Mortgage Banking Profitability

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

July 21, 2017 - Inside FHA/VA Lending

Millennials Seeking to Buy Homes In Affordable Markets, Data Show

Affordability and job availability are driving millennials to seek homes in more affordable markets, particularly in the upper Midwest, according to Ellie Mae data for the month of May. Ellie Mae’s Millennial Tracker, which monitors millennial mortgage applications during specific times, found that the higher percentages of loans made to millennial borrowers are in Hutchinson and Austin, MN, and Wahpeton and Williston, ND. Anniston-Oxford-Jacksonville, AL, rounded out the top-five markets. Ellie Mae defines millennials as applicants born between 1980 and 1999. Data showed that 48 percent of millennial borrowers who closed loans in May were single. In Hutchinson, for example, the majority of borrowers were single men. “This suggests millennials may be embracing homeownership in these areas for reasons other than what we have historically seen, which was family formation,” explained ...


July 21, 2017 - Inside FHA/VA Lending

House Panel Earmarks $50 Million For Home Counseling Assistance

The House Appropriations Committee has recommended $50 million to fund the Department of Housing and Urban Development’s FY 2018 housing counseling assistance to homebuyers, homeowners and low and moderate-income renters. The allocation is $3 million more than the Trump administration had requested and $5 million below the amount appropriated for housing counseling in fiscal year 2017. In its budget report, the committee noted the continued improvement in the economy, which has resulted in fewer foreclosures. Foreclosure filings from 2016 were reported on 933,000 properties, representing a 10-year low and a 14 percent reduction from 2015, the report pointed out. “The foreclosure rate has stayed within a historically normal range for three years, even with the pipeline of legacy foreclosures resulting from the housing bubble,” it said. In addition, the bill retains language that ...


July 21, 2017 - Inside FHA/VA Lending

VA Clarifies, Underscores Use of Tidewater Process in Appraisals

The Department of Veterans Affairs is ratcheting up enforcement of its so-called Tidewater process to prevent veterans from paying more than the appraised value of the property when using a VA loan. In recent guidance, the VA reaffirmed its 2003 Tidewater Appraisal Initiative to help reduce the number of cases where appraisers have been asked to reconsider their initial appraisal, which had come in below the sales price. The guidance emphasizes procedures for improving communication of new sales data to VA fee and staff appraisers for a reevaluation of the low initial appraisal. “These guidelines should help limit the number of cases that reach the reconsideration-of-value phase and also provide a more timely response to those cases that are submitted for reconsideration,” the VA explained. The Tidewater procedure provides a designated “point of contact” (POC) the opportunity to ...


July 21, 2017 - Inside FHA/VA Lending

RHS Spells out Review Procedures For Approved Lenders, Servicers

The U.S. Department of Agriculture’s Rural Housing Service has clarified procedures for reevaluating approved lenders’ and servicers’ eligibility under the RHS Single Family Housing Guaranteed Loan Program. The guidance also provides procedures for updating lender information. The RHS intends to review and document lender eligibility in accordance with regulation and program requirements to protect government assets and minimize taxpayer losses. Office of Management and Budget regulations require federal agencies to reevaluate and record lender and servicer eligibility every two years. “For the [USDA single family loan guarantee program], it requires making sure that lenders and servicers participating in federal credit programs meet all applicable financial and program requirements,” wrote Richard Davis, acting RHS administrator. To meet the requirements, lenders must ...


July 21, 2017 - Inside FHA/VA Lending

MRB Suspends Lender’s Authority To Originate, Service FHA Loans

The Department of Housing and Urban Development’s lender disciplinary arm, the Mortgagee Review Board, has suspended a Pennsylvania FHA lender from originating or underwriting any new agency-insured loans. In addition, HUD’s enforcement center suspended owner John Seckel from doing business with the federal government. According to HUD, Seckle Capital of Newton, PA, and its owner submitted statements and certifications purporting to show the firm was properly audited by independent certified public accountants, when, in fact, it was not. The MRB said Seckel and his firm engaged in a “years-long pattern” of deceit and falsehoods. The action is the result of HUD’s ongoing effort to hold the mortgage industry accountable for the loans it originates, underwrites or services. According to HUD’s Neighborhood Watch website, Seckel Capital has a compare ratio of 164 percent. Of the 557 loans the ...


