Friday, June 3, 2022

Mortgage – HousingWire

Mortgage – HousingWire

Regulators aligned on “once in a generation” CRA rewrite

Posted: 03 Jun 2022 01:58 PM PDT

Two years ago, the regulator of the nation's biggest banks moved alone to rewrite the Community Reinvestment Act (CRA), the country's premier anti-redlining law.

That effort, under the Trump administration, ultimately fizzled. The Office of the Comptroller of the Currency formally rescinded its plan in December of 2021.

In an example of how dramatically the regulatory landscape has since shifted, top officials of all three banking regulatory agencies on Friday appeared together at an in-person event hosted by the Urban Institute, and they were aligned on the biggest revision to the Community Reinvestment Act in decades.

Federal Reserve second-in-command Lael Brainard, acting head of the OCC Michael Hsu, together with Martin Gruenberg, chair of the Federal Deposit Insurance Corporation, explained the thinking behind their nearly 700-page proposal.

"This is a once-in-a-generation opportunity for a substantive rewrite," said Brainard.

Hsu summed up the aligned approach from the agencies under President Biden by saying, "Faster alone, farther together," acknowledging the OCC's past unilateral approach.

He said that the new rule — if successful — will correct the racial discrimination it was first designed to solve.

"If it works, all the needs will be met," said Hsu. "We want to root it back to the origin story. There would be no redlining, no discrimination."

But meeting the spirit of the law remains a challenge, especially since the agencies' proposal does not add a racial dimension to the groups that banks should serve, as some affordable housing advocates had hoped.

It's difficult to square the spirit of the law, which had "clear roots in redlining, with the letter of the law, which is very specifically focused on [low- and middle-income] communities as the group that banks need to be attentive to serving," Brainard said.

Instead of broadening the scope of the rule to include racial minorities — which could result in potential legal challenges, some have argued — the agencies offered some alternative avenues for meeting the needs of minority borrowers.

Provisions that Brainard said would have the effect of serving communities that have faced "systemic inequities" include giving CRA credit for special purpose credit programs, which allow lenders to tailor lending programs based on protected class. Other regulators, including the Department of Housing and Urban Development, have said that special purpose credit programs do not violate fair lending law, in the hopes that lenders will begin to implement them.

The proposed CRA rule would also ask banks to specify the racial and ethnic distribution of lending within their assessment areas, drawing from existing Home Mortgage Disclosure Data.

That approach does not satisfy fair housing advocate Lisa Rice, CEO of the National Fair Housing Alliance. Speaking in a subsequent panel on the same stage, she called the current proposed rule a "missed opportunity."

"Focusing on income is not going to advance the ball on equity issues," Rice said. "We thought this rulemaking would be an opportunity to really mold the CRA into being an effective tool for advancing racial equity. Right now, if the rule stays the way it is, we think it's a missed opportunity."

Stakeholders have until Aug. 5 to comment on the proposed rule.

The post Regulators aligned on “once in a generation” CRA rewrite appeared first on HousingWire.

Mr. Cooper cuts more jobs as origination outlook dims

Posted: 03 Jun 2022 11:10 AM PDT

Top-10 residential lender and servicer Mr. Cooper has cut another 420 jobs, the second major layoff it has made this year.

In a disclosure made public Thursday afternoon, the company said the cuts amounted to 5% of its employee base. Most of the job losses will hit the originations side of the business. About 16% of the staff losses will affect California staffers, and will take effect in July.

"It is with deep regret that we needed to eliminate positions as part of our efforts to manage costs and ensure we position the company for long-term success," Mr. Cooper said in a statement Thursday.

Mr. Cooper Group notched a net profit of $658 million in the first quarter, due almost entirely to gains with mortgage servicing rights (MSR) and a deal with the fintech Sagent to create a cloud-native servicing platform.

During a conference call with analysts in April, Chris Marshall, vice chairman and president, said that reducing capacity is a reality for all originators, and hinted that future job losses were on the horizon.

"In the second quarter, you will see us taking charge of staff reductions related to our lower originations," he said.

Gaining an Unfair Advantage in a Challenging Mortgage Market: A Data Driven Approach

With total originations expected to shrink 35%, (from $4 trillion in 2020 and 2021 to $2.5 trillion for the next three years), some lenders will be on the losing end of the equation. But what if you had an unfair advantage in this climate? This white paper will cover how you can tap into an unfair advantage that helps you not only survive, but thrive.

Presented by: Teraverde

In a recent public filing with the Securities and Exchange Commission, Mr. Cooper told shareholders that it expects to "roughly break-even” on net income for the second quarter, excluding potential mark-to-market gains on its MSR portfolio as well as severance charges.

