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Inside Mortgage Finance

June 12, 2014

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‘Agency Jumbo’ Mortgage Originations Down Sharply in Early 2014, Further Declines Ahead

Production of “agency jumbo” mortgages fell sharply in the first quarter of 2014 and is likely to drop even more as new FHA loan limits show up in endorsement data. According to a new Inside Mortgage Finance analysis, Fannie Mae, Freddie Mac and the FHA saw $10.5 billion in single-family business with loan amounts exceeding the traditional agency limit of $417,000 during the first quarter of 2014. That was down 30.6 percent from the fourth quarter. It was also the lowest three-month volume since the fourth quarter of 2008, not long after dramatically higher “emergency” loan limits were put in place by the agencies. In comparison, originations of non-agency jumbo loans fell...[Includes three data charts] Read More

Lots of Talk About Mortgage M&A, but Not Many Deals Getting Done; Institutional Investors Holding Onto PHH

Waiting for a large merger or acquisition to happen in the mortgage market is a bit like waiting for Godot: there’s plenty of talk about his arrival, but he may never show. “Right now there’s a large discrepancy between what the buyer wants to pay and what the seller wants to sell at,” said Chuck Klein, managing partner in Mortgage Banking Solutions, Austin, TX. “Any company that’s making money will not sell at just book value.” One large company that likely will not be sold this year is... Read More

FHFA Doesn’t Tip Its Hand in Request for Input On Potential Changes to Fannie/Freddie G-Fees

The Federal Housing Finance Agency late last week issued a call for public comment on how Fannie Mae’s and Freddie Mac’s guaranty fees should be determined, although the agency did not make any specific proposals, as some had expected. The FHFA’s “request for input” specifically seeks guidance regarding the optimum level of g-fees and their implications for mortgage credit availability. … Read More

QM Rule Remains Top Compliance Concern, Jury Still Out on its Effectiveness, Impact on Access to Credit

Six months into the new ability-to-repay rule, industry compliance professionals seem confident in the efforts they’ve made to get ready for the regulation and acknowledge that the sky hasn’t fallen – yet. But it’s far too early to draw definitive conclusions about the success of the rule itself and its overall effect upon the market, according to experts at the American Bankers Association’s 2014 regulatory compliance conference in New Orleans this week. “Clearly, the new rules have increased the bank’s risk profile and have put pressure on the decentralized operating market,” said Cheryl Snyder, head of retail banking for Park National Bank, the lead bank in a $6 billion bank holding company headquartered in Newark, OH, and an originator of qualified mortgages and non-QM loans. Citing the lending industry’s technology preparations in the much-hyped run-up to the year 2000, Snyder told... Read More

Expert: Preserve, Don’t Eliminate Fannie, Freddie; Congressional Action Not Required for FHFA Fixes

Meaningful housing finance reform that would include “fixing” Fannie Mae and Freddie Mac, rather than euthanizing them outright, is still possible in 2014 and doesn’t require Congressional action, according to an expert speaking on the topic this week on Capitol Hill. Speaking at a government-sponsored enterprise forum sponsored by Investors Unite, Joshua Rosner, managing director at Graham Fisher & Co., said that GSE reform should consist of repurposing rather than eliminating Fannie and Freddie. “We shouldn’t reinvent... Read More

Industry Bemoans Senate Committee Authorizing FHA to Charge New Fee to Fund Quality Assurance Improvements

A potential conflict over funding of the FHA’s loan-quality improvement efforts and, possibly, of a pilot program that seeks to make broader use of housing counseling in FHA origination and servicing may be brewing as both the House and Senate moved towards finalizing their separate versions of fiscal 2015 appropriations for the Department of Housing and Urban Development. Last week, the Senate Appropriations Committee voted 29 to 1 to pass S. 2438, its FY 2015 HUD funding bill. Notably, it contains a provision authorizing HUD to charge and collect a new fee from FHA lenders in an amount of no more than 4 basis points of the original principal balance of mortgages originated by the lender that were insured during the previous fiscal year. According to the Senate provision, the new fee would be used... Read More

Minimum Requirements for Appraisal Management Companies Prompt Debate on State Regulation

Industry participants have raised a number of concerns about a proposed rule issued in April that would implement minimum requirements for appraisal management companies, which are intermediaries between appraisers and lenders. Federal regulators in April issued a proposed rule that would implement AMC provisions mandated by the Dodd-Frank Act, including a ban on AMCs providing appraisal management services for federally related transactions in states that haven’t established regulations for AMCs. The Consumer Mortgage Coalition said... Read More

Industry Groups Welcome CFPB’s Proposal for a Cure Period For QMs with Points and Fees that Exceed Allowable Limit

Industry groups are supportive of a proposal by the Consumer Financial Protection Bureau to provide a reasonable cure for inadvertent overages in points and fees on qualified mortgages, but they disagree over the appropriate length of the cure period and other issues. The proposed CFPB rule would amend certain mortgage rules issued last year under the Truth in Lending Act. It would provide a limited cure mechanism for QM loans that exceed the points-and-fees limit for such mortgages and provide an alternative “small servicer” definition for nonprofit groups that meet certain requirements. Also, the bureau has proposed to amend the current exemption from the ability-to-repay rule for qualified nonprofits. In addition to the specific proposals, the CFPB sought... Read More

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