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Inside Mortgage Finance

February 6, 2014

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Nonbanks Continued Their Assault on Mortgage Servicing Market in Late 2013, Top Three Take the Right-Hand Lane

Nonbank mortgage servicers continued to grow their portfolios during the fourth quarter of 2013, as market stalwarts pulled aside and gave them room to accelerate, according to a new market analysis and ranking by Inside Mortgage Finance. Nine nonbank companies ranked in the top 30 mortgage servicers as of the end of last year, and they held an estimated $1.69 trillion in mortgage servicing. Several of the top nonbank lenders have not yet reported fourth-quarter earnings, and the group’s total servicing could be higher as more data come to light. Moreover, most of the nonbanks have pipelines of pending bulk and flow acquisitions, meaning they will continue...[Includes one data chart] Read More

At Least 10 Investors Have Raised $500 Million Or More to Buy MSR: Will Their Bets Pay Off?

Over the past two years, roughly a dozen investment vehicles have raised at least $500 million each to buy mortgage servicing rights, fueling a red-hot market that for now shows no sign of slowing. Some of these “funds” are headed by mortgage banking veterans such as Emanuel Friedman – the former co-CEO of Friedman, Billings, Ramsey Group – and Michael Lau, a former top deal maker at Phoenix Capital, one of the largest servicing brokerage firms in the nation. According to interviews conducted by Inside Mortgage Finance, Lau’s company, Pingora Loan Servicing, has amassed... Read More

CFPB Streamlines Post-Exam Reports, Highlights Mortgage Servicing Violations, Supervisory Actions

The Consumer Financial Protection Bureau has decided to streamline its post-examination reporting, apparently in response to banker concerns about prompt feedback regarding lender compliance with federal consumer financial laws. In a new supervisory highlights report, the CFPB said it would stop using written recommendations – opting for oral, on‐site guidance instead. The bureau also will combine all issues it expects a bank to address into a single section called “matters requiring attention.” The agency also decided... Read More

FHA Underwriting Standards Have Loosened In Past Year, Door Open for Further Easing

Average credit scores and debt-to-income ratios on FHA mortgages loosened as 2013 progressed, according to an analysis by Inside Mortgage Finance. Lenders have gotten particularly aggressive regarding credit score requirements, and recent changes to FHA guidelines could prompt further loosening on DTI ratios. According to an Inside Mortgage Finance analysis of Ginnie Mae loan-level mortgage-backed security data, the average credit score on FHA loans was 706.1 in January. However, as FHA originations declined during the year, average credit scores on FHA loans also fell, hitting 685.4 in December. Average credit scores on FHA originations could continue...[Includes one data chart] Read More

Panel: Treasury’s Seizure of Fannie, Freddie Profits Breaches Shareholder Rights, Future Investor Trust

The Treasury Department’s surprise move in the summer of 2012 to rewrite the Senior Preferred Stock Purchase Agreements it had with Fannie Mae and Freddie Mac was an “unlawful” action that could have a far-reaching impact well beyond the shareholders of the two government-sponsored enterprises, according to an attorney representing shareholders. Speaking Wednesday at a forum sponsored by Ralph Nader’s Shareholder Rights advocacy group, attorney Ted Olson of Gibson Dunn & Crutcher said Treasury’s Third Amendment to the PSPA was a calculated effort by the Obama administration to ensure that GSE stockholders got nothing, according to internal Treasury documents they obtained. The amendment replaced the quarterly GSE dividend payment with a net-worth sweep of all company profits. Perry Capital, represented by Olson, is... Read More

CEO of Mortgage Eminent-Domain Firm is Moving On, But Don’t Think the Issue is Over – Not By a Long Shot

Graham Williams, CEO of Mortgage Resolution Partners, a firm that has achieved notoriety in the mortgage industry for trying to use eminent domain to seize underwater loans, is moving on. But that doesn’t mean the concept of municipalities using the legal strategy is going away. “I’m transitioning out of the CEO job,” Williams told Inside Mortgage Finance. “The company will continue on.” Asked whether a CEO search is underway, he said he didn’t know. As Inside Mortgage Finance went to press this week, there were... Read More

Will a QM/QRM Environment Transition the Industry to More of an Originate-to-Hold Model?

The Federal Reserve’s move to reduce its purchases of agency mortgage-backed securities may eventually change the relative costs and benefits of financing new production through Fannie Mae, Freddie Mac and Ginnie Mae. “We’re in an environment where I think banks are going to get interested in at least the more attractive credit risks and holding those in portfolio,” said Mark Calabria, director of financial regulation studies at the libertarian Cato Institute in Washington, DC. “So, to me, the most important question going forward over the next two years for the MBS market is how much of this [new production] is going to make its way into MBS and how much will be held on balance sheets as whole loans.” Calabria predicted... Read More

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