Mortgage banking profitability soared to record levels in the third quarter, but some industry analysts say the boom may begin to taper off in 2013.The surge in mortgage banking income during 2012 came from increased secondary marketing gains as the spread between primary market rates and yields on agency mortgage-backed securities widened to historic levels.

Bank and thrift holdings of first-lien mortgages increased by 3.6 percent in the third quarter of 2012 compared with the third quarter of 2011, according to a new ranking and analysis by Inside Nonconforming Markets. The growth, outpacing portfolio runoff and an overall decline in mortgage debt outstanding, is tied to non-agency mortgages as well as agency-eligible loans being retained by banks. Industry participants are divided on whether the first-lien holdings will ... [Includes one data chart]

The FHA this week announced additional measures to restore the financial health of its insurance fund and better protect consumers, including tighter underwriting on new FHA loans and elimination of a widely used standard fixed-rate reverse mortgage product. Acting FHA Commissioner Carol Galante unveiled the latest structural reforms in a Dec. 18 letter to Sen. Bob Corker, R-TN, who has repeatedly expressed concerns over the slow pace of reforms at FHA. The reforms address issues the senator raised with Department of Housing and Urban Development Secretary Shaun Donovan at a Dec. 6 Senate Banking, Housing and Urban Affairs Committee hearing on ...

A Senate vote on FHA reform legislation appears unlikely unless Senate Majority Leader Harry Reid, D-NV, and Senate Banking Committee Chairman Tim Johnson, D-SD, find a way to persuade Republican lawmakers to sign off on a House-approved bill before the end of the year, industry sources say. Senate Republicans are poring over the bill, H.R. 4264, the FHA Emergency Fiscal Solvency Act of 2012, which the House passed overwhelmingly 402-7. It is unclear how much Republican support the bill would have if – and when – it is taken to the Senate floor, said one trade group executive. The bill would strengthen the ...

The Department of Housing and Urban Development reported strong note sales of more than $1.7 billion under the expanded Distressed Asset Stabilization Program (DASP) and announced another big sale in the first quarter of 2013. Preliminary results from the sale in September showed record participation among interested bidders on 13 pools. In total, the 13 pools went to 10 different entities, among them nonprofit and community-based organizations, according to HUD. While still in the process of settling the transactions, the FHA said it is very ...

Despite the renewed focus on the FHA in the wake of the recent actuarial report, analysts do not expect any meaningful action in 2013 given the important role that FHA plays in supporting the housing market. But that does not mean that the Department of Housing and Urban Development will be sitting idly by next year. It has a lot of additional measures to implement to protect and preserve the FHA Mutual Mortgage Insurance Fund, HUD Secretary Shaun Donovan told Senate lawmakers recently during a hearing on the condition of the fund. The changes are both ...

Ginnie Mae servicers reported a small increase in total production on a quarterly basis and a modest improvement year-over-year, according to an Inside FHA Lending analysis of FHA data. Third quarter servicing volume was up 2.1 percent to $1.3 trillion from the previous quarter and 9.7 percent from the same period last year. Not surprisingly, top-ranked Wells Fargo Mortgage and second-place Bank of America accounted for 52.0 percent of total production. Wells Fargo grew its Ginnie Mae servicing portfolio to $399.6 billion in the third quarter, 4.2 percent better than the previous quarter and a 17.4 percent improvement from a year ago. That bumped up Wells’ market share to ... [1 chart]

Major home-equity lenders continued to show little interest in the sector during the third quarter of 2012, despite signs of strengthening home values, according to a new Inside Mortgage Finance market analysis and ranking. New originations of home-equity loans – including closed-end seconds and home-equity lines of credit – remained at a sluggish $14.0 billion in the third quarter, unchanged from the previous period. The HEL market in 2012 has rebounded about 5.3 percent from the pace set during the first nine months of 2011. The uptick in new HEL originations has not been...[Includes three data charts]

The average mortgage banking firm reported a hefty $4.12 million net profit during the third quarter of 2012, up 40.4 percent from already high earnings in the previous quarter, according to the Mortgage Bankers Association’s performance report. Although the MBA survey group – 311 companies in the latest report – varies somewhat from period to period, the third quarter earnings represent a windfall in profits that mirrors the results reported by large public companies and financial institutions ...

The Mortgage Bankers Association said it largely supports accounting changes that would impact holdings of mortgage-backed securities. Under a proposal by the Financial Accounting Standards Board, there would be no change in measurement for reporting entities that carry certain assets and liabilities at amortized cost. The MBA said the update proposed by FASB in October would require certain changes to the measurement of assets and liabilities of securitizations that a reporting entity is required ...