Mortgage Banking Profitability

Browse articles from all of our Newsletters related to Mortgage Banking Profitability.

May 25, 2018 - Inside Mortgage Trends

Wild Gyrations in Reported 1Q18 Mortgage Income

Some big swings in mortgage banking profitability yielded an unexpected $4.31 billion bonanza for commercial banks and thrifts in the first quarter of 2018. According to call-report data analyzed by Inside Mortgage Trends, the industry’s mortgage banking was up 38.0 percent from the prior period. Several key banks reported gigantic increases, including Wells Fargo’s 170.0 percent jump to $1.22 billion and Bank of America’s 214.1 percent surge to ... [Includes one data chart]

May 25, 2018 - Inside Mortgage Trends

Mortgage Shopping Still Best for Homebuyers

Homebuyers in Tampa, Kansas City (MO), Portland and New York saw the biggest mortgage rate savings by shopping around for home loans compared to buyers in other US cities, according to a new study by LendingTree. The rate spreads in the four cities are the largest for purchase-mortgage loans overall, while New Orleans, Salt Lake City and Indianapolis have the largest differences in refinance mortgage rates, the study found. Also, due to the large loan sizes, California borrowers ...

May 25, 2018 - Inside Mortgage Trends

Consolidation Wave Expected as Mortgage Industry Faces Tight Margins, Overcapacity

Independent mortgage bankers lost money on loan production during the first quarter of 2018, according to preliminary figures reported by the Mortgage Bankers Association at the group’s annual secondary market conference in New York this week. Respondents to the quarterly mortgage banking performance survey reported, in aggregate, a negative margin in the “mid to high single digits” for the first quarter, said MBA Chief Economist Mike Fratantoni. Researchers are still putting together the ...

May 18, 2018 - Inside FHA/VA Lending

FHA, VA Lending Down Sharply in 1Q18 But Programs Diverged

New FHA endorsements and VA home loan guaranty volume were both down significantly in the first quarter, but the two programs followed different paths to mostly similar results. A new Inside FHA/VA Lending ranking and analysis shows that endorsements of FHA forward mortgages slipped 10.5 percent from the fourth quarter to $48.96 billion. That was the lowest quarterly output for the program since early 2015, when just $39.48 billion of FHA forward loans were originated. In the VA program, new loan guarantees fell 11.1 percent from the fourth quarter to $39.06 billion. That was the lowest three-month total since the first lap in 2016, with $37.09 billion produced. Most of the decline in FHA business was in purchase-mortgage lending, which fell 13.5 percent from the fourth quarter. While purchase loans still accounted for a hefty 71.1 percent of FHA forward endorsements during the ... [Charts]

May 11, 2018 - Inside Mortgage Trends

Ocwen Isn’t Out of the Woods Yet

Although Ocwen Financial Corp. eked out a $2.6 million net profit for the first quarter – after years of reporting red ink – investors in the company will continue to wonder if the firm’s best days are behind it. In the nonbank’s new 10-Q filing with the Securities and Exchange Commission, the servicing giant summed up its situation best: “An investment in our common stock involves significant risk.” Still, Ocwen soldiers on, striking settlement agreements with regulators, buying another ...

May 11, 2018 - Inside Mortgage Trends

Mixed Results for Private Nonbanks in 2017

A shift in origination trends from refinances to purchase mortgages led to reduced earnings at a number of private nonbanks in 2017, according to Moody’s Investors Service. In a recent report, the rating service detailed profitability levels for four large private nonbanks: Freedom Mortgage, Provident Funding Associates, Quicken Loans and Stearns Lending. The firms generally don’t disclose their financial results, but Moody’s maintains corporate ratings on them, which provides ...

May 4, 2018 - Inside FHA/VA Lending

Guild Mortgage Introduces FHA-Compliant Energy Financing

Guild Mortgage has announced an FHA-backed financing program that would allow homebuyers to finance solar panels through a mortgage when purchasing a house. It is not Property Assessed Clean Energy financing, which has similar goals but is prohibited by FHA because it asserts lien superiority over all other liens, including a residential mortgage. Guild developed the program, FHA Solar, with FHA to ensure adherence to all agency loan requirements, according to a company representative. “It sounds like Guild slapped their own brand on a loan product that appears to fit among FHA’s various energy-efficient programs, not to be confused with PACE obligations, which are no longer a part of our single-family insurance program,” said a Department of Housing and Urban Development spokesman. FHA Solar is available to residents in California. It provides homebuyers the ...