July 14, 2017 - Inside Mortgage Trends

Underwater Borrowers in Decline, Equity Rising

New research from Black Knight Financial Services finds that the underwater homeowner population has fallen to 1.8 million borrowers, dipping below 2.0 million for the first time since 2006. Researchers also expect “tappable equity” to hit a record high this summer, according to their new report on data from the first four months of 2017. “The steady upward trajectory of home prices continues to improve the equity positions of many homeowners,” said Ben Graboske, executive vice president ...


July 14, 2017 - Inside Mortgage Trends

Bank Mortgage Repurchases Trend Lower

Commercial banks and thrifts reported a decline in the volume of home mortgages they repurchased in the first quarter of 2017, according to an Inside Mortgage Trends analysis of call-report data. The industry repurchased, or provided other indemnification, related to $801.3 million of home mortgages during the first three months of the year. That was down 1.5 percent from the previous period. First-quarter repurchases were actually up 4.9 percent from ... [Includes one data chart]


July 14, 2017 - Inside Mortgage Trends

Fed Study: Refi Ads Work, Could be Improved

Direct-mail advertising campaigns touting refinances help prompt borrowers to refi, according to a study by economists at the Federal Reserve. They added that policymakers should consider making it easier for lenders to target borrowers for refis. Seran Grundl and You Suk Kim, economists at the Fed, authored a recent working paper that examined how borrowers react to receiving ads in the mail for refinances. They said the effect of advertising on consumer mistakes and ...


July 14, 2017 - Inside Mortgage Trends

Retail Losing Steam in 2017 Agency Mortgage Business, Brokers Rising

With refinance activity tapering off, the retail production channel lost some of its edge during the second quarter of 2017, according to a new Inside Mortgage Trends analysis of agency mortgage-backed securities. Retail production accounted for 50.6 percent of the $290.63 billion of single-family mortgages securitized by Fannie Mae, Freddie Mac and Ginnie Mae in the second quarter. Including modified loans and those with no channel identification ... [Includes one data chart]


July 13, 2017 - Inside Mortgage Finance

Warehouse Lenders Give Walter Another Round of ‘Waivers.’ But How Long Can the Forgiveness Last?

Walter Investment Management Corp. has secured a second round of limited waivers from its warehouse providers, a signal that its lenders are being patient – for now. According to interviews with warehouse executives and consultants, the granting of short-term waivers can be a common practice, but if those waivers go into a third or fourth round it can get expensive for the borrower and may signal an end to the patience of a company’s bankers. Walter, the parent of Ditech Financial – the nation’s 13th largest residential servicer – reported...


July 7, 2017 - Inside FHA/VA Lending

Around the Industry

Chicago HECM Lender Arraigned on Fraud Charges. Mark Steven Diamond, a mortgage loan originator with offices in Chicago and Calumet City, IL, was arraigned on fraud charges in connection with a $7 million reverse mortgage scheme that targeted elderly homeowners and FHA lenders. According to the Department of Justice, Diamond deceived lenders into making FHA-insured reverse mortgage loans to homeowners who did not apply for a loan or had been beguiled to do so by the smooth-talking suspect. Diamond allegedly pocketed title-company checks intended for the borrowers, with the help of an unindicted co-schemer. Cynthia Wallace, who posed as a representative of the Department of Housing and Urban Development, was indicted along with Diamond. Using at least three aliases, Wallace allegedly collected money from victims for home repairs, which she claimed Diamond would ...


July 7, 2017 - Inside FHA/VA Lending

FHA Provides Additional Guidance For Using New Loan Review System

The latest issue of FHA’s Lender Insight provides additional information to lenders regarding the new Loan Review System that was launched on May 15, 2017. FHA urged lenders to keep their contact information current in FHA Connection and in the Lender Electronic Appraisal Portal so that they receive automated system notifications on time. Also, lenders should review current FHAC user access for appropriate roles, the agency added. Lenders’ in-house FHAC application coordinators are authorized to grant access to, and assign roles within, the LRS. Having the correct roles should enable users to access the system from the FHAC menu, the FHA said. In addition, the lender must take a photo of any error messages that might appear on screen before contacting the FHA Resource Center, the agency advised. Be prepared to provide the date and time of the attempted login, user ID, lender user ID and the ...


