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Inside Mortgage Trends

July 8, 2011

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Mortgage Slowdown in Second Quarter Hits All States; Midyear Trends Mixed

The dramatic slowdown in mortgage lending activity during the second quarter of 2011 led to significant declines in virtually all states, according to a new analysis of agency securitization data by Inside Mortgage Trends. Fannie Mae, Freddie Mac and Ginnie Mae securitized a total of $565.5 billion of single-family mortgages during the first six months of 2011, but much of that activity was front-loaded in the first quarter. Agency mortgage-backed securities production declined 33.7 percent from the ... [includes one data chart] Read More

GSE Servicing Change Challenges Industry

The mortgage servicing sector is warily eyeing new servicing standards cooked up by the government-sponsored enterprises at the behest of their regulator that strictly mandate the servicers’ delinquency management requirements. Some lenders dread an implementation predicament while others see opportunity. In late April, the Federal Housing Finance Agency announced its Servicing Alignment Initiative that requires Fannie and Freddie to devise uniform rules for servicing delinquent mortgages they own or ... Read More

Servicing Reform Weighs on Company Performance

Bank of America said it will spend $400 million just to implement the servicing changes it agreed to in a controversial proposed settlement with a group of investors in non-agency mortgage-backed securities issued by Countrywide Financial. The proposed settlement itself would cost the bank $8.5 billion, and BofA set aside another $5.5 billion to cover other possible buyback demands. Reckoning the cost of upgrading servicing systems has been a common theme in an industry that faces even bigger expenses from punitive charges. Ally Financial this week said it will cost the company ... Read More

Barcoding Could Save Money, Identify Risks

Financial institutions could save up to an estimated $1 billion a year if a proposal on global identification codes in the financial supply chain is implemented, according to a non-profit specializing in barcode technology. Infrastructure costs could be eliminated through an automated system, said Allan Grody, founder of Financial InterGroup. All financial information originates with physical documents, he said, and then they’re shipped off to intermediary companies where specialized staff interpret the documents. This process is the same for security offerings, swaps and ... Read More

Joint Ventures: Boon for Some, Bust for Others

Mortgage lenders appear divided on whether a joint venture with home builders at this time would be profitable or just a shot in the dark. With home building and purchase-mortgage lending clearly in a slump, joint ventures are probably more important now than ever because the mortgage process has become more complicated and difficult for the consumer, according to a homebuilding industry executive. Bank of America, however, may be cold on joint ventures right now. Saddled with the misfortunes of Countrywide, BofA strategically ended a joint venture recently with ... Read More

Behavioral Economics Can Help Mortgage Process

People get discouraged from taking mortgage loan modifications that are in their best interest by countless paperwork steps and little support from servicers, according to a Harvard University behavioral economist who says he has a solution. Piyush Tantia, the executive director of ideas42, a nonprofit behavioral economics research and development lab at Harvard, has been experimenting with how people respond to foreclosure. Behavioral economics blends psychology and economics to analyze and predict decisions based on how people actually behave. Tantia found that people often did not ... Read More

Mortgage Trends

Four separate research studies found that mortgage counseling dramatically helps homeowners who receive it, especially financially challenged owners, according to the Homeownership Preservation Foundation. The studies show that counseling increases the likelihood that a homeowner will be granted a loan modification by 200 percent. Borrowers who accept counseling also receive better terms on loan modifications compared to those who don’t get counseling, with an average $110 lower monthly payment and an interest rate that’s ... Read More

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