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Inside Mortgage Finance

June 2, 2006

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Securitization Plays Increasingly Key Role in Mortgage Finance in 2006

The mortgage securitization process is playing an increasingly dominant role in how residential mortgage loans are financed, gobbling up a record 74.3 percent of primary market originations during the first quarter of 2006. According to the Inside Mortgage Finance MBS Database, a whopping $498.1 billion of home loans were pooled in securities during the first quarter of this year. That accounted for 74.3 percent of the $670 billion of mortgages originated in the primary market… [One data table included] Read More

Countrywide Leads Flourishing Nontraditional, Adjustable Rate Mortgage Markets in 1Q06

Adjustable-rate mortgages and so-called nontraditional loan products continued to comprise a substantial portion of the primary market originations during the first quarter of 2006, according to a new market analysis and ranking by Inside Mortgage Finance. Despite a flat yield curve that squeezes the payment advantage of adjustable-rate mortgages relative to fixed-rate products, lenders originated a healthy $282 billion of ARMs during the first three months of 2006. That represented 42.1 percent of total… Read More

Minorities More Likely to Receive Alternative Mortgages, Consumer Advocates Report

Minorities are more likely to receive so-called alternative mortgages, according to a new study by the Consumer Federation of America. The study also raises concerns about the incomes and credit scores of borrowers who receive adjustable-rate loans and interest-only mortgages. While refusing to reveal its data source, the CFA said it analyzed certain borrower and loan characteristics of more than 100,000 mortgages originated between January and October 2005 for its study. The group reported that… Read More

Freddie Mac Reports Big Drop in Net Income; GSE Expects To Meet Affordable Housing Goals, Faces Portfolio Cap

Freddie Mac this week reported a sharp drop in net income for 2005 and cautioned the market that it too could be forced into a no-growth posture by its federal regulator. The government-sponsored enterprise reported $2.13 billion in net income for last year, a 27 percent drop from 2004 that was well below Wall Street’s expectation of $3.49 billion. Freddie executives attributed most of the decline in profitability to the cost of settling litigation (about… Read More

Thrift Industry Originations Drop 13 Percent in Early 2006, But Start Even With Last Year’s Pace

Thrift mortgage activity started the year ahead of the pace set in the early going of 2005, but down from the fourth quarter, according to data from the Office of Thrift Supervision. OTS-regulated thrifts reported $142.6 billion in mortgage originations during the first three months of 2006. That was down 13 percent from the fourth quarter of 2005, and up a modest 0.8 from year-ago levels. … [Two data tables included] Read More

Lenders Warn of Higher Costs, Less Availability as A Result of Tougher Senate Flood Insurance Bill

Mandatory flood insurance may become less affordable and harder to obtain if certain provisions in a national flood insurance reform bill approved by a Senate committee last week are not modified, according to mortgage lenders. The Senate version of the Flood Insurance Reform and Modernization Act of 2006, or FIRM, would overhaul the bankrupt National Flood Insurance Program by updating flood maps, eliminating subsidies, expanding flood insurance requirements, and increasing penalties and premiums. The bill… Read More

FHA, VA Still Struggling with Core Products Despite Changes in Program Policies, Procedures

Government officials this week sought advice and counsel from approved lenders on how to make FHA and VA programs more appealing to borrowers, even as they reported mixed results from their year-long effort to make the programs more competitive in the mortgage marketplace. At about the same time last year, top officials from the FHA, the Department of Veterans Affairs’ Loan Guaranty Services, and the Department of Agriculture’s Rural Housing Service announced major improvements… Read More

HUD Prepares for Loss of Downpayment Assistance Nonprofit Groups in FHA

As fallout from an Internal Revenue Service crack-down on downpayment assistance programs continues, the Department of Housing and Urban Development this week released guidelines for determining whether aid from a program that loses or gives up its federal tax-exempt status can be used in FHA mortgage lending. In Mortgagee Letter 2006-13, HUD said if the homebuyer enters a contract of sale on, or before, the date the IRS officially announces that the charitable organization’s… Read More

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