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Inside Mortgage Finance

February 12, 2015

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Two Modestly Bright Spots in Slowing 4Q14 Mortgage Origination Market: Jumbo and Home-Equity Lending

The two best things about the mortgage origination market in the fourth quarter were that it meant 2014 wasn’t as bad as once feared, and that refinance demand had picked up. But a new Inside Mortgage Finance analysis and ranking reveals two other positive trends: the jumbo and home-equity markets continued to gain strength in the final three months of 2014. Lenders originated an estimated $67 billion of jumbo mortgages during the fourth quarter, up 3.1 percent from the previous period. Home-equity production bounced 5.0 percent higher, to an estimated $21 billion. Neither gain was...[Includes two data charts] Read More

HUD Secretary Castro Faces the Music in First Encounter With GOP Critics on House Financial Services Committee

Department of Housing and Urban Development Secretary Julian Castro faced the wrath of the GOP majority during a House Financial Services Committee hearing this week on the state of the FHA, focusing on the agency’s recent decision to cut annual mortgage insurance premiums. While Castro may have been warned about stepping into the lion’s den, he appeared ill-prepared for the confrontation with Republicans, unable to answer basic questions such as FHA’s net income, overall delinquency rate and the serious delinquency rate for 2014. Democrats, on the other hand, helped the embattled secretary regain his footing by expressing support for FHA’s efforts and putting perspective on some of FHA’s actions to strengthen the Mutual Mortgage Insurance Fund and help qualify more borrowers for FHA credit. Committee Chairman Jeb Hensarling, R-TX, set... Read More

Inter-Party Differences Hinder Action in Congress on Mortgage Finance Reform

Internal differences among Democrats and Republicans – let alone the strong differences between the two parties – have prevented Congress from resolving the conservatorship of the two government-sponsored enterprises, according to industry analysts. At the ABS Vegas conference this week sponsored by the Structured Finance Industry Group and Information Management Network, two people with intimate knowledge of matters in the House and Senate pointed to inter-party issues regarding GSE reform. Andrew Olmem, a partner at the law firm of Venable and a former Republican chief counsel and deputy staff director at the Senate Committee on Banking, Housing, and Urban Affairs until 2013, noted... Read More

M&A Heats Up: New Jersey REIT to Buy Aurora While RoundPoint May Be Entertaining Offers

RoundPoint Mortgage, a servicer with more than $41 billion of receivables on its books, is entertaining offers for the entire company, according to industry officials briefed on the matter. Moreover, servicing advisors contend that several large bulk servicing portfolios are ready to hit the market in what should turn out to be a busy late winter/early spring for both buyers and sellers of mortgage servicing rights. In a recent public disclosure, Ocwen Financial said... Read More

Investors Can’t Seem to Make Up Their Minds About Mortgage Stocks; Some are In, and Some Are Out

Institutional investors that loaded up on mortgage stocks the past two years have been battered by huge losses thanks to a 34 percent plunge in originations and negative publicity generated by industry bellwether Ocwen Financial and some of its peers. But with some mortgage stocks – such as Owen – trading at 80 percent discounts to their 52-week highs, now may be the time to “re-enter” the volatile world of mortgage equities. At least, that’s how some hedge funds and private-equity firms view the matter. According to Henry Coffey, a vice president and senior analyst at Sterne Agee, there are... Read More

Policymakers Weigh Relief for Small Banks, CUs From DFA, Trickle-Down Exams, Best Practices

Lawmakers and regulators alike cited the recent move by the Consumer Financial Protection Bureau to liberalize its ability-to-repay rule somewhat as an example of the kind of adjustments that can be made to help ease the regulatory burden for smaller financial institutions, especially those operating in underserved markets. “A few weeks ago, the CFPB announced changes to its mortgage rules – a win for small lenders, particularly those in underserved rural areas,” said Sen. Sherrod Brown, D-OH, ranking member of the Senate Banking, Housing and Urban Affairs Committee, during a hearing early this week. “There is... Read More

HUD Mum on Reported Revisions in Direct Endorsement Program, Loan Certification Policies and Procedures

The Department of Housing and Urban Development declined to comment on the progress on revised policy drafts that may help reduce lender liability and ease back-end enforcement actions. The FHA is considering procedural changes aimed at easing lender liability to spur more FHA lending to qualified, underserved borrowers. Specifically, FHA is reportedly working to raise the bar on loan certification violations, making it harder to sue lenders for unintentional or technical mistakes. Such a change could spur... Read More

Paired Testers Uncover Discriminatory Lending at M&T Bank, Minorities Get Fewer Breaks than Whites

M&T Bank is facing lending discrimination allegations in U.S. District Court in Manhattan after a fair housing group claimed to have accumulated evidence of disparate treatment between qualified minority borrowers and less-qualified white mortgage applicants. The Fair Housing Justice Center, a New-York based nonprofit, accused M&T Bank of violating the Fair Housing Act by offering higher loan amounts to white borrowers and allowing more flexible criteria than those made available for minority borrowers. As of press time, M&T did not respond... Read More

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