The break-even on net income reflects “pressure on volumes and margins in its originations segment, while it continues to project strong growth in servicing segment pretax income culminating in a quarterly run-rate of $100-$120 million by fourth quarter,” the company said.

Dallas-based Mr. Cooper lowered its guidance on originations operating income in the second quarter to between $40-$50 million, down from its prior guidance of $65-$85 million.

The mortgage company laid off 250 workers in the first quarter as rising mortgage rates began to compress origination volume.

"While the mortgage industry experienced record high origination volumes in recent years and resources were scaled up to meet consumer demand, the industry now faces higher interest rates leading to lower originations volume," a spokesperson for Mr. Cooper Group said in a statement in late April.

In a highly competitive market, lender­s are cutting costs, mainly via layoffs. California-based Owning Corp., a direct-to-consumer lender acquired by Guaranteed Rate in February 2021, cut 108 jobs in three rounds from February to April. And it intends to add another 81 layoffs to the list. Other lenders also have reduced staff, such as Interfirst, Union Home Mortgage, Flagstar, Wells Fargo, Fairway and Better. Rocket has not laid off workers but has offered a voluntary buyout to some of its staff.

However, even in this economic environment, some companies are looking to expand their reach. Among them are Planet Home Lending, Geneva Financial and New Western.

The post Mr. Cooper cuts more jobs as origination outlook dims appeared first on HousingWire.

UWM’s CEO Mat Ishbia a finalist to buy Denver Broncos

Posted: 03 Jun 2022 09:53 AM PDT

United Wholesale Mortgage's CEO Mat Ishbia is a finalist to buy the Denver Broncos, which have been up for grabs since February 2022.

As first reported by 9NEWS, four contenders are currently in the running to snatch the team: Ishbia and his brother Justin Ishbia, who owns 22% of UWM; Josh Harris, owner of NBA Philadelphia 76ers and NHL New Jersey Devils; Rob Walton, son of Sam Walton, who was the founder of Walmart; and Jose Feliciano, co-owner of Clearlake Capital, which was the money behind Todd Boehly’s successful bid for Chelsea Football Club in London.

Ishbia and his brother reportedly toured the Broncos’ facilities in mid-May.

The decision of who will become the team’s next owner may be just around the corner. The deadline for submitting second-round bids is on Monday, June 6, per 9NEWS.

Bidding for the team is expected to start somewhere around $4 billion, but the final purchase price is likely to be higher. When the sale was originally announced, the football team, which has three NFL championships under its belt, was valued at $3.75 billion.

Ishbia, who, according to Bloomberg, has a net worth of $5.45 billion, has been actively involved in sports since his college years and continues to be. UWM’s CEO played for four years as a backup point guard for National Championship-winning Michigan State from 1998-2002.

How to make digital marketing easy and effective for mortgage professionals

The shift to a purchase market makes effective digital marketing even more important, and collaborative marketing technology can generate more demand while reducing time spent on marketing. This white paper explains what collaborative marketing is and how forward-thinking lenders are already using it to drive growth.

Presented by: Evocalize

In June 2021, UWM, the nation’s largest wholesale lender, announced that it was the new jersey sponsor for the Detroit Pistons. Financial terms of the deal weren’t disclosed to the public.

The Pontiac-based wholesaler also sponsors Ishbia’s alma mater, Michigan State. Last year he made a $32 million donation for a new football building Ishbia announced in September 2021 that UWM will sponsor all men’s basketball and football players with $500 dollar monthly stipends. The only catch is that players have to advertise UWM on their social media pages.

It is not unusual for lenders to be involved in the sports world, whether that be basketball, football or baseball.

Dan Gilbert, founder of Rocket Mortgage, is the majority owner of the Cleveland Cavaliers. And in 2020, Rocket become the official mortgage sponsor of the NFL.

loanDepot on the other hand is an official mortgage provider of Major League Baseball (MLB). In March 2021 loanDepot announced that it was named the presenting sponsor of the American and National League Championship Series through 2025.

The post UWM’s CEO Mat Ishbia a finalist to buy Denver Broncos appeared first on HousingWire.

Residential construction jobs now 7.6% above pre-COVID level

Posted: 03 Jun 2022 09:06 AM PDT

After a month of very little change in April, the construction sector had a solid month of job growth in May, according to the U.S. Jobs Report released on Friday.

Construction gained 36,000 jobs in May, with residential building adding 5,000 jobs and residential specialty trade contractors gain 11,700 jobs. Employment in the construction sector is 40,000 higher than its level in February 2020, while employment in residential building is 7.6% higher than its pre-pandemic level.

