Mortgage – HousingWire |
- Opinion: GSE policy changes are positive for small lenders
- Mortgage rates continue to move north
- Private-label market filled the void created by PSPA changes
- OCC sanctions subservicer Cenlar for poor risk controls
- Mortgage rate increases push refinance share lower
| Opinion: GSE policy changes are positive for small lenders Posted: 28 Oct 2021 12:28 PM PDT We have recently seen a major shift in the focus of Fannie Mae, Freddie Mac and their regulator, FHFA. Just a few years ago, we were talking about shrinking the GSEs' footprint, giving GSE charters to vertically integrated Wall Street banks, and giving these same Wall Street banks access to the GSEs' Common Securitization Platform, which would have enabled them to dominate mortgage markets. The focus has now shifted to equitable housing for underserved and minority borrowers, initiatives to improve access to affordable mortgage credit, and equitable lender access to GSE loans. The Community Home Lenders Association (CHLA), which represents small and mid-size independent mortgage bankers (IMBs), applauds these developments, and we just submitted comment letters on equitable housing and housing goals on how to build on this. First, in January, a long-time FHFA policy of guarantee fee parity (no volume discounts for large lenders) was formalized and made permanent under amendments to the Treasury PSPAs. CHLA is calling on FHFA to take the additional step of barring volume discounts for large lenders in mortgage insurance (MI) coverage of high-LTV GSE loans. FHFA also should also make permanent the longstanding GSE pilots for direct MI coverage. These changes are important so that all borrowers have equitable access to Fannie/Freddie loans. Unfortunately, the January PSPA amendments also took a huge step backward — by imposing restrictions on higher-risk loans that are critical to homeownership for minority and underserved borrowers, restrictions on investor loans that are commonly used for affordable rental housing and restrictions on lender access to the GSE cash window. CHLA strongly commends the decisive actions that FHFA Acting Director Sandra Thompson has taken since she took over in June. The most significant was suspending all these PSPA restrictions in concert with Treasury, a top CHLA priority since shortly after they took effect. In both our recent comment letters, CHLA is calling on FHFA to make these suspensions permanent. Acting Director Thompson has also made a number of other important access to credit changes – including ending the adverse market fee, making permanent the option to use desktop appraisals, limiting use of the Common Securitization Platform (CSP) to Fannie and Freddie, increasing the GSE housing goals, and reopening the GSE capital rule. Capital requirements for Fannie and Freddie should be reduced. It is widely agreed they are in excess of the risks of the loans the GSEs guarantee. Excessive capital levels translate into excessive g-fees and loan level price adjustments (LLPAs). Moreover, failure to appropriately reflect credit risk transfers in the current capital rule discourages an important activity that substantially reduces GSE risk and encourages market discipline. Excessive LLPAs should also be addressed, since they can stand in the way of equitable housing and access to credit. Broader market considerations also come into play. FHA is overcharging for its loans – both in the annual premiums it charges and its policy since 2013 of charging premiums for the Life of the Loan. But policymakers don't want FHA's market share to be too large. So, Fannie and Freddie need to trim excessive g-fee and LLPA levels – to make it easier to coordinate with FHA premium reductions. In our recent comment letters, CHLA also reiterated our longstanding call for more transparency in the GSEs' automated underwriting systems (AUS). The current black box allows stealth contractions in their credit boxes, as we believe took place earlier this year. Of course, Fannie and Freddie need sound underwriting requirements. But they should never be used as a policy instrument to arbitrarily shrink the role of Fannie and Freddie, who are vital to access to credit and to equitable housing. More transparency makes this easier to identify. Finally, what about the long-term future of Fannie Mae and Freddie Mac? Thirteen years after entering conservatorship, it is unclear if and when they will ever exit. But January's PSPA loan and cash window restrictions show the risks of major decisions that are not subject to rigorous public debate and transparency. Such debate should be a priority for Congress and federal policy makers. Another debate is how to regulate the GSEs. The term "utility model" is casually tossed about – but it means different things to different