The GSEs took hits to their net earnings as a result of hedging losses for the third straight quarter. The launch of the uniform MBS pushed Fannie and Freddie into an indemnification agreement.
The nonbanks that ranked among the top 50 players in the servicing business upped their combined portfolio by 3.5% during the second quarter, while depository institutions recorded a slight decline.
Wells Fargo, for instance, reported $675.0 million in residential mortgage banking income for the second quarter, up just 2.1% from the previous period.
Fannie still accounted for nearly 62% of GSE single-family servicing out-standing at the end of June, but Freddie has been growing its business more quickly.
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.