 | | | | By Paul Muolo pmuolo@imfpubs.com Over the past few months, we’ve been reporting on several rumors concerning mortgage M&A activity and it now appears all that talk is finally resulting in some action. Late this week, industry veteran Willie Newman – armed with at least $250 million of investor money – agreed to buy Maverick Funding of New Jersey. About a week ago, New Penn Financial – Lew Ranieri’s shop – bought Shelter Mortgage, and several other deals are in the works, including (possibly) two acquisitions by RPM Mortgage of California. What do all of these transactions have in common? Most involve small to medium-sized nonbanks. It’s safe to say that the days of the megabanks – Wells Fargo, JPMorgan Chase and Bank of America – buying mortgage companies (of any size) are over. Never again. Right?... With originations expected to fall 30 and 40 percent this year, the mortgage vendor sector is expected to experience a shake-out as well. The due diligence niche has already seen several firms change hands this year, including Allonhill. One technology advisor told us recently that there are 34 loan origination systems (LOS) available to originators. He noted that if three or four transactions happen a year, it would represent “significant” turnover… Is the subservicing arena too crowded? According to new figures compiled by Inside Mortgage Finance, subservicing contracts fell last quarter and are also down compared to a year ago. One somewhat new player to the subservicing arena told us that finding new clients has been difficult. More on the story next week… One sector that appears to be picking up steam is the business of financing MSRs. MorVest Capital, which is run by David Fleig, has completed a handful of transactions and is working on several more. Warehouse providers are also moving into the space… A recent paper penned by the Urban Institute asks this basic question in its headline: “Nonbank Specialty Servicers: What’s the Big Deal?” The paper covers no new ground and rehashes material already covered in Inside Mortgage Finance and IMFnews. It focuses on the three big nonbank servicers – Ocwen, Nationstar and Walter – and points out that the first two have thousands of servicing workers overseas, but apparently Walter has none. We will point out this one interesting fact: when it comes to the stock performance of the three, guess which one has suffered the least this year? Answer: Walter… Force-placed insurance has been in the news quite a bit the past few years because of the high prices they charged to consumers and some alleged kickbacks between servicers and vendors. Late this week, we were told that a new entrant to the space may soon roll out rates that are much lower than those being charged by QBE and other vendors. CFPB ABUSES?: Industry consultant Joe Garrett has written quite a bit in his company newsletter about his distaste for the Consumer Financial Protection Bureau. (You might say that Garrett has several clients that have been pushed around by the agency.) In a recent note to clients, Garrett said one lender received a consent order from the agency without the CFPB ever showing up at its offices. Garrett says: “They based their actions on an exam performed by a state regulator.” WASHINGTON NEWS: A decision by the Department of Housing and Urban Development to suspend a Texas mortgage firm and its top executive was not “arbitrary and capricious” and did not violate due process, according to a recent Houston district court ruling. The court granted HUD’s motion for summary judgment and dismissed all of the claims by the plaintiff: Allied Home Mortgage Corp. For more on the story, see Inside FHA Lending. (Reporting by George Brooks / gbrooks@imfpubs.com). FOLLOW US ON TWITTER: Inside Mortgage Finance and some of our staffers post daily on Twitter, providing updates to readers. Our Twitter crew includes: Guy Cecala, Paul Muolo, and Thomas Ressler. And of course, Inside Mortgage Finance.
