 | | | | By John Bancroft jbancroft@imfpubs.com Production of conventional mortgages – those eligible for sale to Fannie Mae and Freddie Mac as well as jumbo loans – grew at a faster rate than the government-insured market during the second quarter of 2014, according to a new Inside Mortgage Finance analysis. Origination of conventional-conforming mortgages increased 24.4 percent from the first quarter, climbing to an estimated $153.0 billion. While that continued to account for the biggest chunk of new business – 52.1 percent – the largest increase in new lending came in the jumbo sector, where new originations jumped 34.1 percent during the second quarter. Production of government-insured mortgages – FHA, VA and rural housing loans – increased 22.6 percent, slightly below the 25.5 percent gain in total single-family lending during the second quarter. The laggard in the government-insured group has been the FHA program. Final numbers show that FHA single-family endorsements rose just 11.5 percent during the second quarter, while VA loan guaranty program posted a 35.8 percent gain in production. For further analysis and exclusive production tables, see the new edition of Inside Mortgage Finance. Other areas of interest: Originations, Data/Rankings, Fannie, Freddie, Ginnie Mae/FHA, Trends & Profitability | | By Paul Muolo pmuolo@imfpubs.com Commercial banks have placed residential finance at or near the bottom of their strategy lists, according to a new research note from Kroll Bond Rating Agency. “Heavy capital and compliance loads, significant market discounts from investors and low yields are making 1-4 family mortgages unattractive assets for commercial banks,” writes Kroll Senior Managing Director Christopher Whalen. Indeed, figures compiled by Inside Mortgage Finance and its affiliates show commercial banks ceding larger chunks of market share to nonbanks in terms of lending and servicing. Commenting on second quarter bank earnings and other matters, KBRA said that in its talks with bank management, depositories are making C&I (commercial and industrial) lending and consumer finance top priorities, along with multifamily finance. Whalen and his co-author Marjan Riggi, a managing director, note that if the Federal Housing Finance Agency reduces guaranty fees or loan level price adjustments, it could result in more residential originations. Other areas of interest: Originations, Commercial/Multifamily, Trends & Profitability | | By Brandon Ivey bivey@imfpubs.com Chimera Investment this week announced that it acquired the rights to $4.8 billion of seasoned subprime mortgages by purchasing subordinate tranches of non-agency MBS issued by Springleaf Finance between 2011 and 2013. The purchase price wasn’t disclosed. Chimera, a publicly traded real estate investment trust, plans to use its clean-up “call option” to terminate some of the securities by redeeming all outstanding bonds at par and obtain the underlying mortgages. The REIT then plans to issue new non-agency MBS backed by the loans. “The deals will be callable over the next two years and will provide us a robust securitization pipeline subject to market conditions,” said Mohit Marria, Chimera’s CIO. The purchase marks a shift in strategy for Chimera, which was investing in subordinate tranches of newly issued jumbo MBS until accounting problems hindered the REIT for more than a year. Officials at Chimera indicated that new jumbo MBS do not currently provide attractive yields and there isn’t much supply. “In an environment with limited loan originations, this transaction gives Chimera access to a large amount of seasoned residential mortgage loans which may be securitized into new investments,” Marria said. Other areas of interest: Secondary/MBS, Nonconforming | | By Paul Muolo pmuolo@imfpubs.com LoanDepot, one of the largest nonbank mortgage lenders in the nation, is expanding its business model to include consumer finance loans that are not secured by real estate. According to a statement issued by the company, LoanDepot will originate personal loans with balances of up to $35,000. It anticipates average FICO scores of 700. The product will be fully amortizing. It also promises loan decisions “within seconds.” LoanDepot – which is just four years old – ranks 19th among all residential originators, according to figures compiled by Inside Mortgage Finance. Very few nonbank mortgage firms make consumer loans unless they are secured in some fashion by real estate. Company Chief Executive Officer and Chairman Anthony Hsieh said the privately held lender will cross-sell the consumer product to its mortgage customers. Last year, LoanDepot