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Wednesday, Mar 27, 2013

Armed with $500 Million in Cash, Sterling Now Actively Bidding on MSRs

By Paul Muolo

“I know they’re actively shopping,” said one industry consultant familiar with Sterling. But he added: “As an old hand at trading servicing, I can tell you that most of the time, it’s okay to lose, particularly in a market like today. You can learn a lot from losing a bid.”

At press time, Sterling officials had not returned telephone calls from Inside Mortgage Finance. Back in the fall, Sterling hired Michael Lau away from Phoenix Capital, a servicing brokerage firm, with an eye toward building a massive portfolio of MSRs. An EVP at Phoenix, Lau was a key player in the firm’s relationship with Bank of America, a top seller of MSRs the past two years.

One servicing executive told IMF that Sterling “is trying to be the next Nationstar.”

Other areas of interest: Originations, Servicing, Regulatory, Fannie, Freddie

Servicers Will Solicit Candidates Under New FHFA/GSE Modification

By Paul Muolo

Residential servicers will be in the driver’s seat under a new GSE “streamlined” loan modification initiative unveiled Wednesday by the Federal Housing Finance Agency.

The project targets delinquent borrowers who are between 90 days and 24 months late on their loans. “It will be up to the servicer to seek out the borrower and solicit them for this initiative,” noted one GSE official. The refi project launches July 1 and ends in August 2015.

In a statement announcing the streamlined mod program, FHFA said, “Servicers will be required to offer eligible borrowers who are at least 90 days delinquent on their mortgage an easy way to lower their monthly payments and modify their mortgage without requiring financial or hardship documentation.”

But before a borrower is offered a permanent modification, they must “demonstrate a willingness and ability to pay by making three on-time trial payments,” the agency noted, adding that, “Documenting income and financial hardship could result in a modification with additional savings for the borrower.” The largest servicers of Fannie Mae and Freddie Mac loans include Wells Fargo, Bank of America, and Chase, according to figures compiled by Inside Mortgage Finance.

Other areas of interest: Originations, Servicing, Regulatory, Fannie, Freddie

FHA Coverage Spikes in January, Wells and Quicken Lead the Pack

By George Brooks

Despite increases in mortgage insurance premiums and other policy changes aimed at reducing FHA market share and strengthening the Mutual Mortgage Insurance Fund, FHA endorsements rose 18.7 percent in January 2013 from December 2012, and a hefty 38.7 percent from January of last year, according to new figures compiled by Inside FHA Lending.

However, FHA refis accounted for 54.3 percent of total production while purchase mortgages made up 45.7 percent, a trend that has been disappointing to some industry participants. FHA, Fannie Mae, Freddie Mac and private mortgage insurers are not doing enough to stimulate purchase mortgage originations, they complained.

While lender credit overlays are producing high-quality books of business, many qualified purchase borrowers are being rejected. FHA, Fannie and Freddie purchase activities are running well behind historical levels, according to Brian Chappelle, a mortgage industry consultant.

The top 50 FHA lenders funded $23.7 billion of new agency fixed-rate loans in January 2013, compared to $20 billion in December. In January 2012 lenders originated $17.1 billion of FHA FRMs. Wells Fargo maintained its top FHA lender ranking with $2.9 billion in January (12.1 percent market share) while Quicken Loans was a distant second with $920 million. For the full story and complete rankings, see the new edition of Inside FHA Lending.

Other areas of interest: Servicing, Data/Rankings, Ginnie Mae/FHA

Credit Unions Want Relief from CFPB Rules

By Thomas Ressler

The National Association of Federal Credit Unions made a fresh appeal to Senate leadership for relief from CFPB rulemakings, as part of a broader call for regulatory relief for its members from a host of rules and regulations. The trade group said the National Credit Union Administration should have "the authority to delay implementation of CFPB rules that affect credit unions and to tailor those rules for credit unions' unique structure."

In a letter sent March 26 to Senate Majority leader Harry Reid, D-NV, and Senate Minority Leader Mitch McConnell, R-KY, NAFCU President Fred Becker said, "All community based financial services institutions, including credit unions, are struggling under an ever-increasing regulatory burden. The impact of this growing compliance burden is evident as the number of credit unions continues to decline, dropping by more than 700 institutions since 2009.

"Credit unions didn’t cause the financial crisis and shouldn’t be caught in the crosshairs of regulations aimed at those entities that did," Becker continued. "Unfortunately, that has not been the case thus far. Accordingly, finding ways to cut down on burdensome and unnecessary regulatory compliance costs is a chief priority of our members.  We hope it will also be a priority of the Senate."

Other areas of interest: Originations, Servicing, Regulatory

Short Takes: MBA Hikes Origination Forecast, Applications Rise / Rep. Waters Applauds Move to Ban Incentive Payments on Force-Placed / Appraisal Complaints Continue / EverBank is How Large in Warehouse Lending?

By Paul Muolo

The Mortgage Bankers Association recently (and somewhat quietly) hiked its origination forecast for 2013 to $1.432 trillion, an increase of 2.6 percent from its prior look at the crystal ball. MBA chief economist Jay Brinkmann told Inside Mortgage Finance that most of the increase will come in the second and third quarters of the year. Meanwhile, the trade group released its new application figures on Wednesday. New business rose 7.7 percent from the week before, but the refi share remained unchanged at 75 percent of the total…

Rep. Maxine Waters, D-CA, ranking member of the House Committee on Financial Services, likes the thought of the Federal Housing Finance Agency banning the payment of lucrative commissions and reinsurance fees to banks in return for their purchase of force-placed insurance policies.  In some quarters the payments are referred to as “kick-backs” but as many mortgage professionals have noted before, the practice is entirely legal. Servicers are permitted to require homeowners to purchase property and casualty insurance when their policies lapse. This usually happens (but not always) when the mortgagor is delinquent, a point that most politicians don’t realize. Servicers, including the megabanks, of course, benefit from these “incentive” payments. Two months back, FHFA killed a Fannie Mae plan to ban servicers from receiving such commissions. Instead, Fannie’s goal was to lower force-placed costs by purchasing coverage directly from a new group of underwriters...

And the appraisal complaints continue.  Don Frommeyer, senior vice president of Amtrust Mortgage Funding, Carmel, IN, said his shop is busy these days, but noted that “some appraisals are taking as long as three weeks to complete and they are going back to the appraiser for corrections and stuff after that time.” Don is also president of the National Association of Mortgage Brokers

EverBank Financial has been mostly quiet on its role in the warehouse market, a business it bought from MetLife last year, but in a recent SEC filing it revealed that “our loan commitment sizes generally range from $20 million to $100 million to mid-sized and larger firms with a proven track record of originating quality mortgages.” No commitment number was given but we heard that it’s in the range of $1 billion. In the same filing, EverBank noted that it’s also a buyer of  bulk MSRs…

Walter Investment Management Corp. has been gobbling up MSRs like a Pacman the past year. In a new investor presentation the publicly traded servicer – which is now branching out into forward and reverse lending – notes that it paid $810 million to buy MSRs from Bank of America and Residential Capital Corp. It is also projecting that it will have portfolio run-off of 25 to 28 percent this year.

Other areas of interest: Originations, Servicing, Personnel, Regulatory, Data/Rankings, Mergers & Acquisitions, Fannie, Freddie, Mortgage Lending & Servicing


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