May 4, 2018 - Inside FHA/VA Lending

HUD MRB Reports Fewer Lenders Subject to Agency Action in FY17

The number of FHA lenders subject to administrative actions by the Department of Housing and Urban Development in FY 2017 declined from the previous fiscal year, according to the latest report from the Mortgagee Review Board. Published in the April 25 Federal Register, the report showed the number of FHA lenders that were hammered with civil money penalties, lost FHA approval, and received suspensions, probations, and reprimands from Oct. 1, 2016, to Sept. 30, 2017, fell to 20 from 25 in FY 2016. But the biggest change was in the number of lenders cited and disciplined for violation of FHA’s annual recertification requirements. Lenders that failed to meet the recertification requirements in a timely manner but eventually came into compliance totaled 52 in FY 2017, down from 106 in fiscal 2016. On the other hand, 23 lenders agreed to settle with HUD after they failed to ...

May 4, 2018 - Inside FHA/VA Lending

Lenders Win as FL Court Finds Surviving Spouses ‘Not Borrowers’

Reverse mortgage lenders chalked up a win in Florida’s Third District Court of Appeal on the question of whether surviving spouses of borrowers who had taken out a Home Equity Conversion Mortgage loan also qualified as “borrowers” and, therefore, cannot be evicted from the property after the death of the borrower. The appellate court’s ruling contradicted two previous court rulings in Smith v. Reverse Mortgage Solutions, Inc. and Edwards v. Reverse Mortgage Solutions, Inc. Both rulings held that surviving spouses of deceased HECM borrowers also qualified as “borrowers” under the terms of the mortgage and, therefore, entitled to protection from eviction. However, in One West Bank, FSB v. Palmero, the appellate court changed course and outlined the conditions under which a lender could prove that “borrower” meant only the person who actually had taken out the reverse ...

May 4, 2018 - Inside FHA/VA Lending

BPMI Premium Cuts Could Draw Sterling Borrowers Away from FHA

Actions by a number of private mortgage insurers to cut borrower-paid premium rates would enhance affordability and enable private MIs to increase their market share at FHA’s expense, according to an analysis from the Urban Institute. So far, Mortgage Guaranty Insurance Corp., Genworth Mortgage Insurance and Radian Guaranty have announced reductions in their respective monthly and single-premium borrower-paid premium rates. The premium cuts will affect more than just affordability, said UI. On March 6, the company announced that it is reducing borrower-paid single-premium rates in most FICO buckets, effective for all MI applications received on or after March 19, 2018. The Philadelphia-based MI also reminded clients that previously announced single-premium restrictions on debt-to-income ratios exceeding 45 percent and a FICO score below 700, or DTI exceeding ...

May 4, 2018 - Inside FHA/VA Lending

Low-Income, Minority Borrowers Steered to FHA by Adverse Factors

Many low-income and minority borrowers are forced into FHA loans by risk-based pricing and overlays in the conventional market, only to be stymied by higher FHA premiums and non-cancellable mortgage insurance premiums, according to a new study from the Center for Responsible Lending. The study, “Repairing a Two-Tiered System: The Crucial but Complex Role of FHA,” examines FHA’s pre- and post-crisis lending to white and minority borrowers. It also evaluates the impact of risk-based and FHA pricing as well as the impact of False Claims Act enforcement, which have limited the FHA program’s effectiveness in meeting homeownership goals, said authors Peter Smith, CRL senior researcher, and Melissa Stegman, senior policy counsel. The authors used Home Mortgage Disclosure Act data from 2004 through 2016, focusing solely on single-family purchase mortgages made to ...

May 4, 2018 - Inside FHA/VA Lending

Ginnie Reinstates Nations Lending Following Talks on Loan Churning

An approved issuer suspended last month due to alleged VA loan churning activities is back in Ginnie Mae’s multi-issuer mortgage-backed securities program. Nations Lending, ranked 97th in Inside FHA/VA Lending’s top 100 VA lenders, was reinstated after reaching a confidential agreement with Ginnie Mae, according to a source familiar with the case. The Ohio-based lender has been “fully reinstated and [again] able to use all of Ginnie Mae’s programs that are available for lenders in good faith,” said the source, who asked not to be identified. The source declined to provide details of the agreement, maintaining Nations has been very transparent and was “ahead of the curve” in terms of dealing with the churning problem. “Nations began addressing the issue even before Ginnie took action,” he said. Ginnie neither confirmed nor commented on the report. “The evidence will show what is happening in the ...

May 4, 2018 - Inside FHA/VA Lending

Acting FHA Chief Says ‘Disturbing’ Trends Threaten MMIF’s Health

Acting FHA Commissioner Dana Wade voiced concern over increasing shares of FHA-insured loans with high debt-to-income ratios, cash-out refinances and purchase loans with downpayment assistance. Testifying recently before the House Appropriations Committee on the agency’s FY 2019 budget, Wade warned that such disturbing trends suggest that FHA’s exposure to loss could rise and put the Mutual Mortgage Insurance Fund and taxpayers at risk. Wade said FHA’s financial health and the impact of the volatile reverse mortgage portfolio are a continuing concerns. Last year, the fund’s economic net worth declined by $1.9 billion and the capital reserve ratio fell to 2.09 percent from 2.35 percent the previous year due to losses associated with Home Equity Conversion Mortgage loans. Wade noted an increase in the proportion of borrowers with DTI ratios in excess of 50 percent. In February, the ...

