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Inside Mortgage Trends

September 1, 2006

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Both Sides of Mortgage Banking Profit Picture Brighten in Second Quarter

Top mortgage lenders reported improving profits on both loan production and servicing activities during the second quarter of 2006, according to a new analysis by Inside Mortgage Profitability. A group of 10 top lenders reported a combined $1.71 billion in loan production income during the second quarter, a solid 19.4 percent increase from the first three months of the year. With loan origination volume also rising during the period... Read More

Accredited Home Lenders Revamps Business Model To Rescue Its Bottom Line and Retain Salespeople

Cooling markets and shrinking margins are testing Accredited Home Lenders’ core philosophy based on profitable lending. The firm has been struggling to reconcile its pricing and profit strategies. The subprime lender is facing “continuing intense price competition, fluctuating secondary market appetites and higher funding costs,” reported CEO James Konrath during a second quarter earnings conference call. The company did report second quarter profits rose $1.84 per share, or $41.2 million... Read More

Some Lenders Are Feeling the Sting of Buyback Demands and Expect to Shelling Out Millions More

The spreading virus of increased loan repurchase demands from whole loan buyers is crippling Encore Capital and a number of other mid-sized lenders. ECC’s second quarter loss was nearly triple from the first quarter and included nearly $8 million in... Read More

Servicing, Cross-Selling and Diversity Keys To Future Profitability, MBA Council Predicts

Servicing, cross selling and a diverse workforce will drive profitability in the next 10 years, according to an industry panel assembled by the Mortgage Bankers Association. However, servicers may have to cope with already outdated servicing platforms for a number of years before upgrades are feasible. The Council to Shape Change, an MBA study group, predicts that scale will play a key role over the next decade... Read More

Lenders Looking for Alternatives to Fund Loans Find Retirement Accounts Hold Great Promise

Individual investors have played a major role in the housing boom of recent years, but slowing pricing appreciation rates are making quick-turnaround deals less attractive. A new alternative for these investors may be to use their individual retirement accounts to begin funding home mortgages. A structured called a self-directed IRA allows individuals to use retirement funds to invest in real estate, but only if a person goes through a third... Read More

A Freddie Mac Program to Reach Out to Default Borrowers Produces Better Than Expected Results

Freddie Mac is finding great promise in a new program it is co-developing to help delinquent borrowers and save servicers potentially tens of thousands of dollars by avoiding foreclosure proceedings. A Roper Public Affairs survey commissioned by the government-sponsored enterprise shows that when many borrowers get behind in payments, they never attempt to talk with their servicer. That’s despite the fact that at least 75 percent recall being contacted and offered help... Read More

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