people. CHLA, and other groups like the National Association of Realtors have laid out detailed plans on how a true utility model should work. There needs to be a balance of maintaining the GSEs' affordable housing mission while allowing Fannie and Freddie to earn profits, but preventing them from taking excessive risks to maximize earnings like they did prior to 2008. Finally, Congress should never authorize additional GSE charters. Handing over the GSE guarantee and platform to vertically integrated Wall Street banks under the Trojan Horse of "competition" stands that term on its head. Ultimately, it is underserved and minority borrowers that would suffer, given the strong statistical evidence that banks significantly lag in mortgage access to credit. Today the trends for GSE equitable housing for borrowers and small lenders are good. Let's keep up the momentum. Craig Thomas is the Policy Director of the Community Home Lenders Association (CHLA). This column does not necessarily reflect the opinion of HousingWire's editorial department and its owners. 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| Mortgage rates continue to move north Posted: 28 Oct 2021 07:13 AM PDT The average 30-year-fixed mortgage rate continues to trend upwards, rising by five basis points to 3.14% for the week ending Oct. 28, according to Freddie Mac's latest PMMS survey. Rates have risen roughly 20 basis points over the past month, and market observers believe that rise will continue. Sam Khater, Freddie Mac's chief economist, said in a statement that the yield on the 10-year Treasury has been increasing "due to the decline in new COVID cases, increasing consumer optimism, as well as broadening inflation and persistent shortages." "Mortgage rates are also rising, but purchase demand remains firm, showing that latent purchase demand exists among consumers," he added. Last week, the average 30-year-fixed mortgage rate slightly came in at 3.09%, while a year ago today the 30-year fixed-rate mortgage averaged 2.81%. Lenders – Now is the time to prioritize lead generation HousingWire Editor-in-Chief Sarah Wheeler and Deluxe Senior Business Development Executive Mark McGuinn discuss the challenges lenders are facing to optimize lead generation, even as mortgage rates continue to change. Presented by: DeluxeRates have remained historically low in the past year thanks to the Federal Reserve's monthly purchases of $120 billion in U.S. Treasury bonds and mortgage-backed securities. The central bank has signaled that once the labor market corrects itself, they will taper off their purchases. With the rise in mortgage rates, refinance activity has started to wane, with refis representing 62.2% of total applications, per a report from the Mortgage Bankers Association for the week ending Oct. 22, 2021. The refi index dipped 2% from the week prior, sitting 26% lower than it was the same week last year. "The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers' incentive to refinance," said Joel Kan, MBA's associate vice president of economic and industry forecasting. Meanwhile, purchase activity has continued to thrive, with the seasonally adjusted purchase index increasing 4% from one week earlier, the MBA found. "Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity," Kan said. The post Mortgage rates continue to move north appeared first on HousingWire.  |
| Private-label market filled the void created by PSPA changes Posted: 27 Oct 2021 01:38 PM PDT The pandemic, stellar vacation-home sales and regulatory turbulence combined in 2021 to spark a boom in private-label securitizations backed by mortgages on second homes and investment properties. A total of 37 such deals were completed through October of this year involving more than 51,000 mortgages on properties that were not a primary residence (in other words, second homes and investment properties), according to HousingWire's analysis of private-label securitization deals over the period. The mortgages used as collateral were valued in aggregate at $15.2 billion as of the closing of the transactions. The mortgage-collateral volume and total deal count in 2021 dwarfs even the combined totals from the prior two years:
The analysis is based on an examination of data supplied by the Kroll Bond Rating Agency covering more than 160 private-label residential mortgage-backed security (RMBS) issuances over the first 10 months of this year.  This content is exclusively for HW+ members.Start an HW+ Membership now for less than $1 a day.Your HW+ Membership includes: Already a member? log in The post Private-label market filled the void created by PSPA changes appeared first on HousingWire.  |
