New mortgage servicing rules unveiled recently by the Consumer Financial Protection Bureau will likely result in higher mortgage servicing costs and reduced revenue for servicers although some analysts say the rules could have a positive effect on large banks. The CFPB recently previewed some of the servicing rules it plans to issue this summer and finalize by January 2013. Specifically, the rules would require monthly mortgage statements that include mortgage terms, detailed payment information, fee disclosures and loss-mitigation information for delinquent borrowers. They also call for...

Mortgage banking operations owned by commercial banks posted a significant increase in loan sales during the fourth quarter, helping to push earnings higher. Bank mortgage banking units sold a total of $299.0 billion of single-family mortgages during the fourth quarter, up 20.2 percent from the previous three-month period. It was the industry’s second quarterly increase in sales volume after sinking to just $227.0 billion during the second quarter of last year. For the full year, mortgage sales came in 14.4 percent below the level reported during 2010, and the banking...(Includes one data chart)

Builder confidence declined nationally in April for the first time in seven months, according to the National Association of Home Builders/Wells Fargo Housing Market Index, though regional results were more of a mixed bag. The index moved down three notches in April to 25. It is calculated from a seasonally-adjusted index that examines builder perceptions of single-family home sales and sales expectations for the next six months, as well as the traffic of prospective buyers. Any number greater than 50 demonstrates that more builders have a positive, rather than negative, view of the conditions. The index...

The Federal Housing Finance Agency should give consideration to creating a mechanism to allow small mortgage lenders to more easily appeal GSE repurchase demands, according to one U.S. senator.In a letter sent last week to FHFA Acting Director Edward DeMarco, Sen. Jeanne Shaheen, D-NH, said several of her small-business constituents have noted a “sharp increase” in repurchase demands over the last year.

Lenders should expect at least a short-term boost in profits from the Federal Housing Finance Agency’s recent tweaks to the Home Affordable Refinance Program, analysts say, but HARP 2.0’s long-run effectiveness to the pool of underwater borrowers remains an open question. Since January, the industry’s largest mortgage servicers, including Wells Fargo and JPMorgan Chase, have seen a significant uptick in new refinance applications for HARP 2.0. “This quarter should be one of the strongest quarters for mortgage banking we’ve seen in quite some time,” said FBR Capital Markets’ Paul...(Includes one data chart)

Wells Fargo and JPMorgan Chase reclassified more than $3 billion of second-lien mortgages as nonperforming loans in the first quarter of 2012, a move other banks have copied. Both Wells and JPMorgan said that federal guidance from late January was behind the change. Wells characterized $1.7 billion of subordinate home-equity loans as nonperforming and JPMorgan assigned $1.6 billion to that status. “We do not view this as a material shift in the performance of these loans or the reserving methodology,” Fitch Ratings wrote. “However, increased regulatory scrutiny of second liens may continue to...

Ally Financial Inc. is cutting back significantly on its wholesale mortgage business and moving away from its correspondent and broker channel so that it can focus more on originations through the retail and direct channels. In recent filings with the Securities and Exchange Commission, Ally said the shift to the higher-margin retail and direct channels will not have a significant impact on profitability overall if both channels can assume the current volume of government-backed mortgages coming through the correspondent and broker wholesale conduits. “We will continue to evaluate this...

Bank and thrift holdings of home-equity loans continue to decline, particularly holdings of closed-end second liens. Even though performance on the loans currently remains strong, industry analysts warn that these assets could cause major losses. Banks and thrifts held $1.18 trillion in home-equity lines of credit, unused HELOC commitments and closed-end seconds at the end of 2011, according to the Inside Mortgage Finance Bank Mortgage Database. That was down 1.5 percent from the third quarter of 2011 and down 8.8 percent from the end of 2010 ... [Includes one data chart]

Subprime lending standards appear to be loosening across numerous asset classes, including home loans, but it is still difficult for borrowers to get a subprime mortgage. Equifax recently reported that subprime originations have grown as of the end of 2011 compared with the end of 2010. The company’s National Consumer Credit Trends Report was produced with Moody’s Analytics, and included details on credit cards, auto finance, consumer finance, retail credit and student loans. “The evidence of increased lending to subprime consumers demonstrates banks’ ongoing efforts to ...

A conflict-of-interest provision in the $25 billion robo-signing settlement approved by the court last week could make it harder for independent settlement monitor Joseph Smith to organize an oversight monitoring team within the agreement’s timeline. Smith, North Carolina’s former commissioner of banks, may have to issue or seek clarifying guidelines that would allow him to recruit attorneys and other professionals for his monitoring team and begin a phased implementation of the settlement’s servicing standards and mandatory relief requirements, according to an industry attorney. Last week...