Fannie Mae and Freddie Mac issued separate guidance to their mortgage servicers last week designed to continue the conservator-mandated effort to complement the servicing policies of the two government-sponsored enterprises and to develop a consistent framework for assessing servicer performance. The updated servicing policies seek to harmonize compensatory fee structures, servicer violations and remedies, and servicer terminations and transfer of servicing between Fannie and Freddie. Fannie’s and Freddie’s announcements also include...
The “zero-zero” requirement in the loan originator compensation proposed rule pending at the Consumer Financial Protection Bureau could inadvertently steer borrowers into more expensive mortgage loans, according to a top industry official. “There is absolutely no doubt that forcing a zero-zero option is going to result in higher-priced loans,” said David Stevens, president and CEO of the Mortgage Bankers Association, during an Inside Mortgage Finance webinar this week. “Premium [loans] don’t get the same kind of multiple as a current coupon. So as the yield curve shifts and we see rates move, we’re going to see action that is going to make these numbers move around a lot.” To give a more extreme example, “if we have an interest-rate rally, you can drop...
Rules proposed by the Consumer Financial Protection Bureau in August to revamp servicing practices prompted widely varied reactions from servicers, individual consumers and community banks. Servicers largely sought to keep current servicing rules unchanged while borrowers asked for greater protections and community banks requested an exemption from the proposal. The CFPB said the proposed rules are aimed at ending “surprises and runarounds” for borrowers. The proposed rules incorporated a number of provisions included in the national servicing settlement and consent orders between servicers and federal regulators. Some of those provisions were required by the Dodd-Frank Act. Servicers largely suggested that the CFPB should not implement servicing rules beyond those specifically required by the DFA. However, the Consumer Mortgage Coalition, whose members include the servicers complying with the settlement and consent orders, called...
Ocwen Financial is set to become the eighth largest mortgage servicer with its pending acquisition of Homeward Residential, according to an analysis by Inside Mortgage Finance. While the combined servicing portfolio will largely consist of nonprime mortgages, Ocwen is also looking to benefit from Homeward’s relatively new wholesale origination platform, which has produced a significant amount of agency mortgages this year. Ocwen announced last week that it plans to acquire Homeward and its servicing portfolio of more than $77.0 billion for $588 million in cash and $162 million in Ocwen stock. On a combined basis, including subservicing, the two companies serviced $202.0 billion in mortgages as of the end of the second quarter of 2012. “We are...
Historically low mortgage interest rates generated a huge supply of refinance business during the third quarter of 2012 that drove Fannie Mae and Freddie Mac securitization volumes higher, according to a new ranking and analysis by Inside MBS & ABS. A total of $437.7 billion of single-family MBS were issued during the third quarter, up 15.8 percent from the previous three-month period. It was the biggest production volume for the market since the fourth quarter of 2010, and it lifted year-to-date issuance for the first nine months of the year to $1.207 trillion – a 43.2 percent increase over the same period in 2011. MBS issuance gained...[Includes one data chart]
Investors in vintage non-agency MBS have seen strong returns in recent months, particularly in August. Industry analysts suggest that returns are likely to remain elevated as there are few remaining risks for non-agency MBS and supply is limited. “Despite increased profit taking on this year’s impressive performance, bonds continue to trade well,” according to analysts at Bank of America Merrill Lynch. “While demand for non-agency bonds will likely grow as home prices recover, it will not be met with more new supply as is seen in the broader high-yield bond universe. This is a very strong backdrop for further price appreciation.” From the beginning of June through the end of September, pricing on the ABX index that tracks subprime MBS has...
The sale of Ally Financial’s bankrupt mortgage unit, Residential Capital, should not proceed unless or until the company provides more information about the deal, specifically whether preexisting contracts will be honored, according to court filings by Fannie Mae and Freddie Mac. The two government-sponsored enterprises objected to the sale via papers filed this week in U.S. District Bankruptcy Court, New York Southern District. The GSEs expressed concern that without changes to the deal as currently proposed, it may threaten the contracts the GSEs have with ResCap to service loans. “The debtors have failed...
The Federal Housing Finance Agency late this week began the formal process of gathering public input on the MBS platform of the future. The agency had previously indicated that it would push...
GSE observers say that the Federal Housing Finance Agency’s Office of Inspector General appears to be blurring the line between constructive critic and backseat driver following the OIG’s most recent report which takes the agency to task for deficient oversight of Fannie Mae’s and Freddie Mac’s business decisions. In a report issued last week, the OIG determined that the FHFA has not established criteria or policies to ensure a rigorous review of GSE business decisions.
The Federal Housing Finance Agency late this week followed through on its promise to develop a post Fannie Mae and Freddie Mac secondary mortgage market infrastructure by releasing for public comment its proposed new securitization platform that could be used by either GSE, as well as by private issuers. The FHFA’s white paper proposed a framework for both a common securitization platform and a model pooling and servicing agreement. Public input on the proposal is due to the Finance Agency by Dec. 3.
Is Onity Group eyeing a sale? Perhaps. And why not? Servicing values are approaching a 25-year high.
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