With the stock market suffering major losses the past 10 days, investors in equities are bleeding red ink, but mortgage bankers are salivating at the prospect of higher application volumes thanks to declining interest rates. “We’re at the tail-end of the home-buying season when volume drops, but my members are anticipating an increase in refis,” said Glen Corso, executive director of Community Mortgage Lenders of America. The newfound optimism comes courtesy of China ...

Commercial banks and thrifts reported a hefty increase in profits from their mortgage-banking operations during the second quarter of 2015, according to a new Inside Mortgage Trends analysis of call reports. The industry generated $6.09 billion in mortgage-banking income during the second quarter, a 52.2 percent improvement over the first three months of the year. It was the highest income for the banking industry since the second quarter of 2013, when ... [Includes one data chart]

Fannie Mae and Freddie Mac continue to increase their focus on the multifamily segment, which generated growing income for the two government-sponsored enterprises during the second quarter. Freddie Mac’s comprehensive income for multifamily grew by $102 million to $366 million for the second quarter. The increase was primarily due to higher unrealized gains on available-for-sale-securities. New purchase volume remained...

Poor oversight of lenders participating in the Section 203(k) Rehabilitation Loan Mortgage Insurance Program has increased the risk to FHA’s Mutual Mortgage Insurance Fund by more than $1.2 million for 40 active loans, according to the Department of Housing and Urban Development’s Office of the Inspector General. HUD’s Office of Housing questioned the findings of its independent auditors, saying that 203(k) lenders are monitored closely despite the limited staff and resources. The IG recommended to HUD that lenders be required to support or indemnify the department for any future losses on the 40 loans and to reimburse actual losses on two 203(k) loans totaling $83,332. An audit of HUD’s oversight of the program uncovered alleged weaknesses in the monitoring of lenders for compliance with the 203(k) program. In addition, HUD did not always ensure that loan-to-value ratios were ...

Two FHA lenders in Texas have agreed to pay a total of $469,419 in civil money penalties to resolve government allegations they charged bogus fees to borrowers to inflate the purchase amount of newly built manufactured housing. Among 11 alleged violations of FHA rules, the Department of Housing and Urban Development’s Mortgagee Review Board accused American Home Free Mortgage of Prosper, TX, of artificially increasing mortgage costs by an average of $12,000 per loan through improper fees. The fees were paid allegedly to a company owned and operated by AHFM’s sales manager. In addition, HUD alleged there were multiple violations of quality and annual certification requirements. As part of the settlement agreement, without admitting to any fault or liability, AHFM agreed to pay a $169,419 fine and to the permanent withdrawal of its FHA approval. In June 2014, the MRB also heard a ...

The FHA will not issue a new case number for any FHA-to-FHA refinance if the current mortgage has a repair or rehabilitation escrow account in FHA Connection. The change, which is one of several updates to FHA Single Family Policy Handbook 4000.1, applies only to FHA streamline refis. It aims to ensure that escrow funds of the mortgage being refinanced are properly applied as well as conform to system requirements. The updated sections become effective on Sept. 14, 2015. Another change clarifies that the payoff statement for the mortgage being refinanced is the only document required when calculating the maximum mortgage amount for simple refi transactions. In addition, guidance for loan-to-value limits for cash-out refis has been updated to clarify that the 85 percent LTV restriction applies only to cash-out refis. HUD also noted that appraisers have flexibility in regards to when inspections should ...

FHA Begins Registration of Lenders to Prepare their Transition to the EAD Portal. Lender registration for the transition phase of the new Electronic Appraisal Delivery portal began on Aug. 18. Lenders may select any of the seven onboarding phases, which FHA has established to ensure that lenders have more time to work within the EAD portal to ensure that their systems, data flow and operational process meet portal requirements before the June 27, 2016, mandatory-use date. Although lenders may enter at any phase they choose, the FHA strongly encourages lenders to register for the earliest onboarding phase, and to do it as soon as possible. That would give them more time to get ready for the full transition, the agency said. The first phase begins on Oct. 15, 2015, with additional phases beginning each month and running through the first half of 2016. Information on the onboarding phases as well as ...

Mortgage bankers saw improved profitability in both servicing and loan production during the second quarter of 2015, according to a new Inside Mortgage Trends analysis of earnings reports from major lenders. A group of 13 publicly traded companies reported a combined $2.10 billion of production-related income during the second quarter. That was up 9.9 percent from the previous period, and raised their combined production earnings for the first half of the year to $4.01 billion, a 54.7 percent increase over the same period in 2014. Although all 13 reported positive earnings on their origination and sales activity, many noted...[Includes one data table]

Nonbanks couldn’t keep pace with prominent banks in terms of mortgage earnings in the second quarter of 2015, according to a new analysis by Inside Mortgage Trends. A group of eight nonbanks had lower mortgage-related income in the second quarter of 2015 compared with the previous quarter, with large losses tied to servicing operations. PHH Mortgage was the main restraint on the group of nonbanks as the firm reported a $43.0 million loss from mortgage services in the second quarter of 2015 after $38.0 million in income the previous quarter. The loss for PHH included a $66.0 million loss in the servicing segment. The nonbank increased...[Includes one data table]

A new research paper analyzing the risks and opportunities for disruption in the housing finance system notes that new business models and services make the entire mortgage industry ripe for change. Although the paper by the Collingwood Group notes that disruption is inevitable in any industry, it said it is most predictable in an industry faced with conditions where the current model is too challenging, inefficient, costly and unresponsive to customer and business needs. “With no fundamental changes to origination processes in decades, lost efficiency, growing regulatory hurdles, high costs and low profits, there is...