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Inside Mortgage Trends

July 13, 2012

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Mortgage Market Continues to Top Forecasts, Earnings Steady in 2Q12

Early indicators suggest that mortgage production volume was up slightly in the second quarter of 2012, and lenders continued to book strong net profits as a result of healthy gain-on-sale margins.Industry economists had generally expected a slowdown in loan production levels during the second quarter. The consensus forecast from economists at Fannie Mae, Freddie Mac and the Mortgage Bankers Association pointed to a 4.6 percent decline in new originations during the second quarter.Despite the fact that mortgage interest rates continued to ... Read More

Is Government Driving Mortgage Consolidation?

There isn’t a lot of doubt about the increasingly top-heavy nature of the mortgage business, but industry experts are divided over the role government policy has played and its impact down the road as Dodd-Frank Act reforms take root. A decade ago, in 2001, the top five lenders in the market accounted for 37.6 percent of total originations and 36.6 percent of mortgage servicing. By the end of last year, the top five lenders had a combined market share of 59.1 percent in originations and 55.2 percent in mortgage servicing.That trend could be exacerbated by the increased compliance ... Read More

Servicers Don’t Do Enough to Reach Borrowers

Mortgage servicers have not maximized their potential outreach to borrowers facing foreclosure in the wake of the consent orders issued last year by the Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision, according to a new report by the Government Accountability Office. The same can be said for the regulators. “Regulators and servicers have gradually increased their efforts to reach eligible borrowers and have taken steps to improve communication materials,” the GAO said, but they failed to undertake such “best practices” ... Read More

OCC: Underwriting Deficiencies Plague Banks

The overhang of severely delinquent and in-foreclosure residential mortgages continues to challenge large banks with extensive mortgage operations, while it also affects the economic environment for all banks, according to the Office of the Comptroller of the Currency.The OCC’s latest Semiannual Risk Perspective report flagged three major risk concerns for the banking industry: the aftereffects of the recent housing-driven credit boom-bust cycle; the challenges to banking industry revenue growth after the recession; and the potential that banks may take excessive risks in an effort to ... Read More

Collusion Fraud Becoming More Widespread

A larger percentage of loans originated over the past three years show evidence of collusion fraud among parties to the transaction, according to LexisNexis. Prior to 2009, collusion fraud – defined as incidents of verified, non-arm’s length transactions – was reported on less than 5.0 percent of loans, the company said. For loans originated in 2009, that rate jumped to 7.0 percent and then to 9.7 percent in 2010. The rate edged down to 6.8 percent for 2011 originations, but experts think the reported numbers understate the prevalence of such fraud.“Because these complex relationships ... Read More

GSE Market Shifts to Retail

Mortgages sold to Fannie Mae and Freddie Mac are increasingly coming from lenders’ retail production channels, according to a new analysis by Inside Mortgage Trends. In the second quarter of 2012, 58.1 percent of single-family loans securitized by the government-sponsored enterprises were retail originations, up from 52.9 percent in the first quarter. Broker originations dropped from 10.8 percent of GSE business to 9.0 percent, and the correspondent share slipped from 36.3 percent to 32.9 percent. After accounting for a whopping 83.2 percent of Fannie/Freddie business in the first quarter ... Read More

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