Wells Fargo accounted for a whopping 26.1 percent of home mortgages originated during the third quarter, and when you throw in the production numbers for other kingpins in the industry its hard to see how small lenders survive. But beneath the gaudy market shares of the Wells Fargos and JPMorgan Chases of the world stand hundreds of small originators mortgage brokers, community banks, credit unions and old-school independent mortgage bankers that feed them a significant amount of business. The key to finding success under the shadow of the industry giants is developing a speciality, usually coupled with an obsession for...
After negotiating with a potential buyer, Bank of America gave up trying to sell its correspondent business and will simply shut the program down by the end of the year, leaving a huge potential hole in the market. The rumored bidder, NationStar Mortgage, reportedly wanted a higher price than BofA was willing to pay to take the correspondent unit off the banks hands. After a comprehensive review of market opportunities, Bank of America will close its correspondent lending channel by the end of 2011, following an orderly transition with clients, the company said in a written statement. BofA, which had already...
Servicers face increased costs to meet new loss mitigation requirements. However, servicers at the Mortgage Bankers Associations annual conference this week in Chicago said they have accepted the costs as a trade-off for decreased liability. We focus on profitability, but you still have to do quality, said Kent Lemon, a senior vice president at Saxon Mortgage Services. He said the servicer constantly works on quality assurance. Saxon uses targeted performance monitoring of employees for the Servicemembers' Civil Relief Act, fair servicing standards and other loan modification guidelines. Lemon said the servicer also...
Closer scrutiny of portfolio loan quality and growing repurchase demands have pushed mortgage software providers MasterServ Financial and The Prieston Group to develop products to help lenders manage their portfolio risks and reduce buyback risks. MasterServ Financial, a technology solution provider to the mortgage banking industry, is expanding its portfolio monitoring product from distressed real estate loans and REO management to new portfolios of performing mortgage loans. With the shift in real estate values, a weak economy and high unemployment rate, it is very difficult to determine whether the loans in a lenders portfolio today are...
More people than expected showed up at the Mortgage Bankers Association annual convention this week in Chicago including intermittent Occupy protestors given the hugely uncertain prospects facing the industry. MBA economists are predicting less than $1 trillion in new originations in 2012, which would be the lowest new production volume since 1997, and all three major components in the business origination, servicing and secondary marketing face huge structural challenges that so far are still just vaguely mapped out. Yet attendance was up about 18 percent from last year, and several observers noted that investors are...
In five years, the mortgage servicing business will likely be dramatically different than it is now or has been in the past, experts say, and getting there wont be easy. Homeowners think servicing is about them, that the industry should be trying to solve their problems, said Peter Swire, a law professor at Ohio State, during a panel at this weeks Mortgage Bankers Association annual convention. But the servicer is working primarily for the investor, he said, adding that the legal structure of servicing makes the homeowner extraneous. Although there is widespread acknowledgement that change is necessary, the significant...
Negotiations among major banks and state attorneys general to settle problems in foreclosure servicing practices reached a one-year anniversary this week with little apparent progress over the key issue of how much litigation relief the lenders will gain from the deal. We worked out a tremendous amount of the settlement and gotten a lot done, said a spokesman for Iowa Attorney General Tom Miller, who has been spearheading the negotiation on behalf of the states. However, he disputed applying the word imminent, which some bankers had used, to describe when the settlement might be finalized. Lets not jump...
U.S. policymakers are studying the Canadian mortgage market, which endured a far less costly downturn during the economic recession, for ideas that could be imported in the reform of the domestic mortgage finance system. We must find characteristics in other countries similar to our own system, said Rep. Carolyn McCarthy, D-NY, during a hearing in the House Financial Services Subcommittee on International Monetary Policy and Trade this week. In many ways, the U.S. mortgage market is unique. The ubiquity of the 30-year fixed-rate mortgage, a standard mortgage product here, is unparalleled elsewhere. While a 30-year...
Prepayments increased overall in September, particularly on agency fixed-rate MBS, with faster pay-downs occurring in lower coupons, according to analyst reviews of prepayment speeds. The experts expressed surprise at unexpectedly high prepayments for recent low coupon vintages and greater weakness for higher coupons. Deutsche Bank analysts reported that speeds for 4.0 percent Fannie Mae MBS issued in 2010 and 2009 more than doubled in September compared to the previous month. Speeds for similar MBS with 4.5 percent coupons increased also as much, they noted. For example, prepayment speeds for 2010 Fannie MBS with a 4.0 percent coupon...
Securitization market participants continue to face significant uncertainty from regulatory forces on both sides of the Atlantic that is dampening securitization activity, raising costs and probably leaving some deals undone. Much of the problem stems from capital requirements and the use of credit ratings, which have fallen into disrepute among many lawmakers and regulators in the wake of the collapse of the subprime mortgage market and the resulting credit market freeze in 2008. After last years enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Federal Reserve, the Federal Deposit Insurance Corp., the...