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Inside Mortgage Finance

July 21, 2006

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Residential Mortgage Production Volume Expected to Skid in Coming Quarters

Mortgage origination volume appeared to spike sharply higher during the second quarter, but industry experts are predicting significant contraction until well into 2007. The market had been in decline since the third quarter of 2005, as rising interest rates finally began to take a toll on the housing market and refinance demand. Originations dropped sharply in the first quarter of 2006 to $680 billion, their lowest level in two years. … [One data table included] Read More

Merger Activity Remains Robust as Mid-Tier Lenders Look To Grow Scale Now for When Market Conditions Improve

The pace of mergers and acquisitions in the mortgage industry has been brisk so far this year and observers predict the momentum will remain steady for the rest of the year. Last week, National City Mortgage announced that it will take offers for its First Franklin subprime unit and Deutsche Bank entered into a deal to acquire MortgageIT. … Read More

Mortgage Profitability Dropped Sharply Last Year for Privately-Owned Lenders

Privately-held subprime mortgage companies – including the huge Ameriquest enterprise -- experienced sharp declines in earnings in 2005, according to a new analysis by Inside Mortgage Profitability, an affiliated newsletter. At the same time, however, some of the largest privately-held firms specializing in prime conventional lending recorded solid increases in earnings. … Read More

Industry Groups Mold RESPA Reform Views As HUD Pushes Toward Another Proposal

If they took penalty kicks in regulatory reform this could have been over years ago. Mortgage industry groups are gearing up for a new round of lobbying over reform of Real Estate Settlement Procedures Act rules that govern how loans are marketed to consumers. The Mortgage Bankers Association last week asked its members to weigh in on three possible reform proposals the trade group will propose to the Department of Housing and Urban Development. HUD… Read More

More GSE Business Appears to be Eligible For Mortgage Insur-ance Coverage in 2006

A somewhat higher share of loans being delivered to Fannie Mae and Freddie Mac in 2006 look like candidates for private mortgage insurance, according to a new analysis based on the Inside Mortgage Finance MBS Database. Through the first half of 2006, some $101.92 billion of single-family mortgage pools guaranteed by the two government-sponsored enterprises had an average loan-to-value ratio of greater than 75 percent. That was up 19.0 percent from the volume of such… [One data table included] Read More

Departures of Numerous Top Executives Leave GSEs Vulnerable to Loss of Institutional Memory

The accounting scandals and massive financial restatements at Fannie Mae and Freddie Mac continue to produce a substantial tide of executive departures from the government-sponsored enterprises, thinning out the institutional memory in an evolving mortgage marketplace. Since the end of 2004, 44 of the top 55 executive jobs at Fannie have changed hands, while 27 of 29 senior positions at Freddie have been turned over. In recent weeks, Fannie has seen the exit of Barry… Read More

OFHEO Prompts Fannie Mae to Suspend Residential Construc-tion Loan Program

Federal regulators have forced Fannie Mae to suspend its controversial acquisition, development and construction residential loan program. First approved by the Department of Housing and Urban Development more than 10 years ago, Fannie’s ADC has been strongly supported by homebuilders but has been a lightening rod for critics who say the government-sponsored enterprises have roamed beyond their mandates. Banks, in particular, have argued there is no need for Fannie to elbow its way into the… Read More

Lender, Homebuilders Accused of Using Captives to Funnel Illegal Payments for Referrals Settle with HUD

In a strong signal to users of captive title reinsurance, the Department of Housing and Urban Development has cracked down on questionable captive reinsurance arrangements, resulting in historic first settlements with a mortgage lender and its captive title subsidiary, and two major homebuilders. The settlements involve CitiMortgage, Inc. and its captive title reinsurance company Chesapeake Reinsurance; M.D.C. Holdings and several of its Richmond American Homes builder subsidiaries and AHT Reinsurance; and WL Homes, doing… Read More

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