| OCC sanctions subservicer Cenlar for poor risk controls Posted: 27 Oct 2021 04:56 AM PDT The Office of the Comptroller of the Currency (OCC) issued a consent order against Cenlar FSB, the nation’s second-largest mortgage servicer, over "unsafe or unsound practices," the regulator said this week. The consent order states that New Jersey-based Cenlar cannot take on new subservicing clients without explicit approval from the OCC. Cenlar internal controls and risk management practices do not support the profile and size of its mortgage sub-servicing portfolio, the OCC said in a statement. Cenlar is a behemoth in the space – it’s the largest mortgage subservicer and the second largest mortgage servicer in the United States. The non-depository bank says it has around $900 billion in its sub-servicing portfolio, and $1.1 billion in assets. "The bank has failed to take timely corrective actions to remediate its deficiencies and unsafe or unsound practices," the regulator said in the consent order. How mortgage servicers can increase visibility into their portfolios The DigitalTax Portfolio Monitoring solution provides powerful visibility into trending and identification of changes in the customer's property characteristics, which then incites action and initiates true risk management, enabling a better experience for the homeowner. Presented by: CoreLogicThe order shows Cenlar's interest in cooperation and avoids additional costs associated with administrative and judicial proceedings. The OCC requested that the bank develop an effective default operations program concerning loss mitigation, foreclosure, and claims activities. In addition, the bank will have to develop an IT control program. "We are working with the OCC to make any changes necessary to resolve their concerns," the company said in a statement. Cenlar added that it “is profitable” and has strong capital and liquidity. The bank's board has 30 days to appoint a compliance committee and has 60 days to submit a written progress report showing corrective actions and their results and status. The post OCC sanctions subservicer Cenlar for poor risk controls appeared first on HousingWire.  |
| Mortgage rate increases push refinance share lower Posted: 27 Oct 2021 04:00 AM PDT Mortgage applications increased 0.3% from last week, per the latest report from the Mortgage Bankers Association for the week ending Oct. 22, 2021. With two consecutive weeks of mortgage rates over 3%, refinances continued to retreat. The refinance share of mortgage activity decreased to 62.2% of total applications, down from 63.3% the week prior. The refinance index was down 2% from the week prior, a staggering 26% lower than it was the same week last year. "Mortgage rates increased again last week, as the 30-year fixed rate reached 3.30% and the 15-year fixed rate rose to 2.59% – the highest for both in eight months. The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers' incentive to refinance," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity," Kan said. "Both new and existing-home sales last month were at their strongest sales pace since early 2021, but first-time home buyers are accounting for a declining share of activity." Home prices have continued their rapid rise, and a lack of housing supply constrains the purchase market. The latest S&P CoreLogic Case-Shiller National Home Price Index, released on Tuesday, showed a 19.8% annual gain for the year ending in August 2021, remaining the same as the previous month. The annual rate of housing price growth is the highest since the index was introduced, in 1987. HousingWire's virtual demo days are designed specifically to help mortgage industry decision makers identify the technology solutions they need to operate efficiently and securely. Tune in November 2nd to experience demos from the most innovative servicing, audit and post-close tech companies in the industry. "Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation, and this is constraining sales in many markets, and particularly for first-timers," said Kan. The adjustable-rate mortgage share of activity decreased to 3.1% of total applications. The Federal Housing Administration share of total applications increased two basis points from the week prior, reaching 10.4%, and the Department of Veterans Affairs' share of total applications also increased slightly, to 10.6% from 10.4%. The USDA share of total applications stood unchanged from 0.5% the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, those with balances at $548,250 or less, increased to 3.30% from 3.23%. The average contract interest rate for 30-year fixed-rate mortgages for jumbo loans, those with balances greater than $548,250, increased to 3.34% from 3.26%. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.31% from 3.17%. The post Mortgage rate increases push refinance share lower appeared first on HousingWire.  |
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