Roughly one out of every 14 banks in the country suffered significant investment losses following the September 2008 government takeover of Fannie Mae and Freddie Mac, according to a new Federal Reserve discussion paper. The paper, When Good Investments Go Bad: The Constriction in Community Bank Lending After the 2008 GSE Takeover, details how financial institutions took a bath when the two companies were placed into conservatorship and dividend payments on common and preferred shares were suspended.
Mortgage banking operations reported stronger earnings in both loan production and servicing operations during the fourth quarter of 2011, according to a new Inside Mortgage Trends analysis. A group of nine institutions reported a total of $2.73 billion in earnings from mortgage production activity during the fourth quarter. That was up 20.8 percent from the third quarter. All but one company in the group, which includes most of the top lenders in the industry, reported positive results on loan production activities, which typically include secondary marketing results. The...(Includes one data chart)
Mortgage bankers reported stronger corporate income during the fourth quarter of 2011, but profitability was generally lower on a per-loan basis, according to the most recent performance report released by the Mortgage Bankers Association this week. Based on a survey of some 310 mortgage bankers, the study found average pretax income of $1.51 million per company in the fourth quarter, up 34.8 percent from the third quarter of last year. That brought the average pretax income for the year to $3.69 million, down 14.2 percent from 2010. Average profits per loan were generally down in the fourth quarter, even...
Banks maintain real estate-owned properties unequally, with properties in minority communities showing clear signs of vacancy while those in white communities receive necessary attention, according to a new investigation by the National Fair Housing Alliance. The investigation, outlined in the report The Banks are Back Our Neighborhoods are Not: Discrimination in the Maintenance and Marketing of REO Properties, looked at 1,036 REO properties in nine different metro areas, comparing those in predominantly Latino and African-American neighborhoods to those in predominately white communities...
Iowa Attorney General Tom Miller downplayed concerns raised by investors in non-agency mortgage-backed securities regarding the pending $25.0 billion servicing settlement. The current set of concerns arent particularly warranted, he said this week during a webinar hosted by Inside Mortgage Finance Publications. The Association of Mortgage Investors has asked for a number of changes to the settlement, including a cap on the amount of principal reduction that can be completed on non-agency MBS to meet the participating servicers loss mitigation requirements. Miller said the AMI is the only group he is aware of that might challenge approval of the settlement by the U.S. District Court for the District of Columbia. I think that their concerns are not going to be realized ...
Bank and thrift portfolio holdings of first liens increased in the fourth quarter of 2011 compared with the previous quarter, according to the Inside Mortgage Finance Bank Mortgage Database. Loan modifications completed by the major bank and thrift servicers during that period also decreased significantly, as portfolio performance has improved. Banks and thrifts held $1.76 trillion in first liens at the end of 2011, up 1.9 percent from the third quarter of 2011. The increase in holdings suggests strong portfolio originations as some banks are allowing their mortgage portfolios to run-off and others are selling delinquent mortgages. At the same time, loan modifications offered by the major banks and thrifts declined by ... [Includes one data chart]
Fannie Mae, Freddie Mac and the FHA accounted for 41.8 percent of the $84.66 billion in lending over the $417,000 threshold in 2011, the lowest share theyve had since emergency loan limits went into effect in 2008, according to an analysis by affiliated publication Inside Mortgage Finance. The agency share of jumbo production peaked in the second half of 2009 at 53.1 percent.The government-sponsored enterprises and Ginnie Mae financed 36.6 percent of the loans exceeding $417,000 that were originated in the fourth quarter of 2011. That was down from a 42.7 percent agency share of the jumbo market in the third quarter of 2011 ... [Includes three briefs]
Unless Congress takes legislative action by the end of the year, Fannie Mae and Freddie Macs unlimited pipeline of cash support from the U.S. Treasury will be significantly dialed back, a paper by Deutsche Bank cautions. Although agency mortgage market observers have assumed that the Treasury will extend the taxpayers unlimited line of credit to the GSEs before the Dec. 31 deadline, a close reading of the authorizing legislation suggests that the Treasury may not be able to extend unlimited support without the approval of Congress, noted Deutsche Bank.
Nationstar Mortgage Holdings says the deal it announced earlier this month to purchase $63 billion of mortgage servicing rights from Aurora Bank FSB, a subsidiary of Lehman Brothers Bancorp Inc., is part of the servicers long-term strategy to drive future growth. Texas-based Nationstar, the home finance unit of Fortress Investment Group, said the purchase represents all of Auroras servicing with 75 percent of the loans in non-agency mortgages, comprising approximately $45 billion of Aurora-serviced non-agency loans. Aurora serviced $34 billion of Alt A and negative amortization loans and about $10...
Ally Financial may be getting closer to ridding itself of its non-agency mortgage unit, ResCap, the residual of a business formerly known as Residential Capital that helped invent the jumbo securitization and Alt A markets. According to reports, Ally is weighing putting ResCap into bankruptcy as a prelude to selling the business to Fortress Investment Group or another suitor. Allys primary mortgage business, GMAC Mortgage, is a top seller-servicer in the agency market. ResCap and GMAC Mortgage are separate entities that are both subsidiaries of the holding company that also owns Ally...