Given the home price spike seen in the past 18 months, many distressed borrowers have enough equity to sell their homes rather than face foreclosure. Still, previous practices suggest that a notable share of borrowers with strong equity positions will go through foreclosure.
For refinances completed during the second quarter, 28% of borrowers remained with the servicer of their previous mortgage, the largest share since the pandemic started, according to Black Knight.
It was thought that higher capital requirements proposed on Ginnie Mae issuers would ding valuations of the MSR asset. But so far, that hasn’t happened. Credit: strong demand and declining forbearance ratios.
The key to a modest increase in servicing-for-others in the banking industry was the purchase of a large nonbank by Western Alliance Bank. (Includes data chart.)
Income fell at four nonbanks in the second quarter, though performance was far from uniform. loanDepot’s profits dropped 94% compared with the previous quarter.
The number of borrowers whose forbearance plans will expire in the fall is greater than they might have been because maximum forbearance periods are varied based on when a borrower started a plan.
Some new players came into the bulk agency MSR market in the second quarter, though Freedom Mortgage and other familiar names remained the biggest buyers. Coissuance volume rose slightly, thanks to Ginnie Mae. (Includes three data charts.)
At its current pace, the banking industry will soon have less than $3 trillion of servicing-for-others on its books. But MSR values saw one of their biggest quarterly gains in early 2021.
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