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Inside Mortgage Trends

April 12, 2013

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GSE Repurchase Data Suggest Industry May Be Turning the Corner on Buybacks

Despite an uptick in the fourth quarter, the volume of Fannie Mae and Freddie Mac mortgages repurchased by lenders declined by 10.3 percent from 2011 to 2012, according to a new Inside Mortgage Trends analysis of data reported by the government-sponsored enterprises. In their year-end earnings reports, the GSEs said total repurchases and other resolutions of buyback demands – typically indemnification of the GSEs’ loss – dropped to $20.57 billion last year. It was still the second ... [Includes one data chart] Read More

Servicing Profits Picked Up the Slack

Mortgage banking remained hugely profitable during the fourth quarter of 2012, but it took a rebound in servicing income to boost overall earnings, according to the most recent quarterly performance report from the Mortgage Bankers Association. The MBA data show that average pretax income for a wide variety of mortgage companies rose 11.1 percent from the third to the fourth quarter of last year, hitting a record $4.71 million. That raised the average firm’s pretax income for all of 2012 to ... Read More

Gain-on-Sale Margins Declining Yet Elevated

Gain-on-sale margins for mortgage originations declined for lenders during the first quarter of 2013, according to industry analysts, but a number of factors appear likely to keep the margins this year well above historical levels. Core gain-on-sale margins for the major banks fell to 2.9 percent in the first quarter of 2013, according to estimates by Credit Suisse Securities, down from 3.3 percent in the previous quarter and from a high of 3.5 percent in the third quarter of 2012. The analysts warn ... Read More

New Subprime Lender Funds First Loan

Citadel Loan Servicing Corp. of Irvine, a new subprime lender launched by industry veteran Dan Perl, funded its first loan last week, and is getting a barrage of telephone calls from potential borrowers to its headquarters in Southern California. “We’re getting 25 to 30 inquiries a day,” Perl told Inside Mortgage Trends. The firm is in the process of evaluating between $1.5 million and $2 million in residential loans. The first mortgage it funded was for $315,000 on a home in Orange County, CA. The ... Read More

Modified Loans Still a Threat to Bank Profits

Modified mortgage loans continue to pose credit risks for banks despite improved housing-market conditions and modest declines in foreclosure activity, according to a new analysis by Fitch Ratings. Despite better modification results (partly due to reduced payments under the Home Affordable Modification Program) through the third quarter of 2012, the high delinquency and foreclosure rates for recently modified mortgages indicate persistent asset quality problems, said ... Read More

Oil, Gas Leases Present Revenue, Challenges

Servicers and lenders are missing out on revenue from oil and gas leases, according to Wingspan Portfolio Advisors. However, industry analysts also warn of challenges posed by the leases. Oil companies have leases across vast areas of land that permit drilling for natural gas and oil deposits. Steven Horne, president and CEO of Wingspan, said if the lease on a specific property is lost due to foreclosure and a subordination agreement is not worked out, production lasting up to 30 years can be lost along with ... Read More

Are Lending Standards Easing in 2013?

It’s been a longstanding and usually treacherous tradition in the mortgage industry that when origination volume starts to sag, lenders begin to expand the credit box. One quarter does not a trend make, but the pattern in credit characteristics of loans sold to Fannie Mae and Freddie Mac suggest that some easing may be underway as the market works to sustain production volume. A new Inside Mortgage Trends analysis of first-quarter sales to the government-sponsored enterprises ... [Includes one data chart] Read More

Lenders Push No-MI Loans for Purchase Boom

Anticipation of a boom in the purchase-mortgage market has prompted some conventional conforming lenders to roll out products with no mortgage insurance, and the response has been overwhelming. The 360 Mortgage Group in Austin, TX, recently launched its exclusively wholesale “NOMI” (no-MI) product and demand has been very strong, executives said. “One week after launch, we have been getting calls from mortgage brokers, correspondents, real estate agents and consumers who are very ... Read More

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