Banks and thrifts continued to generate very strong earnings from their mortgage banking operations during the first quarter of 2013, despite a slowdown in originations and loan sales. Banks and thrifts reported a total of $7.704 billion in mortgage banking income during the first three months of 2013, according to a new Inside Mortgage Trends analysis of recently released call-report data. That was up 15.5 percent from the previous quarter, and the early 2013 earnings fell just ... [Includes one data chart]

SunTrust Mortgage is in settlement discussions with the Department of Housing and Urban Development and the Department of Justice over alleged violation of the False Claims Act in connection with the bank’s origination of FHA loans. The Atlanta-based mortgage lender disclosed the ongoing talks in a recent regulatory filing after being notified by the agencies of the results of their preliminary investigation during the first quarter of 2013. Even with the ongoing settlement talks, SunTrust continued to deny any wrongdoing, making clear its disagreement with the government’s analysis and methodology. It gave no further ...

Changes to the FHA’s mortgage insurance premium cancellation policy, which take effect on June 3, could ultimately cause some FHA loans closed after the effective date to become a “higher-priced mortgage loan” that no investor would want to purchase, lenders warned. Eliminating the MIP cancellation and requiring insurance to be kept for the life of the mortgage loan will raise the annual percentage rate 150 basis points above the average prime offer rate (APOR) index. This will trigger a higher-priced mortgage loan (HPML) designation for some ...

FHA lenders now face more stringent default monitoring and reporting requirements as federal housing regulators try to keep close tabs on loan performance to reduce losses to the FHA insurance fund. New guidance issued by the Department of Housing and Urban Development requires FHA lenders to use new status codes in their monthly reporting of delinquent single-family mortgages, special forbearances and trial payment plans. At the same time, HUD announced a new reporting requirement for FHA loan modifications in which the servicer receives no incentives. The requirement to use the new codes and to ...

FHA jumbo loan originations increased in the first quarter of 2013 as well as from the same period last year pending hikes in the mortgage insurance premium and the required downpayment on loans above $625,500, according to Inside FHA Lending’s analysis of FHA data. FHA jumbo lenders produced an estimated $5.44 billion in loans over $417,000 during the first three months of the year, up 6.6 percent from the fourth quarter of 2012 and 14.0 percent higher compared to the volume from a year ago. Consumers continued to use the FHA jumbo product despite FHA’s decision to raise the annual mortgage insurance premiums on ... [2 charts]

FHA loans saw an improvement in delinquencies even as the mortgage industry reported an increase in the overall delinquency rate for single-family mortgages at the end of the first quarter of 2013, according to the Mortgage Bankers Association’s latest national delinquency survey. Among loan types, the FHA saw the largest improvement on a seasonally adjusted basis as its delinquency rate dropped to 10.97 percent in the first quarter, down 20 basis points from the previous quarter. This was good news for an agency that has been battling to reduce losses and stabilize its Mutual Mortgage Insurance Fund. However, the refreshing change was ...

The Department of Housing and Urban Development’s Office of the Inspector General has announced a second round of mortgage note sales for this year under the expanded Distressed Asset Stabilization Program. Separate sales of approximately 20,000 severely delinquent loans have been scheduled for June 26 and July 10 as part of HUD’s effort to reduce its bulging inventory of foreclosed residential properties and to target relief to areas hit the hardest by foreclosures. HUD estimates the total unpaid balance of the loans in this sale at ...

Fannie Mae hit an earnings home run in the first quarter while revealing that it has released $50.6 billion in “deferred tax assets,” an allowance that sets up a massive cash payment to the U.S. Treasury by the end of June. Fannie estimates that based on a net worth of $62.4 billion at March 31, it will have a dividend obligation to Treasury of $59.4 billion, a cash payment that appears all but certain. Following an edict from Treasury last summer, the GSEs cannot build retained earnings and can only maintain a small “buffer” of net worth. The rest of their earnings must be given to Treasury, which controls their preferred stock.

A jump in production income during the first quarter spurred a sharp increase in profitability that more than made up for a downturn in servicing earnings for a group of 10 lenders, according to a new Inside Mortgage Trends analysis of earnings reports. The 10 companies, which accounted for nearly half of the mortgages originated in the first three months of 2013 and over 60 percent of capitalized servicing rights, reported a hefty $4.29 billion in production-related income ... [Includes one data chart]

Mortgage industry economists widely agree that loan origination volume is going to drop sharply in 2013 – and again next year – although there is some variation in when they expect the downturn to take hold. The consensus view of economists at Fannie Mae, Freddie Mac and the Mortgage Bankers Association is that new originations in 2013 will drop 13.6 percent from last year’s level, falling to $1.635 trillion. The consensus – a simple average calculated by Inside Mortgage Trends – predicts ... [Includes one data chart]