July 7, 2017 - Inside FHA/VA Lending

VRM Wins 10-Year Contract to Oversee REOs, Service VA Loans

The Department of Veterans Affairs has awarded a 10-year contract to VRM Mortgage Services to manage VA’s real estate-owned assets and service its loan portfolio. The contract requires VRM, a 10-year-old California-based real estate services contractor, to manage, market and sell VA REO properties, and provide other real estate services as well. The new contract was negotiated from a previous five-year contract that was awarded to VRM when VA consolidated both REO management and portfolio servicing into a single contract.VA has often sold conveyed properties with seller loan financing, known as vendee loans, to help keep distressed vet homeowners in their homes. Vendee lending is an arrangement whereby a buyer uses VA financing to purchase a property in the agency’s REO inventory. “Once a loan is sold under the vendee financing program, we would monitor that loan as well as ...


July 7, 2017 - Inside FHA/VA Lending

FHA Lender Pays $4.2 Million to Resolve False Claims Allegations

Prospect Mortgage of Sherman Oaks, CA, this week joined a growing list of FHA lenders that have opted to settle federal false claims allegations arising from flawed underwriting and poor quality control. Prosecutors with the U.S. Attorneys Offices for the Northern Districts of Georgia and California announced a $4.16 million settlement with Prospect stemming from alleged fraudulent FHA lending practices at two of its Southeastern branches. An FHA direct endorsement lender, Prospect’s branches in Florida and North Carolina allegedly violated the False Claims Act by falsely certifying compliance with FHA underwriting and quality control requirements. Consequently, the FHA suffered substantial losses in claim payments when the loans defaulted. HUD’s Atlanta Home Ownership Center reported that Prospect had a 12.29 percent default rate, well in excess of the national average, between December 2007 and ...


July 7, 2017 - Inside FHA/VA Lending

DOJ, HUD Expand FCA Scrutiny to FHA Servicing, Reverse Mortgages

Mortgage compliance experts are cautioning FHA servicers to tread carefully around loss mitigation, annual certifications and reverse mortgages, which could be a potential minefield for False Claims Act lawsuits. While FHA lenders’ exposure to FCA risk remains, the Department of Justice and the Department of Housing and Urban Development have increased their scrutiny of FHA servicing practices for potential violations, according to Phil Schulman and Kristie Kully, both partners in Mayer Brown’s Washington office. In a recent podcast, Schulman warned of increasing DOJ and HUD scrutiny of FHA servicing practices in the last 18 months, a worrisome shift from the origination side, which has seen an estimated $5 billion in settlements and penalties since 2011 for violations of the FCA and the Financial Institutions Reform, Recovery and Enforcement Act. Since 2008, mortgagees participating in ...


July 7, 2017 - Inside FHA/VA Lending

Ginnie MBS Issuance Rides Rising Home Sales in 2Q17

Ginnie Mae issuers were moderately busier in the second quarter of 2017 than during the first three months of the year, according to a new analysis and ranking by Inside FHA/VA Lending. Issuers produced $112.71 billion of single-family mortgage-backed securities during the second quarter, including MBS backed by FHA home-equity conversion mortgages. It was a 5.5 percent increase from the previous period and brought year-to-date issuance to $219.51 billion, down 0.7 percent from the first half of 2016. The quarterly uptick in total issuance may not sound like much, but contrasts sharply with production at Fannie Mae and Freddie Mac, which dropped 13.1 percent from the first to the second quarter. Ginnie volume was up because it had a deeper vein of purchase-money mortgages than there was in the government-sponsored enterprise market. Purchase loans accounted for 63.4 percent of ... [Charts]


June 30, 2017 - Inside Mortgage Trends

Nationstar Moves Offshore Operations to the U.S.

