Earnings reports from nine mortgage banking operations suggest that servicing operations played a major part in the industry’s sharp downturn in profitability during the first quarter. But a new Inside Mortgage Trends analysis also identifies weakness in loan production operations and declining origination volume as key factors. The nine lenders, including the three largest firms and seven of the top 10 originators, posted a combined $1.726 billion in net servicing income during the first quarter of this year. That was down ... [includes one data chart]

Mortgage banking income was hit hard by rising expenses and declining production during the first quarter of this year, with more companies failing to generate a net profit from their business, according the Mortgage Bankers Association’s most recent performance report. The average firm participating in the MBA survey reported $617,000 in pretax income during the first quarter, down 60 percent from the fourth quarter’s average $1.56 million. Only 63 percent of lenders reported a net profit for the first quarter, down from 84 percent in the final three months of 2010. Mortgage bankers reported ...

GMAC Mortgage is making “solid progress” in responding to strategic opportunities and expanding its outreach to borrowers – and real estate agents – via the virtual sales network it launched in the spring of 2010. However, it’s only half way toward meeting its year-end 2010 goal of bolstering its sales team to 200 associates. “We’ve made solid progress in this,” said Jim Olecki, spokesman for Ally Financial, the parent company. “It’s doing what we wanted it to do, which is serving the Realtor community and attracting new home buyers to ...

Purchasers of distressed mortgages or residuals seeking to service their own portfolio but not wanting to build or buy a servicing platform may take advantage of Ocwen Financial’s new product, PlatformPlus. PlatformPlus is a turnkey servicing operation specially designed for investors in nonperforming mortgages or residuals of non-agency securities that want to get more value from their loans. In discussions with hedge funds and other investors in distressed assets, Ocwen Financial found a desire among these entities for special servicing technology and expertise without having to ...

Occupancy fraud risk increased by 25 percent during the first quarter of 2011, wiping out four straight quarters of decline, according to a quarterly report released by Interthinx. Occupancy fraud occurs when investors say they intend to live at a certain property, but maintain their primary residence elsewhere. The goal is the lower downpayment and lower interest rate that comes with living in a home. The Miami and Detroit metro areas are the riskiest in terms of occupancy fraud – and have been for the last five quarters. Reno, NV, Orlando, and Charleston, SC, round out ...

The problems of high defaults and softening asset prices that have afflicted the housing market have so far not affected other consumer credit products, according to experts at the American Securitization Forum’s annual meeting in Washington, DC, this week. “The market conditions are actually quite good,” said Mary Kane, head of global securitized products research at Citi Global Markets. “We’re pricing a lot of auto asset-backed securities, and a lot of the autos that are produced in this country are being financed in this market. It’s extremely critical that we’re able to ...

Expect the $11 trillion residential mortgage market to continue struggling to find its footing as market watchers anxiously await for an improved economy and employment picture to revive the sector from recession-induced stupor, according to the Aite Group. Although the residential mortgage market will “eventually” come back as the economy improves, the ease and speed with which the mortgage-backed securities market recovers is highly dependent on the structural and regulatory forces governing MBS securitization, particularly as it relates to ...

Four more executives have been handed down jail terms for their role in a $2.9 billion fraud scheme that defrauded Freddie Mac, among others, and contributed to the failures of Colonial Bank and Taylor, Bean & Whitaker.

A proposed rule that would allow lenders in the federal Farm Credit System to participate in the FHA mortgage insurance programs is being closely scrutinized at the Department of Housing and Urban Development. The measure is one of several regulatory actions taken by HUD in response to President Obama’s directive in January calling for a government-wide review of rules and regulations. The review is aimed at weeding out rules that are outdated, unnecessary, excessively burdensome, and redundant or in conflict with other federal rules. Twenty rules, including the proposed FHA approval for FCS lenders, are now being streamlined or rewritten to ease the regulatory burdens of small businesses and spur economic growth. The proposed changes build ...

Commercial banks reported a measurable increase in earnings from their mortgage banking activities during the first quarter of 2011, but production volume is slowing and the industry continues to bear a significant burden from repurchase demands. Banks reported a combined $4.21 billion in mortgage banking income during the first quarter, according to an analysis of call report data by Inside Mortgage Trends, an affiliated newsletter. That was up a healthy 20.8 percent from the last four months of 2010, though it trailed the industry’s mortgage...[includes one data chart]