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Inside Mortgage Finance

November 3, 2016

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Nonbanks and Second Tier of Mortgage Servicers Gained More Ground During Third Quarter of 2016

With no blockbuster mergers and a relatively subdued secondary market in mortgage servicing rights, glacial momentum continued to reshape the mortgage servicing business during the third quarter of 2016, according to new ranking and analysis by Inside Mortgage Finance. The two forces that have had the biggest impact over the past few years are the growth of nonbanks and the gradual deconsolidation of the servicing market. The combined portfolio of the 23 nonbanks that ranked among the top 50 servicers as of the end of the third quarter jumped 6.9 percent in just three months. The nonbank share of the $7.389 trillion serviced by the top 50 players in the market rose...[Includes two data tables] Read More

Finally, a Decent-Sized Mortgage M&A Deal: HomeBridge To Buy Prospect. More to Come? Go Big or Go Home?

HomeBridge Financial Services this week agreed to buy the assets of Prospect Mortgage, marking one of the largest acquisitions of the year and stoking the hopes of investment bankers that more deals may lay ahead. But HomeBridge’s purchase of Prospect could turn out to be an anomaly. According to HomeBridge CEO Peter Norden, the two parties had been talking on and off about combining forces for roughly five years. For Norden, the combination of the two nonbanks – both privately held – is... Read More

Wells’ Mortgage Referral Activity Takes Hit After Cross-Selling Controversy, Bank is ‘Prepared for Things to Get Worse’

The $185.0 million settlement Wells Fargo agreed to in early September regarding retail banking sales practices has impacted the lender’s mortgage operations, according to bank officials. Timothy Sloan, Wells’ president and CEO, said mortgage referral activity declined significantly after the settlement was announced. “Mortgage referrals from retail banking, which account for 10.0 percent of our year-to-date mortgage originations, were down 24.0 percent from August to September,” he said during Wells’ recent earnings call. Sloan noted... Read More

Bank of America Drops the ‘M’ from MLO and Tells Its Sales Staff to Take Auto Applications. Will Others Follow?

Bank of America – the nation’s third largest residential originator – this week gave its mortgage loan officers an edict: start taking applications for auto loans as well. Going forward, mortgage loan officers will be known simply as “loan officers.” A BofA spokesman confirmed the changes to Inside Mortgage Finance, but cautioned that LOs will not be taking applications for checking accounts and credit cards, though referrals can be made to other divisions of the bank. BofA watchers, as well as the bank’s competitors, were scratching... Read More

New Approaches to Front-End GSE Risk-Sharing Being Explored as Some Lenders Question Bigger PMI Role

Many industry experts are advising Fannie Mae and Freddie Mac to expand so-called front-end approaches to credit-risk transfers that have so far relied heavily on structured debt notes and reinsurance contracts arranged long after loans are sold to the two government-sponsored enterprises. In a comment letter filed with the Federal Housing Finance Agency, Redwood Trust suggested that “a more robust front-end CRT program [should] at least match the volume of back-end transactions.” Through the end of September, Fannie and Freddie have issued $35.88 billion of back-end debt notes covering $1.223 trillion of single-family mortgages, according to Inside MBS & ABS, an affiliated newsletter. Redwood is... Read More

Fannie, Freddie Concede Industry’s Point on UCD Reporting Burden, Postpone Requirement for a Year

After hearing lenders’ concerns about the increased reporting burden they would face from some of the changes that Fannie Mae and Freddie Mac want to make to their Uniform Closing Dataset requirements, the two government-sponsored enterprises agreed to postpone the requirement to provide the seller closing data for one year. “The GSEs understand the difficulties that acquiring the seller data presents, particularly as many lenders are still working through their processes to obtain the seller closing disclosure and data from settlement companies,” the pair said late last month in letters to the Mortgage Bankers Association. “In recognition of these challenges, the GSEs have agreed... Read More

Attorneys Urge Covered Lenders to Take Advantage of the CFPB’s One-Year Window to Adjust to HMDA Changes

Collecting disaggregated race and ethnicity data a full year before the revised Home Mortgage Disclosure Act regulations become effective will benefit covered creditors as they become used to the new requirements and make the necessary system adjustments to accommodate a new wave of granular HMDA data, according to industry attorneys. A policy statement issued by the Consumer Financial Protection Bureau in late September creates a temporary safe harbor for lenders that take advantage of the one-year window – Jan. 1, 2017, through Dec. 31, 2017 – to collect disaggregated ethnic and racial information in their home-loan application if borrowers agree to provide it. Previous amendments to HMDA will require... Read More

GSEs Report 3Q Earnings Increase and Attribute Rising Income to G-Fees; Freddie Doubles Profit

Fannie Mae and Freddie Mac reported a combined net profit of $5.53 billion in the third quarter of 2016 with income from guarantee fees strong in both the single-family and multifamily segment. Both government-sponsored enterprises expect guarantee fee income to continue to be a driving force. Freddie’s net profit of $2.33 billion represents its strongest performance since the second quarter of 2015, when it earned $4.17 billion. Stellar g-fee income and a steep reduction in hedging losses helped contribute to that growth. Meanwhile, Fannie reported... Read More

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