"Although housing inventory is beginning to increase, demand continues to exceed supply even as mortgage rates have spiked," Mike Frantantoni, the Mortgage Bankers Association’s SVP, said in a statement. "The continued strength in the job market will provide ongoing support to housing demand."

Overall, the U.S. economy gained 390,000 nonfarm payroll jobs in May. Thanks to this increase, the U.S. economy has regained 6% of the jobs it lost in the pandemic.

For the third month in a row, the unemployment rate remained at 3.6%, with the number of unemployed persons at 6.0 million, just slightly above pre-COVID level of 5.7 million.

"If gains continue at the May pace, we could return to the pre-COVID employment peak by August," Odeta Kushi, First American's deputy chief economist, said in a statement.

Could renovated foreclosure resales help solve the nation's increasingly complex affordable housing puzzle?

An estimated 140,000 renovated properties purchased at foreclosure auction or bank-owned auction were resold to owner-occupant buyers between January 2020 and December 2021

Presented by: Auction.com 

The real estate and rental and leasing sectors gained 14,000 jobs in May, with real estate gaining 7,400 jobs, and rental and leasing services gaining 6,500 jobs.

Mortgage banking companies, on the other hand, employed 290,400 full time employees as of April 30, 2022, up 500 from the end of March. However, they’re down 2.4% from June 2021, when 297,600 workers were employed at mortgage banking firms. Mortgage brokerage firms added 500 jobs in April from the prior month, according to the BLS statistics.

The lion's share of the job growth in May came from gains in the leisure and hospitality sector (up 84,000 jobs), the professional and business services sector (up 75,000 jobs), and in the transportation and warehousing sector (up 47,000 jobs). On the other hand, employment in retail trade declined, losing 61,000 jobs, however it is still 159,000 jobs above its pre-pandemic level.

Experts believe May's job report will likely support future rate hikes by the Federal Reserve.

"In our view this report should cement the Federal Reserve's commitment to aggressive policy tightening over the coming months," Doug Duncan, the chief economist at Fannie Mae, said in a statement.

The post Residential construction jobs now 7.6% above pre-COVID level appeared first on HousingWire.

How the PLS market is making money on delinquent loans 

Posted: 03 Jun 2022 08:37 AM PDT

Lakeview Loan Servicing unveiled a rare private-label securities offering this past March involving a pool of mostly delinquent mortgages serviced by the company.

The loans in the offering were all originated through the Federal Housing Administration (FHA) and later securitized through Ginnie Mae. At the time, it was only the fourth such private label securities (PLS) offering of its kind in more than a decade, according to a bond-rating report by Kroll Bond Rating Agency (KBRA). 

Since then, Lakeview has unveiled two additional PLS offerings involving pools of delinquent FHA loans also securitized via Ginnie Mae. 

The delinquent FHA-insured mortgages backing Lakeview's initial private-label securities (PLS) offering earlier this year, Lakeview Trust 2022-EBO1, all were purchased out of Ginnie Mae loan pools via the agency's so-called early buy-out, or EBO, program. 

The more recent offerings — Lakeview Trust 2022-EBO2, which closed in late April; and Lakeview Trust 2022-EBO3, set to close in early June — also involve EBO loans, according to KBRA ratings reports. In those offering, 100% of the FHA loans involved are delinquent — with about a quarter of the mortgages in each deal in active foreclosure.

So why is this rare bird in the PLS world suddenly getting air under its wings, and how can you make money securitizing delinquent loans, even when they are in active foreclosure? 

The major market dynamic making EBO deals attractive now, according to KBRA, is a changing of seasons in the mortgage industry, marked by fast-rising rates, high housing prices and a turn toward a competitive purchase-mortgage market.

"Reverse mortgage, mortgage servicing rights (MSR)-backed issuance, home equity line of credit-backed deals … Ginnie Mae early buyout (EBO), and other esoteric RMBS [residential mortgage-backed securities] transactions are … poised to increase in the remainder of 2022 and 2023 as interest rates rise further," states a recent KBRA report on the private-label securities market. 

To understand how these "esoteric" EBO PLS deals can offer an attractive return for bondholders, we need to examine the details of the recent EBO offerings.

Lakeview Trust 2022-EBO 2 involves a pool of 2,063 FHA-backed loans with an unpaid principal balance (UPB) of $405.2 million, with all the loans deemed delinquent. In total, 99.3% of the loans in the collateral pool for the offering are 90 days or more past due and 26.5% are in active foreclosure. 

