MetLife announced last week that it wants to sell its mortgage banking business, but regulatory and legal issues that are partly driving the firm’s retreat may also make it hard to find a buyer. Nowadays, starting from scratch may make more sense than buying someone else’s problems. MetLife explained in a press release that the decision was prompted by an “uncertain marketplace and regulatory environment [that requires] a tremendous amount of resources – both in terms of people and capital – to effectively compete in and profitably grow the forward mortgage business. Doing so would divert these resources away from...
Small and mid-sized lenders participating in the Ginnie Mae mortgage-backed securities program may gain more financing flexibility – and a more competitive footing against the giants in the market – as the agency makes it easier to pledge mortgage servicing rights. Ginnie this week announced a revised Acknowledgement Agreement that will make it simpler for the agency to honor servicing pledges and permit the transfer of MSRs. Until now, Ginnie servicers that need cash to honor their servicing advance responsibilities have not been able to put their MSRs up as collateral for financing, explained Ted Tozer, president of Ginnie Mae, in...
After negotiating with a potential buyer, Bank of America gave up trying to sell its correspondent business and will simply shut the program down by the end of the year, leaving a huge potential hole in the market. The rumored bidder, NationStar Mortgage, reportedly wanted a higher price than BofA was willing to pay to take the correspondent unit off the bank’s hands. “After a comprehensive review of market opportunities, Bank of America will close its correspondent lending channel by the end of 2011, following an orderly transition with clients,” the company said in a written statement. BofA, which had already...
Servicers face increased costs to meet new loss mitigation requirements. However, servicers at the Mortgage Bankers Association’s annual conference this week in Chicago said they have accepted the costs as a trade-off for decreased liability. “We focus on profitability, but you still have to do quality,” said Kent Lemon, a senior vice president at Saxon Mortgage Services. He said the servicer constantly works on quality assurance. Saxon uses targeted performance monitoring of employees for the Servicemembers' Civil Relief Act, fair servicing standards and other loan modification guidelines. Lemon said the servicer also...
Closer scrutiny of portfolio loan quality and growing repurchase demands have pushed mortgage software providers MasterServ Financial and The Prieston Group to develop products to help lenders manage their portfolio risks and reduce buyback risks. MasterServ Financial, a technology solution provider to the mortgage banking industry, is expanding its portfolio monitoring product from distressed real estate loans and REO management to new portfolios of performing mortgage loans. With the shift in real estate values, a weak economy and high unemployment rate, it is very difficult to determine whether the loans in a lender’s portfolio today are...
Despite low mortgage rates and home prices, significant barriers still stand in the way of a potential first-time homebuyer. A new tax-preferred mechanism for downpayment savings could work towards lowering these barriers, with the added benefit of incentivizing saving habits, according to a policy brief from the Progressive Policy Institute. The “HomeK” account would be carved out of savings mechanisms such as individual retirement accounts and 401(k) accounts allowing a person to separate up to 50 percent of employee contributions into a sub-account. Account-holders could then disburse their money to make a...
Women, on average, pay more for mortgages than men even after taking into account variables like borrower characteristics, mortgage features and market conditions, according to a new study published in the Journal of Real Estate Finance and Economics. The authors, economists Ping Cheng, Zhenguo Lin and Yingchun Liu, suggest that the difference may have more to do with the way men and women seek out lenders than gender discrimination by lenders. The study – “Do Women Pay More for Mortgages?” – notes that the share of single women homebuyers doubled from about one in ten homebuyers 15 years ago to about one in five in 2003. More than...
The Obama administration’s Housing Scorecard for September paints a reasonably rosy picture of efforts to help troubled homeowners and future market prospects. With record low mortgage interest rates, housing affordability increased modestly. But the number of new default notices rose from 59,500 in August to 78,900, which is still well below the 96,500 level of a year ago. Notably, sales of real estate owned properties were down this period. Preliminary numbers from July 2011 show that there were 46,200 REO sales, as opposed to 62,200 in June and 61,800 a year ago. New home sales were down slightly in...
More people than expected showed up at the Mortgage Bankers Association annual convention this week in Chicago – including intermittent Occupy protestors – given the hugely uncertain prospects facing the industry. MBA economists are predicting less than $1 trillion in new originations in 2012, which would be the lowest new production volume since 1997, and all three major components in the business – origination, servicing and secondary marketing – face huge structural challenges that so far are still just vaguely mapped out. Yet attendance was up about 18 percent from last year, and several observers noted that investors are...
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