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Inside Mortgage Trends

September 21, 2012

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New GSE Buyback Policy May Have Muted Impact, But Could Spur HARP

The new “framework” governing Fannie Mae and Freddie Mac repurchase demand activity may have a relatively modest impact on an issue that has been a major factor in the mortgage market over the past few years. Analysts suggest that lenders will be cautious about changing origination strategies that have focused on minimizing buyback risk until they see how the government-sponsored enterprises implement the new policy. Many observers remain concerned about how the GSEs will respond to ongoing pressure from their regulator – and the Office of the Inspector General – to ... Read More

Loan Sales Slowed in 2Q12 But Pipeline Grew

Mortgage banking operations affiliated with banks and thrifts sold a hefty $360.0 billion of home loans during the second quarter, according to a new Inside Mortgage Trends analysis of call report data. While that marked one of the busiest markets since the end of 2010, volume was down 3.9 percent from the first three months of the year. Secondary marketing gains account for the lion’s share of mortgage banking profits as lenders do not recoup enough in origination fees to ... [Includes one data chart] Read More

Housing Strengthening Amid Lackluster Economy

A growing number of market indicators suggest that the U.S. housing market has bottomed out and is on the way back and perhaps even beginning to drive economic activity. “Housing, once the Achilles’ heel of the U.S. economy, is starting to look like a source of strength in a recovery that has lost its vigor as well as still facing significant roadblocks,” said Celia Chen, senior director at Moody’s Analytics, in a new analysis. “That housing is now a bright spot speaks more about the weakness of the ... Read More

Use of Mortgages for Home Purchases Increasing

Homebuyers are increasingly using mortgages instead of cash to purchase homes, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The share of non-cash financing methods for home purchases has increased significantly in 2012 as borrowers take advantage of low interest rates. Overall, the share of non-cash financing for home purchases increased from 65.9 percent in January to 68.9 percent in August, based on the three-month moving average. The increased use of ... Read More

Auditors Cited for Improper Mortgage Accounting

The private-sector watchdog established by Congress to examine auditing firms recently found a number of mortgage-related issues with two major auditors. The Public Company Accounting Oversight Board raised concerns about the mortgage-repurchase reserves that KPMG signed off on and about fair value measurements allowed by Grant Thornton. The PCAOB reviewed 52 audits completed by KPMG in 2011 and found that the auditor failed to sufficiently test a mortgage-backed security issuer’s ... Read More

Realtors Concerned by Tight Credit Standards

Unreasonably tight mortgage lending standards, fueled by lenders’ and regulators’ extreme distaste for risk, are dampening home sales and some flexibility is needed to drive home sales and job creation, according to a new survey by the National Association of Realtors. The survey analyzed credit scores and loan performance for both conventional conforming and FHA-VA loans and suggested returning to reasonably safe and sound lending standards to give home sales a much-needed jolt. Existing home sales should ... Read More

Independent Wholesale Lender on Record Pace

United Shore Financial Services in Birmingham, MI, is on course to a record-breaking $7 billion in residential mortgage originations in 2012, thanks to a robust wholesale lending operation and excellent relationships with mortgage brokers. Great customer service, a strong broker-support system, capable and efficient technology and strong management are the big factors for United Shore’s rapid growth, said Mat Ishbia, president of United Wholesale Mortgage, USFS’s wholesale arm. United Shore originates loans ... Read More

Lenders Vetting More Third-Party Providers

Increasing regulatory pressures and ongoing buyback exposure and legal liability is prompting a number of warehouse banks and mortgage lenders to start using outside companies to vet some of their third-party service providers such as settlement agents. Sources say settlement agents are being charged fees to provide certain business information and undergo background checks and credential verifications to become approved; otherwise, they will not be able to close loans for these entities going forward ... Read More

Lower Losses Expected with Quicker REO Sales

Servicers take lower losses and area home prices take less of a hit when real estate owned properties are quickly liquidated, according to new research by analysts at the Federal Reserve and Fannie Mae. “Our results suggest that the key to minimizing the costs of foreclosure is to minimize the time that properties spend in serious delinquency and in REO,” the authors said in “Foreclosure Externalities: Some New Evidence,” a working paper published this month by the National Bureau of Economic Research ... Read More

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