Despite this year’s implementation of a new Fannie Mae and Freddie Mac representations-and-warranties framework that promises repurchase relief with a three-year sunset on liability, the GSEs still hold all the cards and a very big stick when it comes to lenders managing their buyback risks, according to an expert during an exclusive Inside Mortgage Finance webinar this week. Jonathan Jaffe, a partner at the law firm of K&L Gates, told webinar participants that Fannie’s and Freddie’s hyper-aggressive enforcement of their repurchase options and frequently updated rules creates a near constant state of uncertainty for lenders who have been made all too aware that too much buyback resistance could result in them being on the wrong end of a “nuclear” exchange.
Freddie Mac’s “account balance” with the U.S. Treasury will go into the black by yearend – thanks to stellar third-quarter earnings – and Fannie Mae likely will accomplish the same by the end of March 2014. But mortgage bankers shouldn’t pop any champagne. That’s the view of Dave Stevens, president of the Mortgage Bankers Association who worked at Freddie once and also served as FHA commissioner. Stevens believes that despite their strong performance in the third quarter and beyond, both are just “insurance brokers” that have benefitted from the Federal Reserve buying their mortgage-backed securities. [Includes one data chart.]
Fannie Mae and Freddie Mac this week reported a combined $3.53 billion of mortgage repurchases and other buyback resolutions during the third quarter of 2013, the lowest quarterly amount in three years, according to a new analysis by Inside Mortgage Trends. Buyback resolutions declined by 28.2 percent from the second quarter, even as the government-sponsored enterprises wrapped up large-scale settlements with a handful of their largest sellers. Fannie and Freddie so far this year ... [Includes one data chart]
Three major special servicers are grappling with growth issues as they compete for servicing portfolios and work to establish origination platforms. Nationstar Mortgage, Ocwen Financial and Walter Investment Management all posted lower income in the third quarter of 2013 compared with the previous quarter. Nationstar announced this week that it is downsizing its servicing sites and plans to sell its non-core broker and distributed retail origination channels to Stonegate Mortgage ... [Includes one data chart]
More players are entering the mortgage servicing market even with all the challenges besetting the sector, from the new national servicing standards to Basel III capital requirements, according to industry experts. With megabanks shrinking their mortgage businesses and servicing portfolios, small to medium-sized firms are stepping in to fill the gap, panelists observed during the recent Mortgage Bankers Association annual convention. Purchasers of mortgage servicing rights are mostly nonbanks with no ...
Although the overall U.S. economy added jobs this fall, mortgage banking and brokerage firms continued to shed workers, a trend that is likely to continue until lenders, servicers and others “right size” their companies for declining refinance volume. According to figures compiled by the Bureau of Labor Statistics, the mortgage banking and brokerage sectors shed 6,000 jobs in September. The mortgage brokerage industry shed 2,200 jobs during the month, bankers 3,800, according to an analysis from Inside Mortgage Trends ...
Most outstanding adjustable-rate mortgages have already reset, eliminating concerns about payment shock as interest rates increase, according to a new analysis by Lender Processing Services. However, home-equity loan performance is expected to deteriorate. Some 63 percent of outstanding ARMs have reset, according to LPS. And more than 75 percent of the ARMs scheduled to reset were originated after 2008. “We’re not seeing a significant effect that could cause new problem loans or any resurgence in ...
A number of lenders report that they will record their interactions with borrowers – even face-to-face meetings – in an effort to avoid liability under qualified mortgage requirements, according to Standard & Poor’s. Lenders suggest that they are largely in compliance with the Consumer Financial Protection Bureau’s ability-to-repay rule, which establishes QM requirements on Jan. 10, but documentation is key. Borrowers that go into default can seek to prove that lenders didn’t meet the ATR requirements, even if ...
Shrinking default rates and lower refinance volumes have forced a shift in the mortgage industry’s focus to the purchase market, but lenders must beware that the current business environment is vastly different than yesterday’s purchase market, experts said at the Mortgage Bankers Association’s annual convention last week. Matthew Vernon, a home loan sales executive at Bank of America, told attendees that a small but critical distinction to remember is that lenders aren’t going into a purchase market ...
RSS