A Slight Increase in Jumbo Lending; Rocket's Share Price Spikes - IMFnews

Share Register Advertise March 02, 2021 Jumbo Originations Up Slightly in 4Q20, Sector Loses Market Share bivey@imfpubs.com Non-agency jumbo originations increased during the fourth quarter of 2020, though not enough to keep pace with the broader market, according to a new ranking and analysis by Inside Nonconforming Markets. Mortgage bankers originated an estimated $102.0 billion of jumbos in 4Q20, a 2.0% sequential gain. Total first-lien originations increased by 9.6% during that span. Due partly to the pandemic, which had an outsized negative impact on non-agency lending, the jumbo sector saw its share of overall originations drop to just 9.7% in 2020 from 16.7% in 2019. The last time the sector’s market share was below 10% was 2010, when jumbos made up only 6.6% of overall production. Plenty of jumbo borrowers are refinancing but not at the same pace as refi activity in the agency market. For full details and exclusive jumbo rankings, see the new edition of Inside Nonconforming Markets, now available online. GSEs’ 2020 Affordable Housing Allocation Tops $1 Billion dhollier@imfpubs.com Federal Housing Finance Agency Director Mark Calabria announced Monday he has authorized Fannie Mae and Freddie Mac to disburse a record $1.09 billion to two federal affordable housing accounts. The politically sensitive allocation (the GOP has never been happy about the AFH fund) is more than double the amount disbursed the previous year by the two government-owned mortgage giants. The payment is based on a profitability ratio. The money will be divvied up according to a strict formula, with 65%, or about $711 million, going to the Federal Housing Trust Fund, which is administered by the Department of Housing and Urban Development. The other 35%, or $383 million, is bound for Treasury’s Capital Magnet Fund. In 2019, the two funds received a combined allocation of just $561.8 million. The two affordable housing funds operate slightly differently. Each year, HUD allocates block grants from the Housing Trust Fund to the individual states based on their population. States, and state-designated entities, can use this money to provide grants to build or preserve affordable housing inventory. Permitted projects include the acquisition, construction, or rehabilitation of low- to middle-income housing. REITs Continue to Rebuild MBS Portfolios – but Slowly jbancroft@imfpubs.com   Mortgage REITs held $265.97 billion of MBS at the end of the year, according to a new Inside MBS & ABS analysis of earnings reports from 15 major publicly traded companies. Overall, REIT MBS holdings grew a slight 0.6% during the fourth quarter, after a stronger 5.5% gain from June to September. Even in the immediate aftermath of the market upheaval that led many REITs to dump assets to maintain liquidity in March, industry-wide mortgage portfolios grew 6.2% in the second quarter. At year-end, REIT MBS holdings were down 25.2% from the comparable period in 2019. While industry-wide growth was tepid in the fourth quarter, several institutions upped their investments significantly. (Two smaller REITs have not yet reported fourth-quarter results and are excluded from the calculation.) For full details and an exclusive ranking of REIT holdings of MBS, see Inside MBS & ABS, now available online. For the First Time in Five Weeks, Forbearance Tally Rises; CFPB Issues Warning… pmuolo@imfpubs.com The total number of residential loans in forbearance inched up to 5.23% of outstandings for the week ending Feb. 21, according to figures released Monday afternoon by the Mortgage Bankers Association. The increase was ever so slight, just 1 basis point, though the Ginnie Mae reading rose 3 bps and the portfolio/private-label measurement worsened 9 bps to 9.03%. “A small increase in new forbearance requests, coupled with exits decreasing to match a survey low, led to the overall share of loans in forbearance increasing for the first time in five weeks,” said MBA SVP Mike Fratantoni. He added, “The winter storm that impacted Texas and other states did lead to some temporary disruptions at servicer call centers, but these centers quickly returned to full operations.” Meanwhile, the Consumer Financial Protection Bureau late Monday issued a report that warns of widespread evictions and foreclosures once “federal, state, and local pandemic protections come to an end, absent additional public and private action.” The agency added: “Over 11 million families are behind on their rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent. Homeowners alone are estimated to owe almost $90 billion in missed payments.” Short Takes: What’s with Rocket? / The Others / The 10-Year / Regulatory Headaches in California / The CoreLogic Situation pmuolo@imfpubs.com, lburden@imfpubs.com In case you haven’t noticed, the share price of Rocket Companies (to use a cliché) was off like a rocket as IMFnews went to press today, up a handsome 20.74% on the day to $29.34 a unit. The reason? That’s hard to say, though there was noticeable movement in options activity. Also, the yield on the 10-year Treasury was back down to 1.41% from a recent high of 1.60%... The parent company of the nation’s largest home lender went public at $18.00 a share back in August... So how are other nonbank lender/servicers holding up? United Wholesale Mortgage was up 11.4% but Guild Holdings was off 1.3%. PennyMac Financial Services was just about flat... Last week Rocket posted stellar income of $2.26 billion for the fourth quarter compared to $2.99 billion in 3Q20. As we noted at the time, Quicken’s gain-on-sale margin for 4Q20 was calculated at 441 basis points compared to 578 bps in 3Q20. In 4Q19 the GOS totaled 341 bps. REGULATORY WATCH: The California Department of Financial Protection and Innovation recently issued a bulletin reminding mortgage loan servicers that their regulatory examinations will now include a process to determine compliance with both state and federal laws regarding COVID-19-related foreclosures. The DFPI said the laws include “provisions allowing for forbearance of mortgage payments, post-forbearance options forbidding the requirement of lump sum payments and the extension of the California Homeowner Bill of Rights to tenant-occupied principal residences.” For more on the story, see the new edition of Inside the CFPB, now available online. IN CASE YOU MISSED IT: Industry data vendor CoreLogic disclosed it recently received a revised takeover proposal from CoStar Group under which shareholders would receive $6.00 per share in cash and 0.1019 shares of CoStar Group common stock in exchange for each share of CoreLogic. In early February, CoreLogic’s board approved a sale to funds managed by Stone Point Capital and Insight Partners for $80 a share in cash. The vendor said in a press statement, “The merger agreement remains in full force and effect,” adding the company “has not withdrawn or modified its recommendation that the stockholders of CoreLogic vote in favor of the approval of the merger...” Quick, Easy and Confidential: Take IMF’s Salary Survey 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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