Mortgage Buybacks Spike; The Talent Drain from the GSEs - IMFnews

Share Register Advertise February 23, 2021 A Spike in GSE Loan Buyback Requests jbancroft@imfpubs.com Repurchase activity in the government-sponsored enterprise market increased significantly in 2020 — but not nearly as fast as the record-setting pace in new business. In 2020, mortgage sellers repurchased $986.8 million of single-family loans pooled into Fannie Mae/Freddie Mac MBS, a 26.7% jump from 2019. It marked the highest annual buyback total since 2016. There was another $728.4 million of unresolved buyback demands still pending at the end of the fourth quarter. Recent history shows the majority of those pending and disputed claims will end up being withdrawn by the GSE after the seller provides additional information. The increase in buybacks last year came from Freddie. Lenders repurchased $916.8 million of loans from Freddie MBS in 2020, a 35.4% increase from 2019. For full details and exclusive tables on the topic, see the new edition of Inside Mortgage Trends, now available online. Exodus, The Movement of the GSE People dhollier@imfpubs.com The exodus of senior executives from the government-sponsored enterprises continues apace. United Wholesale Mortgage late Monday announced that it has hired Desmond Smith, chief customer officer for Fannie Mae’s single-family business, to serve as its chief growth officer. In his newly created position at UWM, Smith will focus on expanding the company’s mortgage broker channel. With a career that includes stints at FHA, Wells Fargo and Capital One Home Loans (in addition to Fannie), he should fit right in at the nation’s fourth largest originator. As UWM CEO Mat Ishbia explained it, Smith “believes in the wholesale channel and knows first-hand the benefits mortgage brokers bring to borrowers.” The industry veteran joins a growing list of highly regarded members of GSE leadership who have recently decamped for greener pastures in private enterprise. At Fannie, the list includes Smith’s old boss, Andrew Bon Salle, who ran the company’s single-family division for many years before being tapped in January to serve as board chair for Home Point Financial. This fall, Fannie also saw the departure of Jeffery Walker, chief strategy officer and Smith’s predecessor as chief customer officer for the single-family business. Higher Originations, Lower Net Earnings for Mr. Cooper. MSR ’Mark’ at 100 BPs pmuolo@imfpubs.com Mr. Cooper, the nation’s fourth largest residential servicer, reported net earnings of $191.0 million for the fourth quarter, a sequential decline of 10.7%, according to figures released before the opening bell Tuesday morning. However, income would’ve been considerably higher if the nonbank didn’t take an $85 million charge for debt breakage costs. (In a nutshell, Mr. Cooper had to pay now to restructure debt, which ultimately will save cash over the long haul.) Otherwise, it was a pretty good quarter. Mr. Cooper originated $24.5 billion of mortgages, a handsome 56.2% improvement from 3Q20. At Dec. 31, its servicing portfolio totaled $626.0 billion, up from $588.0 billion at Sept. 30. The company also revealed that at yearend its MSRs were valued at 100 basis points compared to an “original cost basis of 100 basis points.” Rates Rise and MBS Trading Takes Off Like a Rocket pmuolo@imfpubs.com The average daily trading volume in agency MBS climbed to $366.3 billion in January, the strongest reading in well over a year and a sign, perhaps, that the current low-rate cycle may be nearing its end. Early this week, the yield on the benchmark 10-year Treasury increased to just under 1.40% before receding slightly. When rates rise, MBS as a technical matter can lose value, though prepayments decline. According to figures compiled by the Securities Industry and Financial Markets Association, trading in Fannie Mae, Freddie Mac and Ginnie Mae product jumped by a whopping 34.5% from December to January. Year-over-year the gain was less pronounced at 22.0%. MBS has been a favorite of institutional investors during these troubled times as banks, real estate investment trusts, sovereign nations and others grope for stability. For full details, see the new edition of Inside MBS & ABS, now available online. MFA Financial’s 4Q Profit No Match for COVID Losses in 2020 bivey@imfpubs.com Despite a profit in the fourth quarter, MFA Financial is still recovering from losses tied to the coronavirus. Overall, the non-QM-centric real estate investment trust generated net income of $45.82 million in 4Q20. However, for the year, the REIT took a loss of $679.4 million.  MFA held non-QMs with an unpaid principal balance of around $2.4 billion at the end of 2020. During the fourth quarter, the firm acquired only $83.2 million of nonagency product and sold $951.6 million of its non-QM holdings through two mortgage-backed securities.  Craig Knutson, MFA’s president and CEO, noted that the REIT’s profitability took a hit in the fourth quarter as MFA paid off financing from Apollo Global Management and affiliates of Athene Holding that helped keep the company afloat earlier in the year. “MFA’s fourth quarter financial results were a continuation of a return to normal, as we put the capital transactions necessary to emerge from our COVID-19 pandemic-induced distress behind us,” he said. How Does Your Compensation Stack Up? Curious about how your pay and benefits measure up to your peers? We are too! That’s why we’re conducting our annual survey to track compensation – including salary, commission and incentives, and benefits — across the mortgage industry. Please take a few minutes to fill out Inside Mortgage Finance’s 2021 Salary Survey, and share the survey with your colleagues. After the survey closes, we’ll send you a brief report on compensation levels in the industry. It’s quick, easy and completely confidential – everything you’d expect from the mortgage market’s leading source of detailed industry data. ​ 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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