Lakeview Trust 2022-EBO 3, involving a pool of 1,713 FHA loans with a UPB balance of $302.9 million, has similarly grim loan-performance markers, with 100% of the pooled loans delinquent — 97.6% are 90 days or more past due and 24.8% are in active foreclosure.

Lakeview's initial EBO offering this year, Lakeview Trust 2022-EBO1, involved a pool of 2,192 FHA-guaranteed mortgages with a UPB value of $423.6 million. The PLS offering was backed by a loan pool in which 96.6% of the mortgages were 90 days or more past due and 16.3% in active foreclosure.

Key to EBO offerings is the fact that the FHA guarantees 100% of the principal balance on the loans it insures. The FHA loans in all three of Lakeview's EBO offerings also were securitized via Ginnie Mae and are backed by the agency, which guarantees only the principal and interest payments to purchasers of its bonds, which are sold worldwide.

Once a loan is 90 days past due, however, under Ginnie Mae's EBO program, the servicer can buy the loan out of the Ginnie Mae loan pool, which means it can stop advancing principal and interest each month. After the mortgages acquired by a servicer become current for six consecutive months, often through modifications, they are eligible to be re-securitized through Ginnie Mae and "re-pooled" with other loan collateral.

Getting the loans to reperform represents "highest income-generating" potential for the EBO offerings, KBRA bond-rating reports indicate, given it provides six months of uninterrupted payments on the reperforming mortgage and the option, in most cases, for a cash-out of the loan at the end of that period via the Ginnie Mae re-securitization.

Current loans have the highest likelihood of redelivery to a Ginnie Mae pool, and re-pooling is the path that is "the most beneficial to the [PLS] transaction as it is generally the shortest resolution path," the KBRA bond-rating reports each state.

For all three of Lakeview's EBO offerings so far this year, however, at least 97% the loans in the pools being securitized via the PLS market are already delinquent by 90 days or more, making a high rate of redelivery to Ginnie pools an unlikely outcome. Principal recovery on the loans is guaranteed through FHA in the event of a default, but there often is a bureaucratic time lag in obtaining interest due, KBRA noted. 

In addition, interest rate recoveries are at the HUD debenture rate, "which is typically substantially below the loan note rate," according to KBRA. All three Lakeview's EBO private-label offerings include an interest-rate reserve account, with starting balances ranging from $9.8 million to $13.2 million, to cover potential bond-interest shortfalls.

Two past EBO PLS offerings prior to initial Lakeview Trust 2022-EBO1 transaction earlier this year, according to a US Bank trust investor report, also were sponsored by Lakeview — one in 2015 and another in 2021. Another such transaction, a $370.7 million offering of nonperforming FHA loans, closed in July 2021 and was sponsored by Waterfall Victoria Master Fund, with Carrington Mortgage Services acting as the loan servicer, according to a separate KBRA ratings report.

That makes a total of six private-label EBO offerings over the past decade or so, according to KBRA's accounting. Those transactions are not likely to be the end of the story, however.

"EBO strategies are expected to become more prevalent as a function of the size of the overall GNMA [Ginnie Mae] market, with GNMA outstanding [mortgage-backed securities] at approximately $2.1 trillion in 2021 vs. approximately $400 billion in 2007," KBRA's ratings report on Lakeview's latest EBO offering states.

Lakeview, based in Coral Gables, Florida, is part of the Bayview Companies and a subsidiary of Bayview MSR Opportunity Master Fund LP. It also is an affiliate of Bayview Asset Management, a certified minority-owned and private equity firm with hedge fund holdings.

As of May, Lakeview ranked as the third-largest servicer of loans backed by a Ginnie Mae guarantee, controlling 10.4% of the agency's servicing book of business — with a $211.2 billion portfolio comprised of both new-issuance securitizations and net purchases, according to a recent report from mortgage-data analytics firm Recursion. Ahead of Lakeview at the No. 1 position is Freedom Mortgage, with a 12.7% market share and volume of $257.5 billion; followed by Pennymac, 11.5% market share and volume of $232 billion.

As of the same date, Lakeview ranked as the fifth-largest overall servicer of agency-backed loans, controlling 4.6% of the combined servicing book of business for Fannie Mae, Freddie Mac and Ginnie Mae loans. Its servicing portfolio for all-agency loans based on unpaid principal balance stood at $374.8 billion, according to Recursion's May report. Wells Fargo ranked first, with a 7.7% market share and an all-agency servicing portfolio totaling $623.9 billion as of the same date.

The post How the PLS market is making money on delinquent loans  appeared first on HousingWire.
at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)

Mortgage – HousingWire

Mortgage – HousingWi...