More Companies Finding Non-QM Lending a Low-Production Solution Originations are down. But each week, more and more mortgage companies identify lending outside of the qualified mortgage standard as a way to boost production. What do they know that you should know? Attend the Sept. 24 Inside Mortgage Finance webinar “Unlocking the Potential of Non-QM Lending” to find out. Other areas of interest: Originations, Servicing, Personnel, Regulatory, Data/Rankings, Mergers & Acquisitions | | By Thomas Ressler tressler@imfpubs.com The Consumer Financial Protection Bureau's integrated disclosure rule will be "treacherous" for mortgage lenders and a challenge to deal with thanks to its massive size and complexity, according to industry experts. Speaking to attendees of an Inside Mortgage Finance webinar this week on the CFPB’s TILA/RESPA Integrated Disclosure rule – commonly known as “TRID” – Rod Alba, senior regulatory counsel for the American Bankers Association, rattled off a number of concerns that lenders still have with the new rule, which is slated to take effect Aug. 1, 2015. “The regulation is enormously voluminous in length. The sheer size of this rule, we think, makes this regulation treacherous for banks in terms of liability, in terms of enforcement, in terms of understanding, and in terms of buyback risk,” said Alba. “The lending industry, I think it’s fair to say, struggles to call this ‘regulatory simplification.’” He added: “Importantly, it reconfigures every disclosure that we had before. Nothing is the same in that sense. Even though you may still have similar concepts in these disclosures, they are all different, so all your systems are going to change. This is going to be expensive, this is going to be disruptive, and I think, without a doubt, that it will require retraining.” Elsewhere during the webinar, Rich Horn, a partner with the Dentons law firm and one of the architects of the rule while at the CFPB, discussed liability under the rule. Roger Fendelman, head of compliance for Interthinx, talked about the challenges that the new rule presents to mortgage companies. And Andy Dunn, a senior attorney with Wolters Kluwer Financial Services, went over the effect the new federal disclosure rule will have on state laws. For more analysis, see next week's issues of Inside the CFPB and Inside Mortgage Finance. Other areas of interest: Originations, Regulatory, Technology, Mortgage Lending & Servicing | | By George Brooks gbrooks@imfpubs.com Concern about government-proposed capital rules for private mortgage insurers and their potentially negative effect on MI premiums has prompted loan guarantors and others to call for changes. The Mortgage Bankers Association, National Association of Realtors and – of course – several private MI firms are urging the Federal Housing Finance Agency to ease proposed capital requirements for mortgage insurers. As written, the proposed rules could cause MI premiums to spike, making it more difficult for first-time homebuyers to purchase a home and for MIs to maintain market share, the groups write in their comment letters to the agency. The draft Private Mortgage Insurer Eligibility Requirements (PMIERs) is a new risk-based framework designed to ensure that approved MIs have enough liquid assets to cover claims. It spells out MI performance expectations as well as actions an MI could take if it fails to comply with the new rules. No effective date has been set. An approved insurer would be required to make quarterly risk-based evaluations comparing its available assets to minimum-required assets to ensure its financial adequacy. For more details, see the new edition of Inside Mortgage Finance. Other areas of interest: Originations, Regulatory, Mortgage Lending & Servicing | | By Paul Muolo pmuolo@imfpubs.com The Federal Housing Finance Agency appears to be all alone – for now – in its effort to prevent nonbanks from gaining access to the Federal Home Loan Bank system by using a captive insurance affiliate. The proposal would also change FHLBank membership rules for depository institutions. But already the proposed ban – issued for a 60-day comment period early last week – is coming under heavy fire from different factions of the mortgage industry, including the Council of Federal Home Loan Banks, real estate investment trusts and private-equity firms that own REIT stock. David Jeffers, executive vice president for the Council, said “widespread calls” for the comment period to be extended are a sign that a “significant number of negative comments” will be filed with the FHFA. The proposed rule closely tracks an advance notice of proposed rulemaking aired by the FHFA back in 2010 that also drew significant criticism from the industry. Potentially, a ban on mortgage REITs gaining access to the system would reduce membership. For years, the FHLBs have struggled to gain membership in the face of widespread consolidation among depositories. For further analysis, see the new edition of Inside Mortgage Finance, now available online. Other areas of interest: Originations, Secondary/MBS, Regulatory | | By Charles Wisniowski cwisniowski@imfpubs.com The Federal Housing Finance Agency’s “single security” proposal for a generic Fannie Mae/Freddie Mac MBS is “well-thought out” and “worthy of serious consideration,” but the agency should pick up the pace in its implementation to avoid making the solution part of the problem, according to a paper from the Urban Institute. Lewis Ranieri, chairman of Ranieri Partners, and Laurie Goodman, director of the UI’s Housing Policy Center, expressed concern that the FHFA “may be contemplating a slower pace in the project than it warrants.” The GSE regulator last month issued a request for input on the proposed structure and implementation of a single security issued by the two GSEs that would be part of a multi-year initiative to build a common securitization platform. Currently, mortgage securities issued by Fannie and Freddie have different features and trading prices even though both have government charters and an “implicit” guaranty. For further analysis, see the new edition of Inside MBS & ABS. Other areas of interest: Originations, Secondary/MBS, Regulatory, Fannie, Freddie | | | |
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