May 4, 2018 - Inside FHA/VA Lending

Risk Factors Creep Higher in FHA And VA Loans in Early 2018

With overall production levels falling, there was a modest increase in several risk vectors of FHA and VA loans pooled in Ginnie Mae mortgage-backed securities during the first quarter of 2018.A new Inside FHA/VA Lending analysis shows the average credit score for FHA loans in Ginnie MBS issued during the first quarter was 671.1, the lowest level since Ginnie began reporting loan-level data on its securities. That was down from 673.2 in the fourth quarter and 679.2 a year ago. Part of the slide in FHA credit scores likely reflects the increased share of purchase mortgages, which typically have lower scores than refinance loans. The same thing happened in the VA market, where average credit scores fell 1.1 points to 707.8 in the first quarter. A year ago, the average VA score was 710.2. Debt-to-income ratios also drifted higher, suggesting more risk of default. Among FHA loans, the average DTI rose to ... [Charts]

May 3, 2018 - Inside Mortgage Finance

Origination Profit Margins Stay Ugly as Spring Arrives, But Some Hope Market Will Improve

Nonbank mortgage lenders have been reporting weak profit margins since January, a situation that has some in the industry alarmed while others believe that as originations increase in the months ahead the tough times will dissipate.

April 27, 2018 - Inside The GSEs

As GSE Common Keeps Falling, Investment Fund Makes Changes

Pershing Square Holdings, one of the largest institutional investors in Fannie Mae and Freddie Mac common stock, is doubling down on its investment in the two mortgage giants. But it’s taking a different tack, buying up junior preferred stock rather than increasing its holdings of common. The change in strategy was mentioned in the firm’s annual report to shareholders and comes at a time when the chances of housing-finance reform look nil for 2018. How much PSH paid for the junior preferred is unknown. According to the annual report, “Our preferred stock represents approximately 21 percent of our total investment in Fannie and Freddie, or about 1 percent of net assets.”

April 27, 2018 - Inside Mortgage Trends

Huge Gains Coming from New Technology

Though technology has lagged in the nation’s housing and mortgage financing markets compared to other industries, players in those markets are now bridging the gap in response to their customers’ growing demand. Consequently, more mortgage companies are deploying new technologies, changing market dynamics and consumer behavior as well as laying the foundation for future advances, according to a new report from Moody’s Investors Service. The digitization of loan ...

April 27, 2018 - Inside Mortgage Trends

Student Loan Debt Helps Boost Homeownership

The relatively low homeownership rate seen after 2008 has been pinned on the burden of student-loan debt, among other factors. It turns out that borrowers with student-loan debt actually have higher homeownership rates than other consumers, according to a working paper published recently by the Federal Reserve. The Fed researchers combed through federal student-loan databases and tax returns, including mortgage-related filings. They found that student-loan debt ...

April 27, 2018 - Inside Mortgage Trends

Megabanks Suffered Mega Declines in Lending

The nation’s largest depositories posted weak origination results for the first quarter – noticeably weaker than some of the top-ranked nonbanks they compete against. According to an analysis by Inside Mortgage Trends, market leader Wells Fargo suffered a 19.5 percent sequential origination decline while its three closest bank competitors – JPMorgan Chase, U.S. Bank, and Bank of America – fared even worse. The number two-ranked JPM ... [Includes one data chart]

April 20, 2018 - Inside FHA/VA Lending

House Bill Introduced to Ensure Compliance with Loss-Mit Rules

Legislation was introduced this week in the House Financial Services Committee that would strengthen oversight of FHA mortgage servicers to ensure their compliance with the agency’s loss-mitigation requirements. The FHA Foreclosure Prevention Act of 2018 (H.R. 5555) would require the Department of Housing and Urban Development to conduct servicer oversight, including sampling, compliance reviews, and direct information collection from borrowers whose files were sampled. “A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” said Rep. Maxine Waters, D-CA, ranking member on the committee and sponsor of the bill. Waters said her bill would ensure that FHA servicers help families experiencing financial hardships avoid foreclosure so that they can ...