merged with imortgage.com, Scottsdale, AZ. At the time, imortgage.com was roughly 14 years old. Other areas of interest: Originations, Nonconforming, Mortgage Lending & Servicing | | By Thomas Ressler tressler@imfpubs.com The Consumer Financial Protection Bureau provided fresh guidance on mortgage servicing transfers last month, but lenders say there are plenty of unresolved issues. In August, the CFPB put out an updated compliance bulletin on mortgage servicing transfers that augments existing guidance from last year to reflect the agency’s complex mortgage servicing regulation, as well as its supervisory and enforcement activities during the last year and a half. Bob Davis, head of mortgage markets, financial management and public policy at the American Bankers Association, said banks have been looking for more definitive guidance on a variety of issues. “There are sometimes large potential consequences, particularly since the CFPB acts like a supervisory regulator sometimes, but it also uses the enforcement tool a lot to demonstrate what’s going on,” Davis said. “Institutions want as much clarity as possible as to what the CFPB is really looking for. “When you get guidance, you don’t always like everything you get, but then you know with clarity what the regulated entity is supposed to do,” he added. “Generally, we have been encouraging this and we’re happy they are responding.” Asked to give an overall grade to the bureau’s new guidance, he said: “thumbs up.” For further analysis, see the new edition of Inside Mortgage Finance. Other areas of interest: Servicing, Regulatory, Mergers & Acquisitions | | By Paul Muolo, Brandon Ivey, John Bancroft pmuolo@imfpubs.com, bivey@imfpubs.com, jbancroft@imfpubs.com Former Federal Housing Finance Agency Acting Director Ed DeMarco has joined the Milken Institute as a senior fellow-in-residence. Sources say DeMarco, who left the agency earlier this year when Mel Watt came onboard, interviewed for a few jobs in the Washington area, including one with a mortgage consulting firm. DeMarco will be part-time at the Milken Institute, which was started by Michael Milken, the former junk bond king… Meanwhile, DeMarco has already penned his first paper for the Institute. Entitled “12 Things You Need to Know About the Housing Market," the paper rehashes the issues at hand. DeMarco notes that factions against reforming Fannie Mae and Freddie Mac are “actually protecting an existing interest, either business or political.” Who might DeMarco be talking about?... In a new comment letter delivered to the FHFA, the Community Home Lenders Association said it opposes any increase in guaranty fees. It points out that if a g-fee hike comes, the cost will be passed on to mortgage borrowers… Home-equity lending rebounded in the second quarter, climbing 15.4 percent to an estimated $15.0 billion in volume, according to new figures compiled by Inside Mortgage Finance. The HEL market has been buoyed by rising house prices and a somewhat more bullish view about the product among portfolio lenders, though new lending remains far below the levels reached prior to the housing market collapse… MORTGAGE REGULATIONS: The Comptroller of the Currency is proposing to collect loan-level mortgage data from more than 60 banks on a monthly basis. Under the proposal, banks would have to report loan amounts, LTVs, debt-to-income ratios, documentation information and servicing details for first liens and home-equity loans. The collection effort will allow the OCC to match senior liens to junior liens to better gauge the risks posed by the loans. “This data are important and necessary to support supervisory activities to ensure the safety and soundness of the federal banking system,” the OCC said.
Your Mortgage Disclosure Planning Needs to be in Full Swing Now While there’s a year left before the Consumer Financial Protection Bureau’s integrated mortgage disclosure final rule takes effect, mortgage compliance experts are warning that lenders need to prepare NOW for major changes in the whole mortgage origination process that must be made to accommodate the new disclosures. Find out what you need to know – and do – at Inside Mortgage Finance’s September 11, 2014, 2:30 pm webinar: “Planning for New Disclosures: The Time Is Now.” Our team of experts will examine the changes required under the new rules–and, most importantly, take you through what you should be doing now to ensure the smoothest transition to the new requirements. Other areas of interest: Originations, Servicing, Secondary/MBS, Personnel, Regulatory, Nonconforming, Fannie, Freddie | | | |
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