A significant number of independent mortgage bankers failed to turn a profit during the first quarter of 2014, but many firms are tightening their belts and hanging on, thanks to a strong market for mortgage-servicing rights. According to the Mortgage Bankers Association’s annual performance report due out late this week, mortgage bankers saw their net profit margin on production and secondary marketing slump to a negative 9 basis points, said MBA Chief Economist Mike Fratantoni. The number was preliminary, but it represents a huge decline since the gung-ho first half of 2013, when lenders generated about 120 bps in net income from production. Only about 55 percent of lenders participating in the survey, which is includes a large number of independent mortgage bankers, earned...

Aggregate mortgage-banking income reported by an eclectic group of 32 lenders fell 25.9 percent from the fourth quarter of 2013 to the first quarter of this year, although many companies saw increased earnings, according to a new Inside Mortgage Trends analysis of earnings reports. The 32 lenders included all of the top originators and servicers in the industry, along with a number of other publicly traded nonbanks and depository institutions ... [Includes one data chart]

The presence of the Consumer Financial Protection Bureau is causing a seismic shift in the way mortgage lenders relate to their customers, with customer dissatisfaction a high-profile barometer that can quickly capture the bureau’s attention and focus it with an uncomfortable intensity in an unwanted direction. “For the first time in our industry’s history, the safety and soundness of the financial institution is just one part, albeit an important one, of what the government hopes to ...

Even though the wholesale/broker channel is a shadow of its former self in terms of market share, that isn’t stopping LoanDepot of Irvine, CA, from sticking its toe in the water. In fact, the company acknowledged the problems the sector faces when it announced to the world two weeks ago that it was entering the space. “There is no segment in the mortgage industry facing greater challenges today than mortgage brokers,” said Jeff Walsh, president of LDWholesale, the unit LoanDepot ...

The increased incidence of occupancy fraud by borrowers in 2013 poses risks for lenders, but the industry also needs to be aware that the Consumer Financial Protection Bureau is on the lookout for lenders that facilitate occupancy fraud as a way to avoid the CFPB’s ability-to-repay rule. Occupancy fraud risk increased by 24 percent in 2013, according to Interthinx, a firm that provides fraud prevention services. “In previous years, when refinances dominated the market, we saw higher ...

Correspondent mortgage originators accounted for a little over a third of the single-family mortgages securitized by Fannie Mae, Freddie Mac and Ginnie Mae during the first quarter of 2014, but they are an unusually rich source of the industry’s most prized commodity, according to a new analysis by Inside Mortgage Trends. Some 68.7 percent of correspondent-originated loans were purchase-money mortgages, the highest such ratio for ... [Includes one data chart]

The Department of Housing and Urban Development will soon seek comment on a proposal to extend equal protection to reverse mortgage borrowers and their non-borrowing spouses from displacement due to eviction or foreclosure. The proposed rule would codify the changes to existing Home Equity Conversion Mortgage regulations and make other alternative revisions as appropriate, according to HUD. The FHA expects to publish a notice of proposed rulemaking soon. Currently, the National Housing Act provides for a “safeguard to prevent displacement of the homeowner.” The provision defers repayment of the HECM until the homeowner’s death, the sale of the home, or the occurrence of other events specified in the regulations. Such events include the homeowner’s failure to reside in the property or failure to pay the required taxes and insurance. Without this provision, a reverse mortgage is ...

The House Appropriations Committee this week approved the FY 2015 Transportation, Housing and Urban Development funding bill, which, among other, things contains a provision prohibiting federal housing agencies from facilitating the use of eminent domain in resolving foreclosure problems. Specifically, the FHA, Ginnie Mae and the Department of Housing and Urban Development would not be allowed to use funds appropriated by Congress to “insure, securitize or establish a federal guarantee” of any mortgage or mortgage-backed security that refinances or replaces a mortgage that has been subject to eminent domain condemnation or seizure by a state, municipality or any other political subdivision of a state. In addition, the bill would prohibit the use of appropriated funds or any receipts or amounts collected under any FHA program to implement the FHA’s new Homeowners Armed with Knowledge (HAWK) program. HUD has proposed to ...

Issuance of mortgage bonds with a Ginnie Mae guarantee fell during the first three months of 2013 as higher FHA costs and all-cash home sales appeared to drive the decline, according to Inside FHA Lending’s analysis of agency data. Ginnie Mae issuers closed the first quarter with MBS issuances totaling $58.2 billion, down 19.0 percent from the fourth quarter of 2013. The drop was steeper on a year-over-year basis, 41.3 percent, data showed. FHA accounted for $30.6 billion of government-backed mortgage securities issued during the period, while VA and Rural Housing Development (Department of Agriculture) accounted for $19.1 billion and $4.1 billion, respectively. Top Ginnie Mae issuer Wells Fargo closed out the first quarter with $12.5 billion, down 28.1 percent from the previous quarter and off 59.9 percent from the same period a year ago. Wells’ volume accounted for ... [1 chart]

Servicers of mortgage debt issued by Ginnie Mae reported a slight uptick in government-backed debt outstanding in the first quarter of 2014 though not enough to cause a ripple in a market that has been generally flat since the end of the third quarter last year, according to Inside FHA Lending’s analysis of Ginnie Mae data. Ginnie Mae servicers reported an increase of 0.9 percent in servicing volume from the fourth quarter of 2013 following a 0.2 percent decline in the prior quarter. Volume, however, increased 7.3 percent in 1Q14 compared with volume a year ago. Servicers ended the first quarter with a total of $1.44 trillion in Ginnie Mae mortgage servicing, up from $1.43 trillion in the fourth quarter. Major banks comprised four of the top five Ginnie Mae servicers. Wells Fargo’s overall servicing portfolio declined to $426.7 billion in the first quarter, down ... [ 1 chart]