When it comes to stock price performance, it’s been an ugly year so far in 2016 for most of the nation’s publicly traded nonbanks, especially if their names happen to be Nationstar Mortgage, Ocwen Financial, PHH Corp. and Walter Investment Management Corp. And you might as well throw Stonegate Mortgage into that club as well. According to figures compiled by Inside Mortgage Finance, these five firms have seen declines in their stock prices – as measured against their highs for the past year – ranging from 52.3 percent (Nationstar) to 82.1 percent (Ocwen). Two other nonbanks whose share prices haven’t suffered as much are...[Includes one data table]

An unanticipated decline in interest rates soured the hedging bets placed by Fannie Mae and Freddie Mac during the first quarter of 2016, leading to sharply lower net income at the two government-sponsored enterprises. The two GSEs booked a combined $7.37 billion in net derivative losses for the first quarter that nearly washed out income from their core businesses. Since 2012, when the two GSEs became profitable again, they have booked huge $23.46 billion in hedging losses. “As we’ve said for over a year now, our quarterly financial results are...

Although many banks wrestled with hedges for their mortgage servicing rights and loan production was generally down, the industry posted a solid increase in mortgage-banking earnings in the first quarter. A new Inside Mortgage Trends analysis of earnings reports filed by 26 major banks showed a combined $3.450 billion in mortgage-banking income during the first quarter. That was up 12.3 percent from their fourth-quarter earnings of ... [Includes one data chart]

An increasing number of financial institutions with a vested interest in mortgage servicing rights are showing a renewed interest in hedging against declining interest rates – something you might think they would already be doing. “You’d be surprised at who’s not hedging,” said Austin Tilghman, senior vice president of United Capital Markets, Denver. “Some mid-sized nonbanks just don’t get it.” Tilghman knows quite a bit about firms – banks included – that don’t ...

The funding models used by prominent nonbank servicers subject the firms to significant risks, according to Moody’s Investors Service, which predicted that the companies’ profitability will improve only marginally in 2016. The Moody’s analysis focused on Nationstar Mortgage, Ocwen Financial and Walter Investment Management. “All three nonbank servicers’ reliance on confidence-sensitive, short-term funding heightens their liquidity and refinancing risk,” said Warren Kornfeld ...

Many borrowers who apply for a mortgage with a partner miss out on lower interest rates due to lenders’ standards regarding credit scores, according to research by economists at the Federal Reserve. Applying for a mortgage solo can lead to substantial cost savings, though determining whether to take that option can be complicated. Geng Li, Weifeng Wu, and Vincent Yao detailed their findings in a FEDS Notes article published by the Fed. The analysis was based on ...

Mortgage financing as it exists today might have to go through significant changes if the impact of climate change worsens, particularly in areas most exposed to the risk, according to new research from Freddie Mac. While flood insurance makes it possible for borrowers to obtain home loans in areas of high flood risk, other fallout from climate change – rising sea levels, changing weather patterns, increasing temperatures – may not be insurable. “As a result, some important features ...

Thanks to rising loan applications and a stronger-than-anticipated start to the second quarter, merger and acquisition activity in the mortgage industry is at muted levels these days, according to investment banking officials. In other words, lenders will continue to “make hay while the sun shines,” believing that current profit margins are just too good right now to consider selling out. It was originally thought...

The average daily trading volume in agency MBS fell to $189.4 billion in March, the lowest reading of the year, and a sign that liquidity may still be an issue, depending on which seat you’re in. According to figures compiled by the Securities Industry and Financial Markets Association, the trading numbers for 2016, so far, haven’t exactly lit the world on fire. In January and February, the readings were $195.1 billion and $201.4 billion, respectively. Last year, the best reading was...

Bank of America and JPMorgan Chase are using somewhat different strategies for conforming mortgages eligible for sale to the government-sponsored enterprises. Both banks are originating significant amounts of conforming mortgages and retaining some of the loans in portfolio instead of delivering them to the GSEs. BofA said its mortgage-banking income has declined due to holding mortgages in portfolio while Chase sold some of the credit risk on its conforming mortgage ...