The GOS Boom is Over; Fannie Change Negative for Vacation Homes? - IMFnews

Share Register Advertise February 25, 2021 The Gain-on-Sale Boom is Over. Now What? pmuolo@imfpubs.com Just because Treasury yields have been climbing steadily the past five weeks that doesn’t mean mortgage rates are guaranteed to follow. Still, residential lending executives and loan officers are starting to grow antsy, whether they care to admit it or not. Bottom line: the record year of 2020, when $4.04 trillion of new loans were written, is clearly in the rearview as mortgage bankers grapple with what likely will be reduced production volumes in the quarters ahead. One item not in dispute is the declining nature of gain-on-sale margins. According to a cursory analysis by Inside Mortgage Finance, some of the GOS declines suffered by individual shops have been steep, to say the least. loanDepot, which reported earnings late last week, registered a GOS of 347 basis points for the fourth quarter, a 31.6% drop from 3Q20. The nonbank, the nation’s seventh largest originator, is hardly alone. For full details, see the new edition of Inside Mortgage Finance, available online Thursday afternoon. NAR: New Fannie Rules Endanger Resort Area Borrowers dhollier@imfpubs.com The National Association of Realtors, responding to concerns raised by members from Florida and other resort areas, has raised the alarm about new Fannie Mae restrictions on lending for short-term rentals, condotels, and similar facilities. Earlier this week, the trade group wrote Federal Housing Finance Agency Director Mark Calabria to complain about changes to the Fannie selling guide that went into effect in December. NAR argues that the new guidance could further damage already struggling resort area markets with a preponderance of second homes and investment properties. According to the Realtors, Fannie’s latest “clarification” of its condo-lending protocols could limit the financing options in these markets with large numbers of second homes. Projects with a mix of both primary and secondary homeowners appear especially vulnerable. The problem is that some of the language in the new guidance is ambiguous. NAR offers a few examples. For instance, under the modified rules, a lender’s decision on whether a property qualifies for a loan can be based on something as small as the use of the word “resort” in the project’s name. New Leadership at Non-QM Aggregator Deephaven, Nichols Stays on at Pretium bivey@imfpubs.com Deephaven Mortgage, an aggregator of non-qualified mortgages, has a new president and CEO: John Keratsis. Company founder and former CEO Matt Nichols will remain with Pretium, which owns the Charlotte-based Deephaven. Keratsis was previously a senior managing director at Incenter, where he had oversight of several mortgage services and specialty lending units. “Pretium’s willingness to invest in intelligent technologies will allow Deephaven to grow and offer creative products to borrowers, which is an exciting opportunity for someone with my experience,” he said. Pretium acquired Deephaven in June 2019. The alternative investment management firm had more than $20 billion of assets under management and 1,600 employees as of late January. A former Goldman Sachs executive, Nichols is now co-head of Pretium’s residential credit business and executive board chair of Deephaven. Nichols said Keratsis’ experience “will be instrumental as we continue to scale our platform and look to capitalize on a broad array of strategic business opportunities.”   Radian Reports Higher Earnings for 4Q20, Lower NIW pmuolo@imfpubs.com Radian Group, the nation’s second largest mortgage guaranty company in terms of insurance-in-force, earned $148.0 million in the fourth quarter, a 9.6% sequential improvement, while new insurance written fell 10.6% to $29.8 billion. In the year-ago quarter, Radian earned $161.2 million. Like all the MIs, Radian’s results have been negatively impacted – to some degree – by rising delinquencies and forbearance readings tied to economic damage caused by the pandemic. For the year ending Dec. 31, its MI provision for losses totaled $483.3 million compared to just $131.5 million for 2019. “The number of primary delinquent loans was 55,537 as of December 31, 2020, compared to 62,737 as of September 30, 2020 and 21,266 as of December 31, 2019,” Radian noted in its earnings report. “The primary mortgage insurance delinquency rate was 5.2% in the fourth quarter of 2020, compared to 5.9% in the third quarter of 2020, and 2.0% in the fourth quarter of 2019.” In terms of NIW written for full-year 2020, Radian ranked fourth behind Arch Mortgage Insurance, MGIC and Essent, according to a new ranking from Inside Mortgage Finance. Short Takes: A Byproduct of the Regulatory Cap? / Rising Rates, Rising Yields / FHFA Extends Foreclosure and Eviction Moratoriums / Spector Named Chairman of PennyMac pmuolo@imfpubs.com, dhollier@imfpubs.com In the Wednesday edition of IMFnews we reported that Guaranteed Rate had hired top-performing New York metro area loan officer Brian Scott Cohen away from Wells Fargo. One observer of the situation noted that Cohen was a jumbo specialist (home prices in the New York area are not cheap, despite the economic damage caused by the pandemic), adding that when “regulators capped what Wells could portfolio (in terms of mortgages) that harmed many of their top producers.” After IMFnews went to press, Wells confirmed Cohen’s departure but offered no further comment... The big question: How many more LOs might the nation’s fourth largest originator lose or is this it?... At press time, the yield on the 10-year Treasury was once again creeping northward at 1.47%. For the week ending Feb. 25, the going rate on a 30-year fixed rate mortgage was 2.97% compared to 2.81% seven days earlier. And yes, mortgage stocks were suffering ... Surprising no one, the Federal Housing Finance Agency this morning announced that it is extending its COVID-19 foreclosure and REO eviction moratoriums. Unlike previous extensions, which typically were only for a month, this one lasts until the end of June. The previous moratoriums were scheduled to end March 31... The announcement puts FHFA policy in line with other federal government agencies, including the FHA and the VA. However, the regulator's three-month extension will only apply to single-family mortgages backed by Fannie Mae or Freddie Mac, and only if those loans are in forbearance as of February 28... MORTGAGE PEOPLE: PennyMac Financial Services named current CEO David Spector to the additional position of chairman. The nonbank also announced Jonathon Jacobson, founder of HighSage Ventures, has joined the board of directors. In late January, PennyMac’s founder and non-executive chairman died due to complications related to COVID-19. He was also battling brain cancer. Digital Closings Are on a Rapid Rise A recent survey by the American Land Title Association showed that nearly 30% of title and insurance companies offer some type of digital closing, up from 17% in 2019. If you’re looking to increase digitalization in your lending process, turn to IMF’s Guide to Digital Mortgages. The guide incorporates advice from lenders, lawyers, technology vendors and secondary market participants who are deeply involved in digital mortgage issues about the benefits, risks and best ways to transition to digital lending. To ensure delivery to your inbox, add news@imfpubs.com to your address book or safe sender list. 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