Publicly traded nonbank mortgage lenders and servicers reported weak earnings during the first quarter of 2017, according to an Inside Mortgage Trends summary. The nine nonbank lenders posted a combined profit of $116.69 million for the first three months of the year. That was down 79.4 percent from the fourth quarter, although it represented a huge improvement from the $509.68 million loss the group recorded in the first three months of 2016 ... [Includes one data chart]

Newfi Lending, an online residential mortgage lender, is looking forward to a big origination year with the consolidation of its product lines under the “Newfi Lending” brand. A multi-channel lender, the Emeryville, CA-based lender previously operated as Nexera Holdings under two national brands – Newfi for its consumer-direct retail business and Bluestream Lending for third-party originations. In conjunction with the change, Newfi’s wholesale-broker business will now be ...

As interest rates increase, nonbanks’ holdings of mortgage servicing rights will help offset losses tied to lower originations, according to analysts at S&P Global Ratings. “We expect market trends affecting nonbank mortgage companies to change dramatically now that rising interest rates are driving MSR valuations higher,” the rating service said in a recent report. Freddie Mac and the Mortgage Bankers Association separately forecast that the average interest rate ...

Transfers of servicing from large servicers to smaller firms can help improve loss mitigation performance while introducing new risks to the system, according to industry analysts. Smaller servicers tend to be more “nimble” than large servicers and are better suited to handle distressed mortgages, according to analysts at Moody’s Investors Service. The rating service published a report recently highlighting changes in the servicing industry. Many large servicers, predominantly banks, have reduced...

The Financial Services Roundtable recently called for enacting comprehensive housing finance reform, including reform of the FHA’s single-family mortgage insurance program while focusing the agency’s mission on first-time and low- and moderate-income borrowers. The FSR’s call came in a detailed response to President Trump’s executive order earlier this year directing the Treasury Department to conduct an assessment of financial regulations. For starters, the trade group urged...

Nonbank lenders far out-produced depository institutions in originating FHA mortgages during the first quarter of 2017. A new Inside FHA/VA Lending analysis reveals that nonbank lenders produced over 83 percent of FHA forward loans endorsed during the first quarter. With over 8,000 entities listed as originators and sponsors in FHA loan-level data, the overwhelming majority of them were independent mortgage banks, mortgage brokers and other nonbank lenders. The 14 largest FHA originators were all nonbanks, led by Quicken Loans, Freedom Mortgage and loanDepot. One sign of the overwhelming fragmentation in the FHA primary market is the fact that these three lenders accounted for just 11.3 percent of first-quarter endorsements. The largest depository originator of FHA loans was PrimeLending, an affiliate of PlainsCapital Bank. It ranked 15th in production with a ... [charts ]

What is an “egregious” VA mortgage loan? Panelists at last month’s VA Lending Conference in Kansas City, MO, helped shed light on such loans by describing them as flawed and in violation of VA requirements. “But there’s more,” said Greg Nelms, VA chief of loan policy. Unstable income and use of active-duty income when that income will be extinguished within one year could taint a VA loan and make it egregious, said Nelms. High debt-to-income ratio, residual income that is below VA requirements and failure to consider a spouse’s debts or credit in a community-property state also could have an adverse effect on a VA loan, he added. The panel presented several “egregious loan” scenarios involving reviews of several mortgages from 2016 in which lenders were required to sign indemnification agreements. The first example consisted of a VA home loan for $102,047, which closed in ...

The Department of Veterans Affairs’ interim final rule on qualified mortgages (QM) implements the Dodd-Frank provision requiring creditors to make a reasonable and good faith determination that the borrower has a reasonable ability to repay the loan. The VA interim final rule defines QM to mean any loan that the agency guarantees, insures or originates. However, certain limitations apply to VA’s Interest Rate Reduction Refinance Loans (IRRRLs) in the rule’s guidance for “safe harbor.” Under the safe harbor requirements for an IRRRL, the loan being refinanced must have been originated at least six months before the new loan’s closing, and six payments must have been made. In addition, the veteran should not have been more than 30 days past due during the six months preceding the new loan’s closing. The QM rule’s six-month seasoning requirement, however, inadvertently created an ...

PHH Mortgage, Walter Investment Management Corp. and Ocwen Financial these days are all working from the same survival playbook: sell their most valuable asset – mortgage servicing rights – and remain as the subservicer of record. The idea is simple. All three hope to raise cash by selling MSR assets, eliminate the need to hold large sums for servicing advances and – importantly – buy some time. There’s...

Federal Housing Finance Director Mel Watt this week expressed strong reluctance to allow Fannie Mae and Freddie Mac to be forced to take another draw on their Treasury line of credit. “FHFA has explicit statutory obligations to ensure that each enterprise ‘operates in a safe and sound manner’ and fosters ‘liquid, efficient, competitive and resilient national housing finance markets,’” Watt testified in a hearing at the Senate Banking, Housing and Urban Development Committee. “To ensure that we meet these obligations, we cannot risk...