The Structured Finance Industry Group this week unveiled key performance indicators for deal agents to track in new non-agency mortgage-backed securities. The proposed standards detail 150 measurements for deal agents to monitor. Ocwen Financial reported a net loss of $6.14 million for the third quarter of 2017. The loss would have been worse if not for a one-time tax benefit of $23.2 million related to the release of previously established reserves ... [Includes three briefs]

Correspondent-based lending operations are accounting for a growing share of the FHA and VA home loans pooled in Ginnie Mae mortgage-backed securities, according to a new analysis and ranking by Inside FHA/VA Lending. In fact, correspondent originations are the only production channel to see year-over-year growth in FHA and VA business through the first nine months of 2017. Retail and wholesale-broker production is down for both FHA and VA loans. Correspondent programs are most dominant in the FHA market, perhaps reflecting a preference among large producers to have recourse to a primary-market lender if the government later finds defects in how the loan was originated. Correspondents accounted for 48.7 percent of FHA loans pooled in Ginnie MBS during the first nine months of the year, up from 43.1 percent in all of 2016. Volume was up 1.7 percent from the ... [Charts]

A new net tangible benefit test for ensuring that a VA borrower benefits from a refinancing appears to be the obvious solution to the VA’s churning problem, according to analysts at Bank of America Merrill Lynch (BAML). Modeled after the FHA net tangible benefit test, the test seems to be a “foregone conclusion” for VA, analysts said. A Ginnie Mae/VA task force is currently working to resolve the problem, which is causing rapid prepayments in Ginnie mortgage-backed securities and raising serious doubts as to whether aggressive refinancing truly benefits veterans and servicemembers. “There is a critical need to ensure that veteran borrowers are not harmed by repeated refinancings through VA’s Interest Rate Reduction Refinance Loan program,” said Mortgage Bankers Association President/CEO David Stevens during a recent appearance before the House Financial Services Committee. IRRRLs, also referred to ...

FHA lenders think the new Loan Review System is a “modern and streamlined system” that is less user-friendly than Neighborhood Watch, according to the Mortgage Bankers Association. In a letter to the Department of Housing and Urban Development, the MBA called on the FHA to continue its ongoing discussion with lenders and other industry stakeholders on how the improve the LRS and its response timelines. Implemented last May, the LRS is an electronic platform for monitoring and reviewing the quality of single-family mortgages that FHA has insured. It replaced the post-endorsement technical review performed by the FHA Connection/Underwriting Review System (URS), review functions for post-closing test cases submitted by direct endorsement lenders, and lender self-reporting functions in Neighborhood Watch. The LRS also includes a defect taxonomy, which features a list of ...

Most banks and thrifts continued to report solid earnings from their mortgage banking activities during the third quarter, but profits generally weakened and year-to-date performance clearly has not kept up with the pace set in 2016. A diverse group of 24 banks reported a combined $2.36 billion in mortgage banking income for the third quarter, down 11.3 percent from the previous period. Half of them posted declines. The group generated $7.33 billion in mortgage ... [Includes one data chart]

The industry’s shift toward originations of purchase mortgages could help mortgage brokers gain market share, according to industry analysts. “This is a much more promising sector of the business than it was three or four years ago,” James Modrycki, a vice president of correspondent sales at Impac Mortgage Holdings, said at the Mortgage Bankers Association’s annual convention in Denver. Brokers originated $87.0 billion of mortgages in the first half of 2017, accounting for ...

Purchase-mortgage originations are expected to increase slightly in 2018, but not enough to offset declines in refinance activity, according to industry analysts. On average, economists at Fannie Mae, Freddie Mac and the Mortgage Bankers Association project that $1.21 trillion in purchase mortgages will be originated next year, up 5.9 percent from the amount expected in 2017. “All the pieces are in place for stronger growth in 2018 and beyond,” Michael Fratantoni, the MBA’s chief economist ...

There were no seismic shifts in the demographics of the mortgage-servicing business during the third quarter of 2017, although a new Inside Mortgage Finance ranking and analysis revealed an unexpected decline in the total holdings of the top servicers and a shift in composition. The top five shops held a whopping $3.716 trillion of servicing on their books at the end of September, down 0.2 percent from the previous quarter. The only top-five servicer to ... [Includes two data charts]

In a well-telegraphed move, federal regulators this week proposed reduced capital requirements for bank holdings of mortgage servicing assets, including mortgage servicing rights. The proposal issued late last week was part of an effort to “simplify” servicing-related capital requirements for all but the largest banks. The proposal would eliminate a 10 percent common equity tier 1 capital deduction threshold that currently applies to MSAs and certain other assets. Instead, a 25 percent deduction ...

One of the biggest takeaways for the mortgage industry in Republicans’ tax reform effort is that homeownership incentives provided by the mortgage interest deduction will be reduced significantly. Republican leaders have stressed that they don’t plan to eliminate the MID. But a near doubling of the standard deduction and other provisions included in tax reform will make the deduction worth much less, according to Leonard Burman, an institute fellow at the ...