A reduction to the Federal Home Loan Bank system’s advance business and investment portfolio would diminish Bank profitability, resulting in a credit negative for U.S. commercial banks, according to a recent report by Moody’s Investors Service. “Limiting access to FHLBank funding would reduce alternative liquidity for U.S. banks,” noted the Moody’s report “A Diminished Federal Home Loan Bank System Would Weaken U.S. Banks.”
For an all too brief moment last week there was bipartisanship on Capitol Hill as exasperated Democrats and Republicans took turns questioning and berating the CEOs of Fannie Mae and Freddie Mac and their regulator surrounding the issue of executive compensation at the two GSEs.Federal Housing Finance Agency Acting Director Edward DeMarco was called before the Senate Banking, Housing and Urban Affairs Committee and the House Committee on Oversight and Government Reform to explain some $13 million in performance bonuses to Fannie CEO Michael Williams and Freddie CEO Charles Haldeman and eight other senior executives at the taxpayer-subsidized firms.
Both Fannie Mae and Freddie Mac retained their hefty shares of mortgage-backed securities with something of a bump during the third quarter of 2011, according to a new Inside The GSEs analysis.The GSEs issued a combined $174.8 billion in MBS in the third quarter, a 12.8 percent increase from the second quarter. Compared to the third quarter of 2010, Fannie and Freddie saw an 11.2 percent decrease in MBS issuance during the first nine months of the year.
Mortgage banking earnings improved significantly during the third quarter of 2011 on both the production and servicing sides of the business, according to a new analysis by Inside Mortgage Trends. A sample of nine mortgage banking firms showed a combined $2.26 billion in production-related income during the third quarter. That reversed a disastrous $11.97 billion combined loss on production during the second quarter of 2011. The group’s second-quarter results were skewed by Bank of America’s stunning $13.21 billion net loss on production income during...(Includes one data chart)
With the severe housing recession having created a more than abundant supply of poorly performing mortgages that will likely linger for years, “step servicing,” or varying compensation based on the amount of servicing work performed, may well be the wave of the future. “Currently, many in the industry are proposing step servicing fees for transactions including newly originated prime jumbo product,” said Kathleen Tillwitz, senior vice president of U.S. and European structured finance for DBRS, in a recent analysis. “As a result, the servicing fees we are seeing for prime jumbo loans are currently ranging anywhere from...
Despite low mortgage rates, the outlook for the purchase-mortgage market remains gloomy. And you can blame it mostly on current housing market conditions. One of the biggest problems plaguing the housing market, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, is the large share of distressed properties that make up home sales in most areas of the country. Nationally, foreclosed properties and short sales accounted for a whopping 48.4 percent of home purchase transactions tracked in the HousingPulse Distressed Property Index during...
Total single-family originations could drop another 20 percent or more in 2012, following a similar decline this year, according to mortgage industry economists. The consensus forecast from Fannie Mae, Freddie Mac and the Mortgage Bankers Association is that $1.28 trillion in home loans will be originated in 2011, a decline of 22 percent from last year’s estimated volume. But 2011 will prove to be just a prelude to another sharp decline in production next year. Despite the fact that mortgage rates are expected to stay at...
One of the goals in the recent revisions to the Home Affordable Refinance Program is to stimulate more interest among lenders, largely through relaxed requirements on representations and warranties and some streamlining of the process. But HARP 2.0 also includes new guidelines on soliciting potential customers, both from the lender’s own portfolio and from borrowers currently serviced by another firm. A handful of lenders have begun touting the expanded program to consumers. The new program includes specific refi solicitation practices that lenders must...
Employment and income fraud risk has been steadily rising since 2009. Analysts at Interthinx attribute the growing risk to the misrepresentation of borrower data to meet the tighter debt-to-income ratios that lenders now demand. The Mortgage Fraud Risk Report shows that employment and income fraud risk in the third quarter was up 8.8 percent from the same period last year, and up 50.0 percent from the third quarter of 2009. One thing that doesn’t change is the states that have the highest exposure to this fraud; Nevada, the riskiest state, has an index value of 255, and Arizona comes in a close second with an index of 243. These...
Four years after the credit crisis, analysts at Fitch Ratings expect eventual losses from structured finance transactions to soar from current levels, about $94 billion, or 2.7 percent of the original balance of rated transactions, to $376 billion, or 10.6 percent, by the time the dust settles. And the primary culprit, of course, is residential MBS. “Fitch expects a further 9,754 tranches to not recover their full principal, representing 33 percent of all tranches and increasing the proportion of tranches with realized or expected losses to 63 percent of the total...
Is Onity Group eyeing a sale? Perhaps. And why not? Servicing values are approaching a 25-year high.
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