More small banks can soon receive qualified-mortgage status for certain originations even if the loans would otherwise be non-QMs thanks to provisions in the Dodd-Frank reform legislation signed into law last week. The new type of QM will be available to banks and credit unions with less than $10.0 billion in total assets. Originations held in portfolio by such institutions will receive QM status if they meet a variety of standards. The exemption is already provided to depositories with ...

Mortgage brokers and their wholesale funders gained some share in the FHA/VA market during the first quarter of 2018, according to a new Inside FHA/VA Lending analysis. Survey data collected by Inside Mortgage Finance show that all three production channels took big hits in FHA/VA volume in early 2018. The $49.11 billion in government-insured lending reported by participating lenders was down 20.7 percent from the previous quarter and 10.8 percent below the volume the group generated in the first three months of 2017. Correspondent production remained the biggest source of FHA/VA loans, accounting for 53.5 percent of the survey sample in the first quarter. But production through this channel was down 22.2 percent from the previous three-month period, a slightly larger decline than seen overall. Four of the top five lenders in the group have strong correspondent platforms, especially ... [Chart]

Independent mortgage bankers lost money on loan production during the first quarter of 2018, according to preliminary figures reported by the Mortgage Bankers Association at the group’s annual secondary market conference in New York this week. Respondents to the quarterly mortgage banking performance survey reported, in aggregate, a negative margin in the “mid to high single digits” for the first quarter, said MBA Chief Economist Mike Fratantoni. Researchers are still putting together the ...

While numerous concerns have been raised about how capital requirements impact bank holdings of mortgage servicing rights, few banks are selling MSRs because of capital requirements or regulatory issues, according to an American Bankers Association survey. In 2017, 5.0 percent of banks sold MSRs due to regulatory requirements or capital treatment, up from a 2.0 percent share in 2016. And 12.0 percent of banks said they’re contemplating selling MSRs due to new regulatory ...

Homebuyers in Tampa, Kansas City (MO), Portland and New York saw the biggest mortgage rate savings by shopping around for home loans compared to buyers in other US cities, according to a new study by LendingTree. The rate spreads in the four cities are the largest for purchase-mortgage loans overall, while New Orleans, Salt Lake City and Indianapolis have the largest differences in refinance mortgage rates, the study found. Also, due to the large loan sizes, California borrowers ...

Some big swings in mortgage banking profitability yielded an unexpected $4.31 billion bonanza for commercial banks and thrifts in the first quarter of 2018. According to call-report data analyzed by Inside Mortgage Trends, the industry’s mortgage banking was up 38.0 percent from the prior period. Several key banks reported gigantic increases, including Wells Fargo’s 170.0 percent jump to $1.22 billion and Bank of America’s 214.1 percent surge to ... [Includes one data chart]

New FHA endorsements and VA home loan guaranty volume were both down significantly in the first quarter, but the two programs followed different paths to mostly similar results. A new Inside FHA/VA Lending ranking and analysis shows that endorsements of FHA forward mortgages slipped 10.5 percent from the fourth quarter to $48.96 billion. That was the lowest quarterly output for the program since early 2015, when just $39.48 billion of FHA forward loans were originated. In the VA program, new loan guarantees fell 11.1 percent from the fourth quarter to $39.06 billion. That was the lowest three-month total since the first lap in 2016, with $37.09 billion produced. Most of the decline in FHA business was in purchase-mortgage lending, which fell 13.5 percent from the fourth quarter. While purchase loans still accounted for a hefty 71.1 percent of FHA forward endorsements during the ... [Charts]

A shift in origination trends from refinances to purchase mortgages led to reduced earnings at a number of private nonbanks in 2017, according to Moody’s Investors Service. In a recent report, the rating service detailed profitability levels for four large private nonbanks: Freedom Mortgage, Provident Funding Associates, Quicken Loans and Stearns Lending. The firms generally don’t disclose their financial results, but Moody’s maintains corporate ratings on them, which provides ...

Although Ocwen Financial Corp. eked out a $2.6 million net profit for the first quarter – after years of reporting red ink – investors in the company will continue to wonder if the firm’s best days are behind it. In the nonbank’s new 10-Q filing with the Securities and Exchange Commission, the servicing giant summed up its situation best: “An investment in our common stock involves significant risk.” Still, Ocwen soldiers on, striking settlement agreements with regulators, buying another ...

With overall production levels falling, there was a modest increase in several risk vectors of FHA and VA loans pooled in Ginnie Mae mortgage-backed securities during the first quarter of 2018.A new Inside FHA/VA Lending analysis shows the average credit score for FHA loans in Ginnie MBS issued during the first quarter was 671.1, the lowest level since Ginnie began reporting loan-level data on its securities. That was down from 673.2 in the fourth quarter and 679.2 a year ago. Part of the slide in FHA credit scores likely reflects the increased share of purchase mortgages, which typically have lower scores than refinance loans. The same thing happened in the VA market, where average credit scores fell 1.1 points to 707.8 in the first quarter. A year ago, the average VA score was 710.2. Debt-to-income ratios also drifted higher, suggesting more risk of default. Among FHA loans, the average DTI rose to ... [Charts]