“Our estimate of legal and rep and warrant reserves for the largest banks is a total of roughly $60 billion,” S&P writes in a new report. “We estimate that the largest banks may need to pay out an additional $55 billion to $105 billion to settle mortgage-related issues, some of which is already accounted for in these reserves.”
Freddie Mac this week racked up another settlement in the GSE’s recent ongoing series of mortgage buyback deals when Bank of America announced it will pay $404 million to settle repurchase obligations tied to loans sold between 2000 and 2009. The payment also compensates Freddie for “certain past losses and potential future losses relating to denials, rescissions and cancellations of mortgage insurance,” the GSE said. The amount is less $13 million of repurchases already made.
Mortgage banking income fell sharply in the third quarter and the compliance outlook remained murky, but banks reported a huge improvement in loan buybacks, according to a new Inside Mortgage Trends analysis of call-report data. Banks and thrifts repurchased or provided other indemnification totaling $1.998 billion during the third quarter, the lowest quarterly amount for the industry in five years. Banks first began reporting repurchase data in their call reports ... [Includes one data chart]
Since the beginning of 2012, it’s been relatively difficult to lose money in mortgage banking, but that was no longer the case in the third quarter of this year. According to the Mortgage Bankers Association quarterly performance report, slightly more than one fourth of the industry failed to turn a profit during the third quarter. Starting in the first quarter of 2012, over 90 percent of mortgage bankers in each period reported net pretax profits. The average pretax income for ...
Prospect Mortgage of Sherman Oaks, CA, is a strong candidate for an initial public offering: It’s a retail-only originator whose loan production is top-heavy in purchase-money loans and it has all the right agency and FHA approvals. The privately-held firm also has a $13 billion servicing portfolio and licenses to lend in 48 states. Moreover, in early September it raised $150 million by selling five-year senior notes in the capital markets. Over the past few months rumors have surfaced that the ...
Lender-paid mortgage insurance has garnered renewed interest lately from mortgage lenders as an alternative to FHA-insured loans, whose increased costs have shut out many cash-strapped borrowers. David Williams, vice president of RightStart Mortgage in Pasadena, CA, said his firm has been getting a lot of requests from wholesale brokers for conventional conforming loans with LPMI because the FHA product has lost its competitive edge. With borrower-paid private MI, the homeowner pays a monthly ...
Nonbanks are better than banks at controlling foreclosure timelines and servicing costs, according to industry analysts. Nonbank special servicers have significantly increased their servicing portfolios in the past year and expect to acquire even more servicing from banks in 2014. “The cost of servicing for banking institutions has increased in lockstep with the additional processes to maintain compliance with regulatory requirements,” according to Fitch Ratings. “In response, a number of large banks have employed ...
Capacity constraints and demand for same-servicer refinances helped lenders book significant profits in recent years, according to an analysis published by the Federal Reserve Bank of New York. Lenders’ profits have declined in recent quarters with the shift toward purchase-mortgage originations due to higher interest rates. A group of researchers determined that higher prices paid by investors in agency mortgage-backed securities in recent years weren’t offset by corresponding increases in ...
Independent mortgage bankers saw increased value in their servicing assets that helped offset slumping production volume in the third quarter, according to a quarterly survey by Richey May & Co. The accounting and business advisory firm found that overall production slid 12.4 percent from the second quarter, and refinance volume was down 42.0 percent. The survey also found that average values of indies’ servicing portfolios increased by seven basis points from the second quarter to the third ...
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