Despite the immense popularity of fixed-rate mortgages in an environment of once-in-a-lifetime low interest rates, adjustable-rate mortgages still hold a significant chunk of the mortgage marketplace. In 2011, ARMs accounted for 19 percent of banks’ total loan originations, an American Bankers Association 2012 report on real estate lending showed. Last year’s ABA survey showed that ARM products are still being actively marketed by lenders even though the fixed-rate products dominated the mortgage marketplace. ARM lending is extremely popular with community banks, which hold such loans in...

Seven months after launching as a new wholesale and retail mortgage firm with national ambitions, Bexil American Mortgage originated its first loan, highlighting the current barriers to entry in the mortgage industry. The company, founded by industry veteran John Robbins, has obtained 18 state licenses with others pending, as well as approval from the Department of Housing and Urban Development, the FHA, Veteran’s Administration and the Department of Agriculture. Although he has started and sold two previous mortgage companies, he said “it’s a significantly different environment. It’s been more challenging...

While many of the largest mortgage lenders in the industry continue to scale back their operations in a somewhat precarious operating environment, a few companies see opportunity in the reshuffling and are hitting the gas pedal. None more than Nationstar Mortgage. Fresh off an initial public offering, the company has been on a buying spree for mortgage servicing and production capacity. Although Nationstar ranked as the 11th largest servicer in the market at the end of March, pending acquisitions would push it all the way to fourth place on a pro forma basis, according to a new...(Includes one data chart)

Residential Capital’s filing for bankruptcy early this week signaled Ally Financial’s exit from the mortgage industry, and though the transfer of its servicing and origination platforms will not change the market in a meaningful way beyond industry rankings, the legal situation could offer a paradigm for other beleaguered mortgage units to follow. “It wasn’t a monstrous event,” said one industry observer. “It was an unfortunate event. Everyone knew they missed an interest payment, so it wasn’t much of a surprise.” ResCap includes both GMAC Mortgage, Ally’s mainstream mortgage banking operation, and what’s...

Redwood Trust saw steady progress in growing its residential mortgage business in the first quarter of 2012, which was highlighted by two securitizations totaling $745.0 million, according to the company’s recent filing with the Securities and Exchange Commission. The Mill Valley, CA-based real estate investment trust reported first quarter income of $30 million, compared to a loss of $3 million in the previous quarter and $18 million in profits a year ago. The increase resulted from a combination of Redwood’s new mortgage banking activities that include gains from the $416 million jumbo MBS...

While issuance of non-agency mortgage-backed securities is not particularly attractive for lenders at the moment, banks have been able to turn strong profits by holding nonconforming loans in portfolio. “We’re able to make very good returns” that exceed the profit on selling to the government-sponsored enterprises, said Greg Tallmadge, a vice president at TD Bank. Speaking at the Mortgage Bankers Association’s National Secondary Market Conference this week ...

Although agency mortgage securitization gobbles up a huge share of new home loan originations, jumbo mortgages, home-equity loans and nontraditional mortgage sectors are largely held in retained portfolios that have to be carefully managed, experts say. “Your loan portfolio is incredibly important,” said Jerry Hubbard, president of FTN Financial Capital Assets Corporation during a panel at this week’s Mortgage Bankers Association Secondary Market Conference. “Your consolidated portfolio is three to four times bigger than an investment portfolio. It’s the most important asset on the books...

Dividend payments paid by Freddie Mac to the U.S. Treasury for its continued financial support held down the GSE during the first quarter of 2012 as Freddie would have otherwise posted a profit. Freddie, which posted its first quarter results late this week, actually reported $577 million in net income during the first three months of this year before having to repay $1.8 billion in preferred stock dividends to the government. Under the terms of the GSEs’ purchase agreement, the Treasury is entitled to a dividend of 10 percent per year on a quarterly basis. Freddie’s first quarter dividend payment more than offset the company’s comprehensive income of $1.79 billion, prompting the GSE to seek another $19 million from taxpayers.

The Federal Home Loan Bank Office of Finance announced this week that preliminary combined net income for the FHLBanks jumped 42.3 percent to $733 million in the first quarter of 2012, up from $515 million from the end of the fourth quarter and a whopping 104.7 percent increase from the same period last year. The FHLBank system’s $375 million year-over-year income increase was driven by lower other-than-temporary impairment charges, higher net gains on derivatives, hedged items and financial instruments carried at fair value, and lower assessments, partially offset by lower net interest income, said the Office of Finance.

Nearly all major lenders have reported increased earnings from their mortgage banking activities during the first quarter of 2012, according to a new Inside Mortgage Trends analysis of earnings reports from 25 companies. As a group, the 25 public companies posted an impressive $7.606 billion in mortgage banking income during the first three months of 2012. That was up 39.0 percent from the $5.471 billion these same firms earned over the final three months of 2011, and it was a huge 177.4 percent increase over the first quarter of last year.The group’s first-quarter mortgage banking...(Includes one data chart)