points, said MBA Chief Economist Mike Fratantoni. The number was preliminary, but it represents a huge decline since the gung-ho first half of 2013, when lenders generated about 120 bps in net income from production. Only about 55 percent of lenders participating in the survey, which is includes a large number of independent mortgage bankers, earned...
The latest wrinkles in repurchase policies at Fannie Mae and Freddie Mac are widely seen as incremental changes that at least point in the right direction. The two government-sponsored enterprises last week announced a narrow adjustment in how loans with minor payment problems can still qualify for buyback relief if they are current 36 months after origination. The new framework also provides buyback protection for mortgages that come clean in the GSEs’ quality control checks and an alternative to automatic repurchase of loans when private mortgage insurance is canceled. Only about 2 percent of loans go...
All three loan-production channels saw significant declines in volume during the first quarter of 2014, but retail had the biggest downturn, according to a new Inside Mortgage Finance ranking and analysis. Retail production declined 24.6 percent from the fourth quarter to an estimated $138 billion, the lowest quarterly volume since the fourth quarter of 2008. Retail lending, which includes traditional loan-origination offices and consumer-direct operations, was down 60.0 percent from the first quarter of last year, slightly worse than the 58.0 percent downturn in the overall market. However, retail is...[Includes four data charts]
Although the Federal Housing Finance Agency has backed away from radically reducing the government sponsored enterprises’ role in the mortgage market, some non-agency lenders believe more of the conventional market might be up for grabs if the FHFA overhauls GSE guaranty fees and loan-level pricing adjustments. There isn’t likely to be much market opened up based on loan amount; FHFA Director Mel Watt has ruled out any change in Fannie Mae and Freddie Mac loan limits. But the FHFA is actively engaging the industry and will be seeking formal comment on guaranty fees and LLPAs. Under current LLPAs, if a borrower has a low FICO score, low downpayment or other “risk factors,” they pay...
As reported by IMFnews, the FHFA has yet to appoint a permanent chief executive and chairman for the CSP, formally known as Common Securitization Solutions.
There is a tradeoff between taking on more higher-risk loans and raising g-fee prices, FHFA official Bob Ryan noted, and the calculation has to take into account other players in the market, such as the FHA.
So, what’s the biggest impediment to mortgage volumes taking off this spring? According to a new poll from Inside Mortgage Finance, it’s a lack of housing inventory.
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