It’s no secret that pricing on lender-paid mortgage insurance policies has come down over the past several months and now it appears the Consumer Financial Protection Bureau may take a look at what’s going on behind the curtain. According to industry officials who claim to have knowledge of the situation, the powerful consumer regulator may focus on whether there is some kind of quid pro quo going on between lenders and mortgage insurers. In particular, the agency may look...

Residential mortgages held in portfolio would be granted safe-harbor qualified-mortgage status under draft regulatory relief legislation circulated early this week by Sen. Richard Shelby, R-AL, chairman of the Senate Banking, Housing and Urban Affairs Committee. To get that classification, the lender would have to hold the loan in portfolio from inception, and any person acquiring the loan must continue to hold it in portfolio. The loan cannot provide for negative amortization or interest-only payments, and the loan term could not exceed 30 years. Also, the lender would still have...

Consumer Financial Protection Bureau Director Richard Cordray continues to tell the mortgage industry and its allies in Congress that the CFPB will not look the other way while the industry grapples with implementation of the integrated mortgage disclosure rule. The director’s latest official rebuff was delivered in a recent letter to Rep. Blaine Luetkemeyer, R-MO, who has been pressing the director for some kind of an enforcement grace period. Cordray historically has been...

Underwriting standards, not a lack of income or significant student loan debt, have held back originations of mortgages to first-time homebuyers in recent years, according to industry analysts. As lenders gradually loosen their underwriting standards, originations of mortgages for first-time homebuyers are expected to increase in the coming years. In a recent brief, analysts at Capital Economics stressed that there doesn’t appear to have been a fundamental shift in homeownership aspirations, even though housing is currently slightly over-valued compared with renting. “There is...

Big banks in recent years likely focused their refinance efforts on loans in agency MBS that had been purchased by the Federal Reserve, according to a working paper by economists at the Fed. John Kandrac and Bernd Schlusche noted that agency MBS held by the Fed exhibit faster prepayment rates than MBS held by the rest of the market. While some analysts have pinned the prepayments on refi activities by nonbanks, the Fed economists said they found that Bank of America, Citigroup, JPMorgan Chase and Wells Fargo played a large role in the high prepayment rates for agency MBS purchased by the Fed. The economists noted...

Fannie Mae and Freddie Mac continued to follow orders and prune their retained investment portfolios – and potential future income – during the first quarter of 2015. But the government-sponsored enterprises ended the period holding more of their own MBS than when it started. The combined Fannie/Freddie mortgage investment portfolio fell 0.5 percent during the first quarter of 2015. Under their conservatorship agreement, each GSE is required to reduce its mortgage portfolio to $250 billion by the end of 2018. They each have a little over $150 billion more to go and, as of the end of March, 15 quarters to do it. The Federal Housing Finance Agency has directed...[Includes one data chart]

The stock market hasn’t been treating real estate investment trusts that buy MBS very well of late, but there could be better news on the horizon: prepayment rates on the securities they own are coming down. As Barclays noted in a recent report: “Prepays fell for most cohorts, led by recent vintage 3.5s and 4s.” The investment banking firm added: “Next month, we expect speeds to remain mostly stable as seasonal factors and a 12 basis point rally in driving rates (3.83 percent vs 3.95 percent) helps offset another one-day drop in day count (20 days vs 21 days).” Several mREITs tracked...

The overall size of the single-family mortgage servicing market isn’t changing much, but the dynamics of the business continued to shift in early 2015, according to a new Inside Mortgage Finance analysis and ranking. The Federal Reserve won’t provide an official reading on single-family mortgage debt outstanding as of the end of the first quarter for another month or so, but the data point to little or no growth in the market during early 2015. Mortgage originations were...[Includes two data charts]

Thanks to the recent uptick in interest rates, the value of mortgage servicing rights is on the rise again, which should pave the way for a busy spring and early summer for investment bankers who play in the space. “Prices are holding up pretty well,” said Mark Garland, president of MountainView Servicing Group, Denver. “Prepayment speeds increased in March, but April speeds have come down a bit.” According to Garland, buyers of receivables are paying...

Mortgage industry participants are encouraged by a bipartisan bill introduced in the House last week that would provide a temporary license for loan originators transitioning from a bank to a nonbank or between states. H.R. 2121, from Rep. Steve Stivers, R-OH, would change the Secure and Fair Enforcement for Mortgage Licensing Act to allow for a temporary transitional license and give loan originators 120 days to pass testing standards for nonbank LOs when transitioning from a bank or between states. “The SAFE Act inhibits...