Lender profit margins appear set to stop declining, according to a new survey by Fannie Mae of senior executives at 181 institutions. Industry participants suggest that increased demand from borrowers along with operational efficiencies will help steady profit margins. Doug Duncan, senior vice president and chief economist at Fannie, said the significant decline in volume in recent quarters put pressure on profit margins. “That would be expected to ease somewhat ...

The first-time homebuyer share of purchase-money mortgages differs a great deal across the states, and house price growth may have something to do with it, according to a new study by the Federal Housing Finance Agency. FHFA researchers looked at first-time buyer activity from 1996 to 2013 and how it is affected by nationwide house-price trends. They found a symbiotic relationship that may or may not be beneficial to first-time homebuyers, depending on ...

An overwhelming majority of prospective homebuyers believe purchasing a home is a good investment decision, but many of them “haven’t done the math” and feel overwhelmed by the amount of information that have to contend with, according to a new Discover Home Loans/Versta Research poll. Five years after the Great Recession, most participants generally had positive views and expectations about their upcoming participation in the housing and mortgage markets ...

In keeping with its strategy to reduce its holdings of less-liquid assets, Freddie Mac announced last week the GSE’s first sale of what it calls “deeply” delinquent loans. It remains to be seen if the sale of the $659 million package of distressed single-family mortgages from its portfolio is a one-off or the first of more to come. Asked whether more non-performing loan auctions might be ahead, a company spokesman declined to comment.

A federal judge in Manhattan last week ordered Bank of America to pay a $1.27 billion penalty for losses suffered by Fannie Mae and Freddie Mac from Countrywide Financial’s “Hustle” program for pumping dubious Alt A loans to the GSEs. The bank also is reportedly nearing a settlement with the Justice Department over other charges. Last October, the DOJ and the Securities and Exchange Commission successfully proved in court that Fannie Mae and Freddie Mac lost some $850 million from thousands of loans acquired through Countrywide’s “high-speed swim lane” program – known as HSSL or “Hustle.”

Fannie Mae and Freddie Mac reported a combined $5.0 billion in net income during the second quarter of 2014, down 46.2 percent from the first three months of the year. Compared to the first half of 2013, GSE profits were down nearly 82 percent, though both companies posted strong earnings during the three-month period ending June 30, 2014. Both GSEs are coming off a banner 2013 when each company’s earnings were super-charged by several one-time items – including the capture of each company’s deferred tax allowance, and numerous non-agency lawsuit settlements.

While banks have plenty of capacity to retain jumbo mortgages in portfolio, the top two contributors to jumbo mortgage-backed securities issued in the second quarter of 2014 were actually banks, according to a new ranking and analysis by Inside Nonconforming Markets. First Republic Bank and JPMorgan Chase were the top two contributors to the scant four jumbo MBS during the quarter. And since the start of 2013, three of the top five ... [Includes one data chart]

Flagstar Bank has $802 million in interest-only mortgages that are scheduled for principal payments to kick in over the coming years, and in some cases the borrower’s monthly mortgage payment will double. Officials at the bank said Flagstar is working with borrowers that have IOs and delinquencies have been low thus far. “We’ve put a dedicated team together to get ahead of these resets,” Lee Smith, Flagstar’s COO, said last week during the bank’s earnings presentation ...

For FHA lenders, the idea of a large lender exiting the FHA market and creating opportunities for market share has been overshadowed by concerns regarding liability in the wake of recent fraud-related settlements between lenders and the federal government. Compliance experts said many of their FHA clients are quietly reassessing their FHA business after JPMorgan CEO Jamie Dimon, during a recent earnings call, spoke out loudly against the government’s stringent enforcement actions aimed at recovering “wrongfully” claimed funds. Lenders fear that FHA enforcement actions have taken a turn for the worse in recent years, and that even errors that have nothing to do with loan default are construed as fraud by government prosecutors, resulting in billion-dollar penalties against FHA lenders. Seven major banks, so far, have paid ...

Twenty-five lenders either settled or lost their FHA approval for a full year because they failed to complete their annual recertification requirement, while 21 others were subjected to enforcement actions because their origination or servicing files did not meet FHA requirements. Results from cases heard by the Department of Housing and Urban Development’s Mortgagee Review Board in 2012 and 2013 showed that the board used all enforcement tools at its disposal. Specifically, the board took the following actions: Assessed money penalties of more than $1.5 million; imposed fees, refunds and principal buydowns totaling $1.2 million; required indemnification on 163 FHA-insured loans; withdrew FHA approval of four lenders; suspended the FHA approval of one lender; and placed one lender’s approval on probation. Violations were related to ...