Those Hurt by the GSE Cash Window Cap; QM Rule, Any Word? - IMFnews

Share Register Advertise February 22, 2021 An Issue That Won’t Go Away: the GSE Cash-Window Cap dhollier@imfpubs.com   Last month, when the Treasury Department and the Federal Housing Finance Agency amended the preferred stock purchase agreement, they included an obscure provision that could reduce the ability of many lenders to sell loans to Fannie Mae and Freddie Mac. The new PSPA caps the amount of loans the GSEs can purchase for cash at $1.5 billion per seller over any period of four consecutive quarters. Doesn’t sound like that big of a deal, does it? Think again. A new Inside The GSEs analysis of uniform mortgage-backed securities issued by Fannie and Freddie over the past two years suggests the new limits will undercut loan sales at scores of lenders. Of course, it will also impact the GSEs. Fannie said it’s still assessing the potential damage. However, Freddie in its recently released annual report hinted at the possible deleterious prospects. For more details and exclusive tables on the shops affected, see the new edition of Inside The GSEs, now available online. The Status of the CFPB’s QM Rule? March 1 is Just Around the Corner… lburden@imfpubs.com In a blog posting earlier this month, Acting Consumer Financial Protection Bureau Director Dave Uejio said he had directed the bureau’s Research, Markets and Regulations Division to “explore options for preserving the status quo” with respect to qualified mortgages. But since then, there has been no update from the agency on the matter, a situation that has the industry concerned given that QM standards are scheduled to go into effect in less than a week on March 1, with a mandatory compliance date of July 1. 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. Brian Johnson, a partner with Alston & Bird and a former CFPB deputy director, in an interview said nothing stops a Senate-confirmed director from addressing the QM rule under the Administrative Procedure Act. “It is entirely possible that under new leadership the agency would choose to adjust or rescind certain aspects [of the rule],” Johnson said. For more details, see Inside the CFPB, now available online. Ocwen’s Overseas Headcount Declines Year-Over-Year pmuolo@imfpubs.com Ocwen Financial, a pioneer in mortgage offshoring, employed 3,500 workers in India and the Philippines at yearend 2020, according to a new 10-K filing with the Securities and Exchange Commission. A year ago the headcount was a bit larger at 3,800. Overall, the nation’s 17th largest servicer employed 5,000 workers. Roughly, 1,500 of its employees work in the U.S. and the U.S. Virgin Islands, or 30%. “Of our foreign-based employees, more than 70% were engaged in our servicing operations as of December 31, 2020,” the lender/servicer said. “Ocwen currently operates through a secure remote workforce model for approximately 98% of its global workforce due to the COVID-19 pandemic.” Ocwen is mentioned in a new Inside Mortgage Finance special report on offshoring. A Sequential Setback in 4Q20 but Banks Post Stellar MB Income for FY jbancroft@imfpubs.com Banks reported another hefty round of income from mortgage banking operations during the fourth quarter of 2020, capping the industry’s most profitable year since 2013. Commercial banks and savings institutions reported $6.39 billion in income from mortgage banking during the final three months of 2020, a 19.2% drop from the blockbuster third quarter. The final lap brought year-to-date earnings to $22.52 billion, a 66.3% gain from 2019. Last year was the industry’s most profitable since mortgage banking churned out $25.75 billion back in 2013. Most of the largest banks reported fourth-quarter declines along with increases on a year-to-date basis. For full details and exclusive tables, see the new edition of Inside Mortgage Trends, now available online. Short Takes: M&T Hops Aboard the M&A Train / A Presence in Warehouse / Advisors / loanDepot’s Share Price / Mr. Cooper Official Bolts for Vendor pmuolo@imfpubs.com Another day and another M&A deal. In this case, it’s depository-related. M&T Bank of Buffalo Monday morning disclosed it had inked a deal to acquire People’s United Financial of Bridgeport, CT, creating a $200 billion institution. The deal is valued at $7.6 billion… The combined depository will boast more than 1,100 branches spanning 12 states from Maine to Virginia and the District of Columbia. Mortgage implications? Neither regional is a top-50-ranked home lender but People’s is one of the largest warehouse financiers of nonbanks. Its warehouse unit is headed by industry veteran Paul Best. From what we can tell, M&T has no presence in the warehouse arena… Lazard acted as financial advisor to M&T in connection with the transaction and Sullivan & Cromwell served as legal advisor. Keefe, Bruyette & Woods was lead financial advisor to People’s United… As IMFnews went to press Monday the share price of the recently public loanDepot was tumbling, down 8.15% on the day to $21.29 on no specific news. The company came out at $14.00 a unit and shot up to $39.49 at one point. Whoever bought at the peak is probably not feeling well this morning. MORTGAGE PEOPLE: SLK Global Solutions hired Shane Jones as vice president of tax outsourcing operations. He joins the industry vendor from mortgage banker Mr. Cooper. Nonbank Mortgage Banking Earnings Doubled in 3Q20 Most publicly traded nonbank mortgage companies reported robust income gains in the third quarter of 2020, as the seven companies generated a combined $1.32 billion from their mortgage banking operations — up 110.6% from the second quarter. Ocwen Financial was the only nonbank in the group to report a decline in mortgage banking income. Dig deeper into company-specific earnings results in IMF’s Mortgage Profitability Report. The report, issued quarterly, provides exhaustive bank rankings for mortgage banking earnings, mortgage sales activity and repurchases. 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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