VA Makes Headway; A Servicing 'Disruptor' w/ Fannie Approvals - IMFnews

Share Register Advertise February 02, 2021 A Sign of the Times: VA Servicing Continues to Gain Ground jbancroft@imfpubs.com The outstanding balance of VA home loans continued to grow throughout 2020, but the FHA market shrank for the third consecutive quarter. At the end of the year, Ginnie Mae mortgage-backed securities included $773.49 billion of VA loans — a 9.5% increase from December 2019, according to a new Inside FHA/VA Lending analysis. But the volume of FHA loans was down 4.2% for the year, including a 1.8% drop from the third to the fourth quarter. At $1.114 trillion, FHA loans continued to represent the dominant slice of the Ginnie pie at 55.6%, though that was down 3 percentage points from the year before. The figures track only loans still in MBS pools, not delinquent loans repurchased by servicers (a growing trend). FHA reverse mortgages are excluded. For full details and exclusive tables, see the new edition of Inside FHA/VA Lending, now available online. Tech-Focused Valon Raises $50 Million, Has Huge MSR Growth Plans bivey@imfpubs.com Valon Mortgage, which vows to be a disruptor of sorts in the residential servicing industry, announced it has raised $50 million in working capital. One of its goals: to increase its MSR portfolio by an estimated $10 billion by yearend. The company was founded in 2019 and until recently, was known as Peach Street. Until this round of funding, the servicer had raised less than $4 million. The Series A cap raise was led by Andreessen Horowitz and coincided with Valon receiving Fannie Mae servicing approvals. Tim Mayopoulos, a former CEO of Fannie, also joined Valon’s board. The firm, which describes itself as "tech enabled," plans to use the capital to hire and acquire mortgage servicing rights. In a statement, Andrew Wang, Valon’s CEO, said the company is focused on technology to help reduce costs and improve the servicing experience for borrowers. “Currently, the largest mortgage servicing software controls more than half of all U.S. residential loans, effectively creating a monopoly in the market,” he said. “This stranglehold has driven servicing costs up nearly 250% in the past decade, and the fees are passed on directly to the borrower.” Forbearance Exits at Slowest Pace Ever pmuolo@imfpubs.com First, the good news: the number of outstanding mortgages in forbearance remained flat at 5.38% for the week ending Jan. 24, according to figures released Monday afternoon by the Mortgage Bankers Association.  And the bad: The rate of exits from forbearance was at the slowest pace since the trade group began tracking the data point last summer. MBA noted that while the Ginnie relief reading dropped 10 basis points for the week to 7.51%, the private-label/portfolio measurement jumped 22 bps to 9.16%. The reason: Government servicers are buying delinquent FHA/VA mortgages out of Ginnie MBS pools, placing the notes in portfolio as part of a reclamation strategy. According to newly published figures from Inside MBS & ABS, purchases of delinquent mortgages out of Ginnie pools reached $8.53 billion in December 2020, the highest reading since July. The California ‘CFPB’ Makes Its Presence Known, Quickly lburden@imfpubs.com The California Department of Financial Protection and Innovation — the newly minted state regulator — is wasting no time in getting up to speed. “We take our expanded responsibility very seriously and are moving swiftly to ensure debt collectors do not violate the rights of California consumers,” DFPI Commissioner Manuel Alvarez said in a statement. Already, the so called mini-CFPB has issued subpoenas to a dozen debt collection companies for allegedly violating the California Consumer Financial Protection Law, which went into effect Jan.1. (California is the largest state in terms of mortgage originations.) The new legislation allows the DFPI to oversee previously unregulated financial products and services and enforce laws prohibiting lenders and vendors from using unlawful, unfair, deceptive and abusive practices. For more details, see the new edition of Inside the CFPB, now available online. Short Takes: Non-Agency M&A Heats Up: Civic is Sold / MIAC Offers Up Ginnie MSRs / loanDepot Updates S-1 / The Worry-List / FHFA GC Pollard Announces Retirement pmuolo@imfpubs.com, dhollier@imfpubs.com Pacific Western Bank, Los Angeles, disclosed it has purchased fix-and-flip lender Civic Financial Services, Redondo Beach, for an undisclosed sum. Since its founding in 2014, Civic has originated roughly $4.4 billion (10,000 loans) of product to real estate investors. In 2020, it funded $1.0 billion. The selling party is Wedgewood LLC… Yet more bulk servicing deals are percolating. The latest offering is a $3.87 billion Ginnie Mae package from Mortgage Industry Advisory Corp., New York. “The portfolio is being offered by a mortgage company that originates loans nationally,” MIAC said. The seller will be providing full representations and warranties. The weighted average coupon is 2.89%, the delinquency rate 2.14%. Bids are due Feb. 10… loanDepot, which is expected to go public one of these days, on Monday filed an updated S-1 with the Securities and Exchange Commission. It’s hard to tell what’s new, but among the risks the nonbank cites: “The executive, legislative and regulatory reaction to COVID-19, including the passage of the CARES Act, poses new and quickly evolving compliance obligations on our business, and we may experience unfavorable changes in, or failure to comply with, existing or future regulations and laws adopted in response to COVID-19”... The nonbank also notes, “We have experienced rapid growth, which may be difficult to sustain and which may place significant demands on our operational, administrative and financial resources.” Of course, these risks apply to many nondepositories that have benefitted from not only low rates but banks ceding market share. MORTGAGE PEOPLE: The Federal Housing Finance Agency Monday announced that Alfred Pollard, the only general counsel the regulator has ever known, will retire at the end of March. Pollard was also GC of the FHFA’s predecessor, the Office of Federal Housing Enterprise. Clinton Jones was named as Pollard’s replacement. Is Offshoring the Right Move for You? Moving mortgage functions overseas can save money. But are those savings worth the extra coordination of efforts and other hassles? Learn more about the benefits and burdens of moving mortgage functions to international locations in Inside Mortgage Finance’s brand-new Guide to Offshoring. 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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