Agency MBS Keeps Rocking; Non-QM Changes? Maybe Not After All - IMFnews

Share Register Advertise February 05, 2021 The Agency MBS Rally Keeps Rolling Right Along… jbancroft@imfpubs.com   The historic boom in agency MBS issuance isn’t over yet. Fannie Mae, Freddie Mac and Ginnie Mae issued a combined $334.50 billion of single-family MBS in January, a modest monthly gain from December, according to an Inside MBS & ABS analysis. January agency MBS issuance ranked as the third largest monthly total on the record books. Production was almost exactly double the amount issued in January 2020, before the pandemic led indirectly to a massive refinance wave. The agencies securitized $226.69 billion of single-family refi loans last month, a 2.6% rise from December. The biggest gain was at Ginnie, where refi volume was up 4.3% for the month. The two government-sponsored enterprises saw a 2.3% increase in refi business last month. For more details and exclusive tables on issuance, see the new edition of Inside MBS & ABS, now available online. About Those QM Rule Changes … Not So Fast, Uejio Suggests bivey@imfpubs.com, pmuolo@imfpubs.com Acting Director Dave Uejio Thursday afternoon said he wants the Consumer Financial Protection Bureau to “explore options for preserving the status quo” with respect to the qualified mortgage rule and regulations governing debt collections. The regulator’s agenda was contained in a new blog post on the agency’s website but was short on details. However, it appears to some he doesn’t want the CFPB to implement changes to the QM rules that former (Republican-appointed) Director Kathy Kraninger approved late last year. Also, it’s possible the so-called “GSE patch” might be back in play. President Biden appointed Uejio to the temporary post a few weeks back. The new QM standards are set to take effect March 1 with a mandatory compliance date of July 1. Between March 1 and July 1 lenders can use the QM patch or the new standards. In December, Kraninger’s CFPB issued its final rule for QM standards, which first took effect in 2014. The changes include removal of the 43% debt-to-income ratio limit that applied to jumbo QMs and greater flexibility in terms of documenting borrowers’ income. There’s also a new pricing metric for determining QM status: The annual percentage rate on a first-lien mortgage must be less than 150 basis points more than the average prime offer rate for a comparable loan. Substantially all previously originated QMs would have met the metric.       PennyMac’s Net Income Declines in 4Q20. Lending and MSRs Head North bivey@imfpubs.com PennyMac Financial Services generated $452.8 million of net income in the fourth quarter of 2020, a 15.4% sequential decline, according to figures released Thursday afternoon. Income dropped in both the origination and servicing segments even as PennyMac boosted lending and its MSR portfolio. In 4Q20, the nonbank mortgage giant originated $69.41 billion of product, a 28.1% improvement from a red hot third quarter. Its servicing portfolio grew by 6.2% in that span to $426.75 billion. While most of PennyMac’s originations are in the correspondent channel, the main source of income comes from other lending channels. “Consumer and broker direct represented 20% of fallout adjusted lock volume in the fourth quarter but accounted for over 70% of segment pretax income,” said Dan Perotti, the firm's chief financial officer. For the full year, PennyMac earned $1.65 billion, more than four times the profit of 2019. David Spector, PennyMac’s president and CEO, added that he expects the company’s “exceptional financial performance to persist through 2021.” Is the GSE Cash Window Issue Cap Open for Negotiation? pmuolo@imfpubs.com Three weeks have passed since the Treasury Department and the Federal Housing Finance Agency issued an edict limiting cash window deals to just $1.5 billion per seller over any four-quarter period, but the pain still lingers for small- and medium-sized lenders affected by the decision. The order doesn’t go into effect for a year, but already seller/servicers are making plans. “I’m not a fan,” said the president of a Southeast-based Fannie Mae/Freddie Mac lender, who requested anonymity so he could speak freely. “We’ve been asked to move to MBS now, to get ahead of it.” He added: “We’re medium-sized so it will not hurt as bad, but many smaller players are going to get pushed out [of the window] because of cash flow.” For full details, see the new edition of Inside MBS & ABS, now available online. Short Takes: The M&A Game / GR Racks Up #2 / Phoenix’s Flow Deal / Verus Preps MBS / When You Can Advertise During the Super Bowl, You’ve Arrived pmuolo@imfpubs.com, bivey@imfpubs.com It appears the mortgage M&A binge predicted for the second half of 2021 might be coming early. Guaranteed Rate Friday morning disclosed it bought Owning Corp., a California-based direct-to-consumer mortgage platform. According to the Chicago-based GR, Owning funded roughly $20 billion of product last year. No purchase price was revealed… A few weeks back, GR inked a deal to buy Stearns, the nation’s 37th largest home lender. And just this week Pacific Western Bank, Los Angeles, said it purchased fix-and-flip lender Civic Financial Services, Redondo Beach. The seller was Wedgewood LLC… Yet more bulk servicing deals are coming to light. Phoenix Capital is putting the finishing touches on a conventional flow auction that will yield the buyer $100 million to $150 million of product per month. The formula is based on the seller’s production from October to December. The selling institution (of course) was not identified in the offering circular… Verus Mortgage Capital is prepping a $482.8 million MBS stocked with non-QMs that have seasoned for an average of 11 months, according to a presale report from S&P Global Ratings. The top contributor to the deal is NMSI, accounting for 34.1% of the loans. Founded in 2008, NMSI is based in Los Angeles. THE BIG GAME: You’ve had a lights-out kind of year when your company can afford to advertise during the Super Bowl. So, take a bow Guaranteed Rate, Quicken (Rocket) and United Wholesale Mortgage. And in case you missed it, loanDepot recently inked a deal to be the official mortgage provider of Major League Baseball. Do You Offer Pay and Benefits That Attract the Best? With mortgage applications surging, lenders are busier than ever — and your firm may be one of the many that is looking to staff up. But before you start the hiring process, turn to Inside Mortgage Finance’s Study of 2019 Mortgage Compensation to make sure your pay and benefits offerings position you to recruit and retain top talent. Based on our annual survey of salaries and benefits among residential finance workers, the study examines pay levels, compensation structures and benefits offerings for the market — and distills the findings into clear, concise charts and key takeaways. To ensure delivery to your inbox, add news@imfpubs.com to your address book or safe sender list. Home | Update Your Account | Mortgage Data | User Agreement | Unsubscribe © Copyright 2020 Inside Mortgage Finance Publications 7910 Woodmont Ave., Suite 1000, Bethesda, MD 20814 Tel: (301) 951-1240; Fax: (301) 656-1709

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