April 20, 2018 - Inside FHA/VA Lending

FHA Accounted for a Good Share of Mortgage Complaints in 2017

FHA-insured loans accounted for a modest chunk of mortgage-related consumer complaints submitted to the Consumer Financial Protection Bureau last year. According to the CFPB’s annual report on consumer disputes, the bureau received approximately 37,300 mortgage complaints in 2017, 13 percent of which were related to FHA mortgages. Loans with a VA guaranty and FHA-insured reverse mortgages accounted for 4 percent and 2 percent of the complaints, respectively. Conventional home mortgages had the biggest share of mortgage complaints – 48 percent – followed by “other type of mortgage” at 28 percent. Six percent of mortgage complaints were about home-equity loans or home-equity lines of credit. For mortgage complaints, 41 percent involved making payments (such as those involving servicing, escrow accounts and posting of payments), while 37 percent were related to borrowers’ ....

April 20, 2018 - Inside FHA/VA Lending

VA Pulls Disclosure Requirement From Earlier IRRRL Guidance

The Department of Veterans Affairs recently withdrew a directive that was part of an early disclosure requirement for Interest Rate Reduction Refinance Loans just days after the measure took effect. Although the early disclosure measure became effective for IRRRLs closed on or after April 1, 2018, VA’ “Frequently Asked Questions” guidance issued on April 5 clarified some of the earlier provisions and removed a new disclosure to address lender concerns. The current VA Lenders Handbook requires a veteran to sign a statement showing he or she understands the effects of the IRRRL and how long it would take to recoup all closing costs. If the veteran’s monthly payment increases by 20 percent or more, the lender must certify that the borrower qualifies for the new monthly payment. The handbook, however, is unclear as to when the statement and lender certification must be delivered. Consequently, some ...

April 20, 2018 - Inside FHA/VA Lending

Ginnie Mae Mulls ‘A-Tier’ Issuer Rating to Raise Nonbank Liquidity

Ginnie Mae is considering a tiered rating system to ensure that all participants in its mortgage securities program have sufficient liquidity and capital to meet their counterparty obligations. The agency is still fleshing out the idea of an “A-tier” issuer, which would likely develop into a policy in the near future, said Michael Bright, executive vice president and chief operating officer, during a recent interview with Inside FHA/VA Lending. “An A-tier issuer would be [a company that] has gone above and beyond in helping put together for us a risk management and liquidity plan that does not rely on liquidity providers, and whose defect and cure rates are low,” he explained. Such issuer/servicers also would be well capitalized. Ginnie is developing the metrics for such a system, as well as incentives for the A-tier issuers, Bright said He added that top-rated firms would be eligible for “concierge services” from the ...

April 20, 2018 - Inside FHA/VA Lending

VA Share in Gov’t-Backed Servicing Continued to Grow in Early 2018

The Department of Veterans Affairs home-loan guaranty program continued to account for most of the growth in the Ginnie Mae servicing business during the first quarter of 2018, a new Inside FHA/VA Lending analysis reveals. Total Ginnie mortgage-backed securities outstanding rose to $1.940 trillion as of the end of March, including multifamily MBS and securities backed by FHA reverse mortgages. Some $1.795 trillion of that amount was traditional single-family mortgages, a 1.1 percent increase from the end of last year. The forward-mortgage Ginnie market grew by 7.3 percent over the past 12 months. The amount of VA loans in Ginnie pools was up 13.1 percent from March 2017, nearing the $600.0 billion mark. By comparison, the FHA segment of the Ginnie market was up 4.7 percent from a year ago, hitting $1.085 trillion. Loan performance generally improved in both the ... [Charts]

April 20, 2018 - Inside MBS & ABS

Stars May be Aligned for Strong Profits at Fannie And Freddie as GSEs Leave DTA Hits Behind

After booking large one-time charges from marking down the carrying value of their deferred tax assets in the fourth quarter, Fannie Mae and Freddie Mac likely will post strong earnings for the first quarter of 2018, according to an analysis by Inside MBS & ABS.

April 13, 2018 - Inside Mortgage Trends

MBA Casts the Net Far and Wide for New Chief

To date, Spencer Stuart, the search firm working to find a successor to Mortgage Bankers Association President and CEO Dave Stevens, has contacted roughly 40 different men and women, according to industry officials who claim to have knowledge of the process. For the most part, MBA wanted to cast a net as wide as possible, approaching current and former members of Congress, trade group officials, lobbyists and senior and veteran industry executives. Included in the initial search ...

April 13, 2018 - Inside Mortgage Trends

MBA: Earnings Tanked in Fourth Quarter

Mortgage bankers reported a significant decline in profitability during the fourth quarter of 2017, taking hits on both sides of the business ledger, according to the most recent performance report from the Mortgage Bankers Association. On average, survey participants reported just $389,000 in pretax income during the fourth quarter, a 77.7 percent decline from $1.743 million in the previous three-month period. That knocked annual pretax income down to an average $5.136 million ...


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