Mortgage banking income rose significantly in the second quarter of 2014 for both production and servicing activities, according to a new Inside Mortgage Trends analysis of earnings reports from 11 major lenders. The group, which includes most of the top publicly owned companies in the mortgage industry, reported a combined $1.371 billion in production-related income during the second quarter. That was up 57.0 percent from ... [Includes one data chart]

Real estate agents put an emphasis on local lenders over call center lenders, according to qualitative survey results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Real estate agents indicated that delayed closings are much more common when a buyer is obtaining a mortgage from a call center lender than from a lender with a local office. “Agents crave information and certainty of closing,” said Tom Popik ...

Mid-sized nonbanks the likes of Prospect Mortgage and Guaranteed Rate reportedly have teams of employees whose job it is to look at company acquisitions, but whether any deals of size get completed by year end is another matter. According to interviews conducted by Inside Mortgage Trends, investment banking firms appear to be quite busy with buy- and sell-side clients. Many advisors believe smaller transactions could be plentiful in the second half of the year ...

The Financial Accounting Standards Board has announced changes to the way it accounts for government-backed mortgage loans upon foreclosure. The change, which is being made through FASB’s rule, “Receivables – Troubled Debt Restructurings by Creditors,” is aimed at reducing diversity in the accounting treatment of FHA and VA loans that have been subject to foreclosure, according to FASB’s Emerging Issues Task Force. The EITF ...

The head of a group of disenfranchised Fannie Mae and Freddie Mac investors has called on Federal Housing Finance Agency Director Mel Watt to end conservatorship of the two GSEs and undo what stakeholders consider the illegal government “net worth sweep” of Fannie and Freddie profits. Tim Pagliara, executive director of Investors Unite, followed Watt to Atlanta to seek a meeting with and to put pressure on the director to acknowledge the concerns of GSE shareholders.

FHA Commissioner Carol Galante has announced plans to step down from her current post, leaving behind a Mutual Mortgage Insurance Fund that appears well on its way to recovery and a slumping FHA business. Industry response to Galante’s Aug. 12 announcement was mixed. Some stakeholders applauded her toughness and resolve in steering FHA through hard times, while others criticized her for policies that made it more difficult and costly for first-time homebuyers to obtain an FHA-insured mortgage loan. Galante’s nearly three-and-a-half year stint as FHA commissioner was highlighted by her efforts to stabilize the FHA’s ailing Mutual Mortgage Insurance Fund, reduce losses and improve lender oversight. She achieved these goals by creating a comprehensive risk-management structure at FHA, revamping FHA pricing and credit policies, and ...

The Department of Housing and Urban Development failed to bill lenders for 486 loans with enforceable indemnification agreements that created losses for the FHA, according to the HUD Inspector General. The loans were originated between 2004 and 2014 and were either in the Accelerated Claims Disposition program or the Claims Without Conveyance of Title program, or they went into default before an indemnification agreement expired. Due to procedural errors and apparent lack of oversight, HUD failed to recover $37.1 million for 486 loans that had enforceable indemnification agreements. The unbilled loans represented 8.0 percent of total activity in the programs during that period. In addition, HUD did not ensure that indemnification agreements were extended to 64 of 2,078 loans that were streamline financed. As a result, HUD incurred losses of ...

The False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) not only have become strong enforcement tools in the fight against FHA mortgage fraud but also an efficient means of recovering taxpayer losses. Having used both federal statutes effectively to wrangle huge settlements from large banks, federal prosecutors now have their eyes set on mid-level banks, according to compliance experts during a recent webinar hosted by Inside Mortgage Finance Publications. “Because these FCA [and FIRREA] lawsuits have been a cash cow for the Department of Justice and the Inspector General of the Department of Housing and Urban Development, I think these agencies will target mid-level banks next,” said ...

Weighed down by high premium costs and lender overlays, FHA lost more primary market share to private mortgage insurers and the Department of Veterans Affairs during the second quarter of 2014. Although June’s FHA endorsement numbers have not yet been released, the trend seen in April through May, along with Ginnie Mae securitization data, suggest that FHA business was up a modest 11.5 percent from the first quarter. But that increase provides no comfort to FHA, which saw its market share go down to 33.7 percent, a six-year low. From April to May, FHA forward endorsements rose by 2.4 percent to $10.61 billion. On a year-over-year basis, however, endorsements were down from $21.9 billion in May 2013, according to an Inside FHA Lending analysis of agency data. On the other hand, private MI companies reported a total of $44.19 billion of new insurance written (NIW) during the ... [2 charts]

Two industry trade groups expressed support for consolidating Ginnie Mae’s mortgage-backed securities program and creating a new MBS but they are at loggerheads on some of the details. Commenting on the Ginnie Mae proposal, the Securities Industry and Financial Markets Association (SIFMA) and the Mortgage Bankers Association (MBA) said the disagreements are mostly on how to resolve issues related to winding down the Ginnie Mae I MBS program and providing a conversion option for existing securities. “It is clear that further discussion is warranted, and direct engagement with key stakeholders should be beneficial,” the trade groups suggested. Ginnie Mae has received considerable support from a variety of industry players for its “straw man” proposal to shift to a single MBS program based on the existing Ginnie II. The program now accounts for more than 90 percent of all ...