Nationstar Mortgage has moved its offshore call centers back to the U.S. to improve service to customers, particularly those who prefer to deal with domestic company representatives. The Dallas-based nonbank described the move as part of its two-year plan to become more customer-centric and provide more personalized service to its more than 3 million customers. The shift starts with rebranding, which appears designed to create the impression that the customer is dealing with ...


June 30, 2017 - Inside Mortgage Trends

Communication Key to Borrower Satisfaction

A number of factors beyond offering mortgages with low interest rates can help boost customer satisfaction, said Strategic Mortgage Finance Group. Officials at the advisory firm suggest that communication with borrowers can help reduce complaints. Garth Graham, a senior partner at Stratmor and head of its marketing strategy and execution practice, said lenders can gain market share by using seven practices to improve borrower satisfaction. His advice was based on ...


June 29, 2017 - Inside Mortgage Finance

Beware of Promises Made by Mortgage Disruptors? Or Is Failing Just Part of the Innovation Process?

Sindeo, a mortgage technology-centric company billed as a “disruptor” in some quarters of the industry, closed its doors earlier this month, spurring new talk that making headway via innovative software isn’t so easy – especially in a challenging origination market. As one veteran mortgage consultant put it: “There are no Amazons in this industry,” a reference to the online giant that has profited by causing a wave of destruction in the traditional retail space, including clothing stores and book outlets. Regarding Sindeo’s collapse, Jordan Brown, CEO of MarketWise Advisors, added...


June 23, 2017 - Inside FHA/VA Lending

Senate Chairman Seeks Data on ‘Slush Fund’ Payments to Groups

The chair of the Senate Judiciary Committee is looking into whether monies from mortgage-settlement funds were channeled to partisan advocacy and community organizations that Congress had previously defunded. In a recent letter to Attorney General Jeff Sessions, Chairman Chuck Grassley, R-IA, revived a long-standing request by the committee for a list of all settlement agreements reached during the Obama administration that involved alleged payments to community groups. Grassley’s request came in the wake of Session’s June 7 directive prohibiting the DOJ from entering into any settlement agreements that provide for payment to third parties that were not directly harmed by the alleged misconduct. Sessions said the directive ends the previous administration’s practice of requiring or encouraging defendants to make payments to third parties as a condition of settlement. The directive would ...


June 23, 2017 - Inside MBS & ABS

Jury Finds One of Three Ex-Nomura Traders Guilty of Conspiracy, Acquits Another Trader in MBS Fraud

A Connecticut jury has found a former securities trader guilty and acquitted a second trader in an MBS fraud case brought by the Securities and Exchange Commission two years ago. A conspiracy charge against a third Nomura trader was unresolved. Although multiple charges were brought against the former traders – Michael Gramins, Ross Shapiro and Tyler Peters – only Gramins was found guilty of conspiracy, according to an analysis by Shepherd Smith Edwards & Kantas of Houston. All three defendants were...


June 22, 2017 - Inside Mortgage Finance

Movement Mortgage CEO Casey Crawford Buys a Bank; SoFi Seeks a Banking Charter

For most of the past decade, nonbank residential lenders have eschewed the idea of owning or being affiliated with a federally insured depository for fear of being over-regulated in an already heavily regulated business. But the tide could be turning. Movement Mortgage CEO Casey Crawford this spring bought a controlling interest in First State, a small Virginia bank. Separately, fintech lender Social Finance recently filed an application with the Utah Department of Financial Institutions to open a depository there. SoFi, which branched out from its consumer and student loan business into mortgages, also filed an application with the Federal Deposit Insurance Corp. for deposit insurance coverage. For now, both Crawford – a former professional football player – and the San Francisco-based SoFi aren’t...


June 16, 2017 - Inside Mortgage Trends

Mortgage Banking Profits Squeezed in 1Q17

Profit margins and net income fell sharply in the mortgage banking business during early 2017, according to new data from the Mortgage Bankers Association. On average, firms participating in the MBA’s quarterly performance report earned just $886,000 in pretax income during the first quarter, a hefty 74.8 percent drop from the previous period. Only about two firms in three (67.0 percent) managed to report net pretax income for the first three months of the year. The industry funded...


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