In the next year or so, a changing environment will remain the norm in the mortgage industry, where participants can expect impending interest-rate increases, new product offerings, increasing competition, new servicing business models, and continued regulatory scrutiny, according to a new PricewaterhouseCoopers (PwC) study. To address flat production volume and shrinking margins, lenders will need to cross-sell products, and concentrate on reducing ...

In the second quarter, sharply lower interest rates continued to wreak havoc on the asset value of mortgage servicing rights, causing financial damage at banks and nonbanks alike, according to interviews and analysis by Inside Mortgage Finance. At June 30, Wells Fargo valued its residential MSR portfolio at 68 basis points, down from 77 bps a year ago. Bank of America cut its capitalized MSR from 78 bps in June 2015 to 51 bps at the midway point this year. And JPMorgan Chase lowered its MSR ratio to 81 bps at the end of June, compared to 105 bps a year ago. As Keefe Bruyette & Woods put it, “MSR interest rate marks were...

The second large prime non-agency mortgage-backed security from JPMorgan Chase will differ somewhat from the pioneering deal the bank priced in March. Among other changes, the Chase Mortgage Trust 2016-2 is larger than the previous MBS and includes a higher share of jumbos, according to presale reports. The MBS issued late this week totaled $2.65 billion, with mortgages eligible for sale to the government-sponsored enterprises accounting for 55.0 percent of ...

The securitization rate for adjustable-rate mortgages has declined significantly in the past year, according to an analysis by Inside Nonconforming Markets. Some 11.4 percent of ARMs originated in the first quarter of 2016 were included in mortgage-backed securities, down from 20.1 percent in the first quarter of 2015. When ARMs make it into MBS, it’s generally in securities from Fannie Mae, Freddie Mac and Ginnie Mae. The vast majority of non-agency ... [Includes two data charts]

Senate legislation that would make it easier to obtain FHA financing for condominium projects has been sent to the president for signature, though lenders seem to be more eager for long-anticipated condo reform guidelines from the Department of Housing and Urban Development. Senate lawmakers unanimously approved H.R. 3700, the “Housing Opportunity through Modernization Act,” before Congress retired for the August recess. The bill passed in the House of Representatives by a vote of 427-0 back in February. Industry observers said the bill would essentially codify FHA condo-financing guidelines, which HUD recently drafted and are currently undergoing clearance at the Office of Management and Budget. Under H.R. 3700, the FHA would be required to establish and implement a recertification process that is substantially less burdensome than the ...

CIT Group this week revealed that it was shoring up loss reserves tied to a reverse mortgage servicing operation it absorbed as part of its acquisition of OneWest Bank and its parent holding company, IMB HoldCo., last August. The loss of $167 million in discontinued operations relates to Financial Freedom, a reverse mortgage servicing subsidiary of OneWest Bank, which CIT shut down in December last year. In an earlier filing with the Securities and Exchange Commission, CIT management identified a material weakness in Financial Freedom related to estimates of the interest-curtailment reserve in its Home Equity Conversion Mortgage portfolio. The flawed estimates apparently have resulted in a material misstatement of CIT’s consolidated financial statements. Due to a change in estimates, and taking into consideration an investigation being conducted by the ...

USMI Names MGIC Chief as Chairman. U.S. Mortgage Insurance has tapped Patrick Sinks, chief executive of MGIC Investment Corp., to be the trade group’s new chairman. Sinks succeeds USMI Chairman Rohit Gupta, president and CEO of Genworth Mortgage Insurance. Sinks served previously as USMI’s vice chairman. Bradley Shuster, chairman/chief executive for NMI Holdings, will take overNew Reverse-Mortgage Product. California Mortgage Advisors has expanded its reverse-mortgage menu, with the addition of a non-FHA reverse mortgage option of up to $6 million for select clients. With the new product, CMA joins a handful of private reverse-mortgage lenders that will consider properties valued up to $6 million. Last year, American Advisors Group, the largest Home Equity Conversion Mortgage lender, announced its AAG Advantage lending program, which features the ...

Industry experts agree that the commercial MBS market is not going to live up to expectations of $100 billion of issuance this year, but they are hopeful the market will rebound after the industry fully implements the Dodd-Frank Act risk-retention rules that take effect Dec. 24, 2016. According to Kenneth Cheng, managing director of CMBS ratings services for Morningstar Credit Ratings, there is much uncertainty in the CMBS market about the actual impact of the risk-retention requirements. “I think everybody has agreed that it will be a negative impact – it’s just the magnitude of that impact that is uncertain,” he told Inside MBS & ABS this week. “It’s going to drive up the cost of CMBS – how much is anybody’s guess.” Also, as the cost of issuing CMBS increases, profit margins will...

Small banks have increased their holdings of mortgage servicing rights in recent years as more of these institutions switched to delivering mortgages directly to the government-sponsored enterprises, according to an analysis by federal banking regulators. Small banks, those with total assets less than $10.0 billion, held 8.0 percent of the banking industry’s total mortgage servicing assets in 2015, up from a share of less than 2.0 percent as recently as 2009. Small banks have increased ...

Top commercial banks reported substantial increases in mortgage production during the second quarter, but mortgage-banking income was lagging, according to a new analysis of earnings reports by Inside Mortgage Trends. In aggregate, the five large banks reported $124.25 billion in mortgage originations for the second quarter, a hefty 30.1 percent increase from the first three months of the year. At the high end, Wells Fargo said its mortgage ... [Includes one data chart]