Banks and thrifts held a record $1.491 trillion of residential MBS in portfolio as of the end of June, according to a new Inside MBS & ABS analysis and ranking of call report data. That was up 1.6 percent from the end of the second quarter and marked the fourth consecutive period of growth in the industry’s MBS holdings. Banks and thrifts owned about 22.8 percent of the estimated $6.535 trillion of MBS outstanding at the end of the second quarter. All the growth came in investments in agency structured finance transactions, mostly REMICs. Bank and thrift holdings of agency REMICs jumped 8.6 percent in the second quarter to $459.9 billion, or 30.8 percent of... [Includes two data charts]

Any modified FHA or VA loan can now be repurchased from a Ginnie Mae MBS if the borrower successfully completes a three-month trial period under a policy shift to align with the FHA version of the Home Affordable Modification Program. Ginnie made the announcement on Aug. 26, effective immediately. Before the policy change, loans had to have missed three full payments before qualifying for a repurchase. Issuers can buy out loans that have remained in pools while borrowers made partial payments for at least three consecutive months under an FHA or VA trial payment plan that is a condition to a permanent modification, Ginnie explained. “Until the loan has been...

Commercial banks and their holding companies reported a combined $3.22 billion in income on their mortgage banking operations during the second quarter, the weakest performance for the industry since the depth of the financial crisis in late 2008. Mortgage banking income fell 23.7 percent from the first quarter of 2011, according to a new analysis of bank call-report data by Inside Mortgage Trends. The story is less clear on the production side of the business because of the mammoth loss reported by Bank of America. Through the first six months of the year – a troubling period of declining loan production levels and persistent buyback pressure from... [Includes one data chart]

The average mortgage banking firm reported increased production earnings in the second quarter of 2011 and higher loan production compared to the first three months of the year, according to the Mortgage Bankers Association quarterly performance report. The report, which collected data from 167 companies including many smaller mortgage bankers, found average pretax income fell 60.5 percent to $451,000 during the second quarter. That was the lowest level of profitability since the fourth quarter of 2008, when the average mortgage banking company lost $206,000. The MBA survey suggested that...

The financial crisis and the housing meltdown have cast unprecedented doubt about the virtue of homeownership, and many experts at a conference sponsored this week by the Federal Reserve acknowledged that homeownership has lost its universal appeal. “For low-income households I do think it’s more risky because it’s such a large share of their assets, such a large share of the wealth, so a price decline has a disproportionate effect,” explained Karen Pence, assistant director of the division of research and statistics for the Fed. “I think it’s more risky for low-income households just because it’s such a big part of their portfolio. I think it’s...

Flagstar Bancorp, the parent of Flagstar Bank, one of the top wholesale and correspondent channels through the first half of this year, continued to suffer under the weight of a problematic legacy balance sheet, despite some decent mortgage banking revenue during the second quarter of the year. Flagstar reported an overall second quarter 2011 net loss of $74.9 million, more than twice as poor a performance as its first quarter 2011 net loss of $31.7 million. For the six months of 2011, the company lost $106.6 million and faced growing lack of confidence among investors. The company’s stock faces delisting on the New York Stock Exchange after...

The spread between the average and lowest mortgage rates being offered in the primary market is continuing to widen as lenders try to get customers to take advantage of the record-low rates either for purchasing a home or refinancing. While the average mortgage rates remained in the 4.22 percent to 4.28 percent range for a 30-year fixed-rate mortgage across the country, the most aggressive lenders are offering rates as low as 3.88 percent, according to mortgage brokers. The Lending Tree Weekly Mortgage Rate Pulse, which tracks the lowest and average mortgage rates offered by lenders on the company’s network, recently reported...

Default technology provider Commerce Velocity, based in Irvine, CA, recently upgraded its Optimizer solution to help servicer clients achieve the new requirements for Fannie Mae’s Quality Right Party Contact initiative. The original version of Optimizer enabled servicers to maximize cash flows from delinquencies, and enforce workout consistency throughout the default management process. By applying net present value calculations, cash flow projections, valuation models, and comprehensive workout guidelines, the technology provides “the most intelligent outcomes possible,” the company said. The Optimal Outcome module monitors...

The Federal Housing Finance Agency needs to tweak its proposed eligibility certification form for prospective directors of the 12 Federal Home Loan Banks, according to comments received by the Finance Agency.

A proposal to rid the agency mortgage programs of some of their real estate-owned property through bulk sales has come under fire from Radar Logic, a housing research firm. The company said house prices continued to drop in June, down 4.7 percent from a year ago, and bulk sales of REO properties could hasten the fall. The Obama administration recently launched a fact-finding mission soliciting ideas and opinions about ways to reduce the massive REO inventories held by the FHA, Fannie Mae and Freddie Mac. One solution is bulk sales to investors who would likely turn the houses into rentals. Radar Logic is afraid of possible...