Sun Bancorp, a $3.5 billion banking institution in New Jersey, is leaving the retail mortgage banking business and cutting back on direct home-equity lending due to declining profitability and tighter regulation. The moves are part of a comprehensive plan presented by Thomas O’Brien, Sun Bancorp’s new president and chief executive officer, who was brought on board as a consultant in April to restructure the company and ... [Includes one data chart]

Don't believe the naysayers. Second quarter originations turned out to be better than expected.

Thanks to lousy origination profits posted over the past six months, mortgage bankers increasingly are boosting earnings through servicing-released arrangements, causing a mini-boom in flow transactions. “You might say we’re back to a normal operating environment where originations are cash-flow negative,” which is forcing lenders to book profits through MSR sales, said Jeff Levine, managing director of Houlihan Lokey, an investment banking firm. But Levine is...

Recently implemented steps by the two government-sponsored enterprises to provide an alternative to repurchase when mortgage insurance is rescinded is a pleasant salve for a minor ailment, but it does nothing to address lenders’ chronic pain of sudden and unexpected buyback demands, according to a mortgage lender. Last week, new GSE repurchase requirements took effect, including the “MI stand-in” option, which Fannie defines as “the full mortgage insurance benefit that would have been payable under the original mortgage insurance policy if the mortgage loan liquidates.” In May, both Fannie and Freddie announced...

Non-QM origination volume could rise above $400 billion a year if the GSEs are no longer in conservatorship. Of course, Fannie and Freddie are nowhere close to doing that...

All of the loans that were not reviewed were originated by First Republic Bank. The rating agencies indicated they are comfortable with the lender’s underwriting process.

With just $1 trillion in originations expected this year, lenders and servicers are trimming their payrolls accordingly.

U.S. Bank became the latest casualty in the government’s offensive against lax underwriting and improper origination of FHA mortgages after the bank to pay $200 million to settle all related charges. The Minneapolis-based bank became the seventh FHA lender since 2012 that has entered into settlement agreements with the Department of Justice and the Department of Housing and Urban Development to resolve alleged violation of the False Claims Act and the Financial Institution Reform, Recovery and Enforcement Act, according to Inside FHA Lending’s analysis of government data. The government lawsuits allege that the banks’ certification of loans as eligible for FHA insurance under the direct endorsement program violated the FCA. The banks’ misconduct allegedly contributed to the legacy losses that crippled the FHA Mutual Mortgage Insurance Fund and placed the ...

It has been barely a month since the FHA deployed its Lender Electronic Assessment Portal (LEAP 3.0), but lenders are already having difficulty executing some functions in the new system. Lenders are complaining about how hard it is to provide access to independent public accountants (IPA) for purposes of recertification functions, as well as difficulties in making changes to existing branches or adding new ones or changing cash flow accounts. Lenders are concerned they may be sanctioned or penalized if they make a mistake, but the FHA seems not inclined to do this because the system is new. “[We] are highly focused on correcting these issues, and hope to have these functions working properly very soon,” the agency promised in a recent note to FHA lenders. The FHA said it is also aware of the complications that some lenders have faced in submitting their annual recertification in LEAP. Many of these problems have been addressed and the deadline for submission of recertification packages has been extended as well, the agency noted.

FHA lenders reported a significant increase in the number of FHA-insured loans originated in April, breaking a downward production spiral that began in the third quarter of last year. Whether this marks a turnaround for the market, however, is uncertain. April closed with $10.3 billion in total FHA originations, up 18.5 percent from March but down 51.7 percent from the same period a year ago. This surge in FHA financing occurred despite the rising costs of obtaining an FHA loans and access-to-credit issues, which have narrowed the gap between FHA and conventional loans with private mortgage insurance. Spring and Fall are the busiest times of year for home sales which might explain the spike, according to real estate agents. FHA fixed-rate mortgages comprised 95 percent of April’s production, with purchase loans accounting for 78 percent of loans originated during the month. FHA lending trends, however, show ... [2 charts]