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Inside Mortgage Trends

October 5, 2012

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New Risk Disclosures Proposed by FASB Will Cause Confusion, Lenders Contend

A proposal by the Financial Accounting Standards Board to require disclosure of liquidity and interest rate risk is unnecessary, costly and will cause confusion, according to industry participants. FASB proposed the Accounting Standards Update in June in an effort to increase disclosure of risks that led to problems in the mortgage market and beyond in 2008. FASB noted that liquidity risk and interest rate risk “were prominent during the recent financial crisis and continue to be relevant to ... Read More

Falling Rates Whack MSR Valuations

Declining interest rates forced mortgage bankers to lower the fair market value of their mortgage servicing rights during the second quarter, according to a new analysis of bank call-report data by Inside Mortgage Trends. Banks reported a total of $5.607 trillion of mortgage servicing for others as of the end of June, a 3.1 percent decline from the previous quarter. That represented about 81.8 percent of the total mortgage servicing outstanding that was tied to agency and non-agency ... [Includes one data chart] Read More

QE3 Will Boost Mortgage Banking Profits

The Federal Reserve’s decision to keep interest rates low until the U.S. economy creates a significant increase in employment will help banks continue to enjoy solid earnings from their mortgage banking activities, according to analysts at Credit Suisse. The Fed is increasing its already huge portfolio of agency mortgage-backed securities by $40 billion a month. Along with the $25 billion a month the central bank has been buying to replace principal paydown, the Fed’s total MBS acquisitions ... Read More

10 Steps to Combat Mortgage Fraud

The nature of mortgage fraud evolved over the past few years, and unless mortgage companies adapt to keep pace, they increasingly risk exposing themselves to fraud-driven losses, according to the auditing firm of PriceWaterhouseCoopers. “In the past, mortgage fraud largely occurred in the loan origination process. But with the sharp increase in mortgage defaults, fraudsters have evolved their schemes to target default servicing,” PWC said in a new white paper. “Now, more fraud is occurring among loan ... Read More

BofA Begins Extinguishment of Some 2nd Liens

In an effort related to the national mortgage servicing settlement, Bank of America announced last week that it has pre-qualified 150,000 borrowers to receive full extinguishments of their second-lien mortgages. Banks have been slow to modify second liens because their performance remains relatively strong even as borrowers struggle with first liens and negative equity. BofA said the full balance of second liens owned and serviced by the bank will be forgiven and the bank’s lien on the corresponding property ... Read More

Loan Mod Performance Improving

Servicers have seen increasing success with loan modification efforts in recent quarters, according to an Inside Mortgage Trends analysis of data released last week by the Office of the Comptroller of the Currency. While mod characteristics and performance vary widely, re-default rates largely appear to be tied to reductions in borrowers’ monthly payments. Re-default rates on mods completed in the past year are well below comparable rates for mods completed in 2008 and 2009. Some 44.7 percent of loans modified ... Read More

eMortgage As Compliance Tool Gaining Traction

The unrelenting pressure to comply with industry regulations and standards is the greatest factor impacting eMortgage and paperless mortgage initiatives, according to a survey by Xerox Mortgage Services. Xerox’s eighth annual Path to Paperless survey found that an ample 86 percent of industry respondents looked to a technological solution to avoid being caught on the wrong side of regulatory enforcement. Mortgage laws, regulations and standards continue to evolve in a direction toward ... Read More

Is the Mortgage Interest Deduction on the Table?

The question whether the mortgage interest deduction is worth keeping elicited mixed reactions from economists and housing market experts during a recent discussion about how to bring private capital back into the mortgage market. Participants in a panel discussion hosted by the Progressive Policy Institute and the American Action Forum took up the issue after Republican presidential candidate Mitt Romney, the day before, suggested cutting the mortgage interest deduction as part of an overall plan to equalize tax ... Read More

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