Freddie Mac ended 2012 with its single best quarterly showing since the company was placed into government conservatorship by the Federal Housing Finance Agency at the height of mortgage market implosion 4½ years ago. The GSE late this week posted fourth quarter net income of $4.5 billion. Compared to the third quarter’s earnings of $2.9 billion, profits grew by 55 percent, the company noted in its Securities and Exchange Commission filing.

Mortgage banking operations owned by banks and thrifts – and that’s most of them – posted their most profitable year ever in 2012, but the tide clearly appeared to be turning in the fourth quarter. A new Inside Mortgage Trends analysis of call report data shows that banks reported a whopping $31.925 billion in non-interest income from their mortgage banking operations. That was more than six times the $5.240 billion they earned back in 2011, a year when industry-wide results were ... [Includes one data chart]

Although JPMorgan Chase plans to chop 15,000 mortgage-related positions by the end of 2014 and Wells Fargo has closed roughly 90 residential lending joint ventures in the past 12 months, the immediate future for employment is actually decent. Keep in mind that hiring trends are specific to industry niches. Vendors that work on due diligence and foreclosure reviews – such as Allonhill LLC, The Clayton Group and Promontory Financial – have been cutting contract workers for months as ...

During the height of the housing boom, “80-10-10” loan structures became very popular and caused headaches for mortgage insurance firms that lost business to these arrangements, which dodged the need for traditional MI coverage. As the mortgage and housing markets continued on a downward spiral, a new variant emerged that allowed borrowers to take out a conforming first mortgage for 80 percent of the house value and finance the rest with a 20 percent home equity loan. Both versions went the way of the dinosaur ...

Officials at Redwood Trust took pains last week to defend differences in the real estate investment trust’s business model compared with other REITs that focus on investing in mortgage-backed securities. Some investors have been critical of low dividend payments from Redwood, but the REIT said its dividend payments are not directly comparable to other REITs. “Analysts and investors puzzle about how to categorize Redwood and how to value our company,” Martin Hughes and Brett Nicholas ...

Just when you thought the debate over fair value and historical amortized cost has faded into the sunset, along comes a new empirical study that reinforces the view that fair-value calculations are a better predictor of bank failure. Published by the American Accounting Association, the study suggests that leverage based on fair value provides the earliest signal of financial trouble – at least two to three years prior to failure compared to other measurements. This finding is consistent with ...

Commercial banks and savings institutions reported a modest decline in their aggregate investment in residential MBS during the fourth quarter of 2012, according to a new Inside MBS & ABS analysis of call report data. Banks and thrifts held $1.579 trillion of residential MBS at the end of last year, down 2.4 percent from the close of the third quarter. It was the industry’s lowest aggregate position since the end of 2011, but banks still held an historically high 25.0 percent of total MBS outstanding. Compared to the end of 2011, bank MBS holdings were...[Includes two data charts]

The VA is on pace in 2013 to shatter an old mortgage production record set in 1994, according to agency officials. Mike Frueh, director of the Department of Veterans Affairs’ Home Loan Guaranty Services, said the VA is “trending” to do just about 600,000 home loans even though the home buying-and-selling season, which typically kicks off in the spring, has not yet started. The last time the VA originated that many home loans was in 1994, a banner year for VA mortgage lending to veterans and active members of the military. FY 2012 became the second best year for VA loan originations with ...

The delinquency rate of single-family mortgage loans fell to 7.09 percent of all loans outstanding on a seasonally adjusted basis at the end of the fourth quarter in 2012, the lowest level since 2008, according to the latest Mortgage Bankers Association’s national delinquency survey. The performance of FHA loans, on the other hand, was “mixed,” it said.Loan delinquencies decreased 31 basis points from the prior quarter, and were down 49 basis points from a year ago due to significant improvements in mortgage performance nationwide and in almost every state, the trade group said.“The 30-day delinquency rate dropped by ...

A modest decline in FHA endorsements of jumbo loans in the fourth quarter of 2012 could presage further declines this year, following the Department of Housing and Urban Development’s recent proposal to raise the downpayment requirement to 5 percent, from 3.5 percent, for loans above $625,500. The FHA already has raised its jumbo mortgage insurance premiums to 1.55 percent annually and increased the monthly premiums on new, non-jumbo FHA mortgages by 10 basis points. The agency retained the 3.5 percent downpayment for new forward mortgages below $625,500. The increased premiums are ... [2 charts]