Banks Go Hog Wild in MBS; Caliber Selling MSRs - IMFnews

Share Register Advertise February 19, 2021 Banks Gobble Up MBS in 4Q20, BofA Leads the Way jbancroft@imfpubs.com Commercial banks and savings institutions beefed up their MBS holdings in the fourth quarter of 2020, showing strong appetite for pass-through securities issued by Fannie Mae and Freddie Mac. A new Inside MBS & ABS analysis of bank call reports shows the industry held a record $2.521 trillion of single-family MBS at the end of the year. During the fourth quarter, banks added $210.48 billion to their mortgage-securities holdings, a 9.1% increase from the prior period. Investment in pass-through securities issued by the two government-sponsored enterprises surged 13.9% to $1.538 trillion. Bank of America, the largest MBS investor in the banking industry, added $108.26 billion of GSE pass-throughs to its portfolio during the fourth quarter. The bank also shed $13.67 billion of Ginnie Mae MBS during the period and reduced its holdings of agency collateralized mortgage obligations by $1.07 billion. For more details and exclusive rankings, see the new edition of Inside MBS & ABS, now available online. IPO-Bound Lender Selling ‘Flow’ MSRs pmuolo@imfpubs.com Caliber Home Loans, whose initial public offering filing with the Securities and Exchange Commission is still considered active, has been identified as the seller on a flow servicing deal that could net the buyer upwards of $33.6 billion of product per year. Three different investment bankers, all requesting anonymity, confirmed to Inside Mortgage Finance Caliber’s identity. As for why an IPO-bound nonbank might want to unload mortgage servicing rights, that’s a different matter. A company spokesman this week had not returned several media inquiries on the matter. The investment banker on the MSR sale, Incenter Mortgage Advisors, Denver, declined to comment. For more details, see the new edition of Inside Mortgage Finance, now available online. Angel Oak the Top Contributor to Expanded-Credit MBS in 2020 bivey@imfpubs.com In a disjointed year for issuance of expanded-credit mortgage-backed securities, Angel Oak Companies was the top originator of collateral, according to a new ranking and analysis by Inside Nonconforming Markets. Some $2.96 billion of originations by Angel Oak were included in expanded-credit MBS in 2020. Angel Oak’s contribution was down 37.2% on an annual basis last year while overall expanded-credit securitization declined 29.6% to $21.45 billion. The ECM market was rocked by volatility tied to the coronavirus in March of last year and was slow to recover. In fact, almost all loans included in expanded-credit MBS in 2020 were originated before April. For full details and exclusive tables, see Inside Nonconforming Markets, now available online. CHLA Asks for Delay and Changes to the QM Rule lburden@imfpubs.com The Community Home Lenders Association late Thursday shot off a letter to the Consumer Financial Protection Bureau, asking the agency to delay and reconsider changes to the qualified-mortgage rule’s ability-to-repay requirement put into place by Trump appointee Kathy Kraninger. In December, the CFPB issued two final rules for QMs: one replacing the 43% debt-to-income ratio with a pricing threshold and the other creating a seasoned QM category. The way things stand today, the new QM standards are scheduled to go into effect March 1, with a mandatory compliance date of July 1. In its Feb. 18 letter, CHLA recommends the 43% debt-to-income ratio be reinstated and even raised to 45% and that loans with up to 50% DTI be allowed in conjunction with compensating factors. CHLA also suggested that “some type of GSE patch” be maintained while the delay and revisions take place. Whether and when the Trump Administration QM standards will go into effect is a huge point of uncertainty in the industry. In a blog posting on Feb. 4, CFPB Acting Director Dave Uejio said he has directed the bureau’s Research, Markets and Regulations Division to “explore options for preserving the status quo” with respect to qualified mortgages. That statement, which appeared to throw a monkey wrench into the new standards and their effective date, has caused uncertainty and anxiety in the industry. Short Takes: Believing in the Rocket / Crikey / Lower Profits and NIW for Essent / NAR Study on Minorities, Student Loan Debt and Mortgages / A New Hire for Mortgage Network pmuolo@imfpubs.com Institutional investors continue to plow into the stock of Rocket Companies, the parent company of the nation’s largest home lender Quicken Loans. The latest 13G filing with the SEC comes from Invesco, which recently reported a 9.3% stake in the nonbank mortgage giant. Another recent filer: the Australian-based Caledonia Investments, which controls 9.54 million shares, good for a 8.29% share… Back in August, Rocket went public at $18.00 a unit and shot up as high as $34.42. At press time, the shares were trading at $20.43. A few weeks back, company CEO Mark Farner warned short-sellers against targeting the stock… The nation’s mortgage insurers this week began to roll out fourth quarter results. Among them:  Essent Group, which posted a net profit of $123.6 million, down slightly from 3Q20. However, new insurance written dropped 19.3% on a sequential basis. According to Keefe, Bruyette & Woods, “The quarter was in line with us, but missed consensus on a larger loss provision … The January delinquency rate of 3.89% (previously reported) was down from 4.54% in September and 3.93% at year end.” IN CASE YOU MISSED IT: According to a new report from the National Association of Realtors, African-American home buyers are more than twice as likely to have student loan debt and be rejected for a home mortgage than white applicants. The median student loan debt for blacks is $40,000 compared to $30,000 for whites. MORTGAGE PEOPLE: Mortgage Network, Danvers, MA, hired Rachelle Bourgault as a loan officer in its Portland, ME, office. Bourgault will serve customers in Maine, New Hampshire and Florida where she holds licenses. Lenders Take Different Approaches to Their Agency Loan Sales Some mortgage lenders sell their loans to all three agencies, like Loan Simple, which in 4Q20 sold $21.709 million of loans to Fannie Mae, $22.950 million to Freddie Mac and $12.632 million to Ginnie Mae. Others, like American National Bank of Texas, don’t shop around. All of the lender’s $55.026 million in fourth quarter agency sales were to Fannie. Compare and contrast the business practices of more than 1,700 companies — every institution that sold a loan to Fannie, Freddie or Ginnie during the quarter — in Agency Seller-Issuer Profile: 4Q20. The exhaustive rankings in the report provide details on volume, channel usage and loan purpose, as well as FICO score, DTI and LTV averages. - To ensure delivery to your inbox, add news@imfpubs.com to your address book or safe sender list. 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