Mortgage banking and brokerage firms are about to start laying off production workers as refi applications continue to decline, but industry executives say the heaviest layoffs are unlikely to come until the end of summer. That’s when lenders begin closing mortgages that first entered the pipeline in May, when the application picture was brighter. According to figures compiled by the Bureau of Labor Statistics, the mortgage banking and brokerage sectors employed 293,800 full-time workers in May, compared to 295,500 in April, a loss of 1,700 positions. Compared to a year ago, employment is up 10 percent. The brokerage sector alone employed...

Fannie Mae and Freddie Mac saw a marked decline in refinance business during the second quarter of 2013, but a strengthening housing market helped offset some of the lost volume. The two government-sponsored enterprises securitized $256.0 billion of single-family refinance loans during the second quarter, according to the Inside Mortgage Finance GSE Seller Profile, a quarterly statistical report based on loan-level, mortgage-backed securities disclosures. That was down 13.6 percent from ... [Includes two data charts]

Mortgage banking remained highly profitable during the first quarter of 2013, but the hefty margins earned in secondary market activity declined and production volume tapered off, according to the Mortgage Bankers Association’s quarterly performance report. The average firm participating in the survey generated $3.65 million in pretax income during the first quarter, off 22.5 percent from the previous period, the MBA said. That was still well above the $2.33 million in average earnings for the ...

To implement sustainable cost reductions, lenders and servicers should address four critical elements, according to analysts at PricewaterhouseCoopers. PWC said executives addressing consumer lending costs should develop a strong foundation, create breathing space, look at the system as a whole and embed a cost-conscious culture. “To create sustainable reductions in cost requires a comprehensive review of the organization, its strategic positioning and the underlying ...

Although it appears that the rate on the benchmark 10-year Treasury has finally stabilized, most mortgage professionals are operating under the assumption that the days of ultra-low rates are over. That may be the “bad” news. But there is good news in rising rates in the form of higher values attached to mortgage servicing rights. As FBR Capital Markets points out in a recent note to investors: “MSR holders are the clear winners” when it comes to higher rates. In its report, FBR lays out the basic ...

An FHA proposal for new legislative authority to transfer servicing has raised concerns among industry participants, particularly in the Ginnie Mae market. Authorizing the FHA to shift mortgage-servicing rights from one servicer to another could have a ripple effect on Ginnie Mae servicing rights and also adversely impact state mortgage servicing and origination licenses, some say. The bottom line is that Congress should consider FHA’s request for new statutory authority with great care, said Larry Platt, a compliance attorney and a partner at the Washington law firm K&L Gates. “We would hope that ...

The FHA’s tiered system for assessing servicers’ use of loss mitigation tools should serve more as a red flag for increased supervision rather than as a basis for terminating servicing rights, said the Mortgage Bankers Association. Commenting on the FHA’s proposed enhancements to its servicer scorecard, the MBA acknowledged the agency’s responsibility to monitor and hold servicers accountable for poor performance. But while tiered ranking is a good enforcement tool, it can be misapplied, the group indicated. Any ranking system is a good first ...

FHA endorsements saw very little improvement in May as mortgage interest rates began to climb, according to Inside FHA Lending’s analysis of FHA data. Total FHA originations rose only 2.4 percent in May to $22.0 billion from $21.5 billion the previous month, and 8.9 percent on a year-over-year basis. Volume was split down the middle between purchase and refinancings, with rates rising from 3.35 percent during the first week of May to 3.81 percent at the end of May. Retail accounted for 81 percent of FHA endorsements, which were mostly 30-year, fixed-rate mortgages. The average interest rate for FHA-insured, 30-year FRMs was ... [1 chart]

Reverse mortgage lenders, consumer groups and certain advocates for the elderly are urging Congress to enact legislation passed recently by the House of Representatives granting the FHA additional authority to govern its reverse mortgage program. Testifying before the Senate Banking Subcommittee on Housing, Transportation and Community Development, the groups said the most productive action Congress can take is to pass H.R. 2167 to allow HUD to make expeditious changes to the Home Equity Conversion Mortgage program through mortgagee letters. The bill, which the House approved on June 12, would ...

Deep-freezing the Home Equity Conversion Mortgage program’s full-draw, fixed-rate standard product apparently has not diminished borrowers’ appetite for reverse mortgages as indicated by a significant increase in HECM originations in the first quarter of 2013. FHA endorsements under the HECM program surged 36.2 percent during the first three months of 2013, with lenders reporting $3.84 billion at the end of the quarter, according to Inside FHA Lending’s analysis of FHA data. Volume was also up a modest 5.3 percent from the same period a year ago. The Department of Housing and Urban Development announced the ... [1 chart]