With the mortgage finance industry in turbulence and a fast-changing regulatory landscape, banks have been forced to reevaluate how they optimize processes and become more cost-efficient, making “operational certainty the need of the hour,” according to an expert at a webinar held this week by NelsonHall. The market is seeing an increase in defaults but a decrease in mortgage originations, noted Sandip Sahni, practice head of business process services at Tata Consultancy Services. This has led to mortgage providers having to deal with fluctuations in volume and costs, and in response, service providers are creating more...

The roiling mortgage lending marketplace continues to present some lenders with even more challenges that force the adoption of coping strategies to cut their losses, while opening up fresh opportunities for others to deploy the next phase in their long-term strategic plans. loanDepot.com, based in Foothill Ranch, CA, the latest start-up by the founders of E*TRADE Mortgage and LendingTree Loans, falls into the latter category, recently launching its new national expansion plan with the opening of a new origination center in Franklin, TN, just outside of Nashville. Company President Tomo Yebisu said Franklin was chosen because of...

For a growing number of lenders, the decision to adopt a mortgage pipeline hedging strategy is fast becoming less of an innovative option and more about adapting to a business necessity to stay ahead of the curve, according to a white paper by MCT Trading Inc. MCT, a San Diego-based risk management and advisory services company, details in its recently issued paper the intricacies for mortgage bankers considering the switch from a best efforts delivery platform to a mandatory delivery model. "There are a number of different pitfalls lenders need to be cognizant of when making the move from best efforts loan sales to...

Mortgage lending to finance home purchases increased a hefty 32.2 percent from the first quarter to the second quarter of 2011, helping to offset a huge drop in refinance activity. Housing sales jumped 43.6 percent during the second quarter, although the housing market in 2011 is still considerably slower than it was a year ago. Conditions looked better in the second quarter largely because the first quarter of 2011 was one of the worst on record for housing sales and home-purchase lending. Fewer than 1 million new and existing home sales were reported during the first quarter of 2011, yielding a record low of just... [Includes two data charts]

Private investors in agency MBS could lose $13 billion to $15 billion from a new government effort to help current Fannie Mae, Freddie Mac and FHA borrowers refinance, according to a new Congressional Budget Office staff working paper. The Obama administration is expected to announce a revved-up refinance program as part of a new strategy to strengthen economic growth. A “stylized” refinance program analyzed by the CBO would have a relatively small impact on the overall economy, the analysts said. The biggest impact would be on private MBS investors and the estimated 2.9 million households that would likely be brought into the...

Fannie Mae, Freddie Mac and Ginnie Mae produced a total of $84.25 billion of new single-family MBS during August, a sturdy 19.8 percent jump from the previous month, according to a new analysis and ranking by Inside MBS & ABS. Although there was a brief bump higher in production in June, agency MBS issuance has generally been sliding lower since the end of 2010. The decline has corresponded to reduced production of refinance mortgages, which accounted for just 55.1 percent of new originations in the second quarter, down from 67.1 percent for all of last year. New data suggest the refi market is still struggling. Some 63.5 percent of...

The reverse mortgage arena experienced another shake-up as SunTrust Bank, citing poor volume, quite the business even as J.G. Wentworth, the largest purchaser of future payment products, announced its entry into the market. Atlanta-based SunTrust stopped accepting new reverse mortgage applications as of Sept. 1, although it is continuing to process applications already in the pipeline. A statement from the bank indicated that low production volume was the reason for management’s decision to leave the reverse mortgage business and to focus resources instead on mortgage origination and servicing. The market also lost ...

Banks and thrifts held a record $1.491 trillion of residential MBS in portfolio as of the end of June, according to a new Inside MBS & ABS analysis and ranking of call report data. That was up 1.6 percent from the end of the second quarter and marked the fourth consecutive period of growth in the industry’s MBS holdings. Banks and thrifts owned about 22.8 percent of the estimated $6.535 trillion of MBS outstanding at the end of the second quarter. All the growth came in investments in agency structured finance transactions, mostly REMICs. Bank and thrift holdings of agency REMICs jumped 8.6 percent in the second quarter to $459.9 billion, or 30.8 percent of... [Includes two data charts]

Commercial banks and their holding companies reported a combined $3.22 billion in income on their mortgage banking operations during the second quarter, the weakest performance for the industry since the depth of the financial crisis in late 2008. Mortgage banking income fell 23.7 percent from the first quarter of 2011, according to a new analysis of bank call-report data by Inside Mortgage Trends. The story is less clear on the production side of the business because of the mammoth loss reported by Bank of America. Through the first six months of the year – a troubling period of declining loan production levels and persistent buyback pressure from... [Includes one data chart]

The average mortgage banking firm reported increased production earnings in the second quarter of 2011 and higher loan production compared to the first three months of the year, according to the Mortgage Bankers Association quarterly performance report. The report, which collected data from 167 companies including many smaller mortgage bankers, found average pretax income fell 60.5 percent to $451,000 during the second quarter. That was the lowest level of profitability since the fourth quarter of 2008, when the average mortgage banking company lost $206,000. The MBA survey suggested that...