Falling interest rates produced a record increase in new originations and soaring production revenue in the second quarter, but MSR hedging results offset much of the gain.
A large bank merger and Wells Fargo’s move to unload Ginnie Mae servicing played key roles in the surge of bulk MSR transfers during the second quarter.
Vehicle-finance deals remained the backbone of ABS production in the first half of 2019, but transactions backed by consumer loans are a faster-growing segment.
Lenders of all shapes and sizes reported eye-popping increases in production volume from the first to the second quarter of 2019. At the midway point, this year was running 11.5% ahead of the pace in the first half of 2018.
Most of the increase in FHA/VA delinquencies came in early-stage defaults as the share of loans over 90 days late declined. The Ginnie servicing market grew 1.4% in the second quarter.
The biggest chunk of the insured market was loans with private MI coverage: $78.32 billion in the second quarter, a 49.3% increase from the previous period. That broadened the private MI footprint to 42.0% of the insured agency market, up from its relatively low 41.7% share in the first quarter.
Non-agency MBS backed by seasoned collateral, mostly nonperforming and re-performing loans, accounted for 54.3% of new issuance in the second quarter. Securitization of newly originated loans slipped 13.5% from the previous period.