A Stellar 1Q for Home Lending?; Annaly Exits CMBS via Repo Sale - IMFnews

Share Register Advertise March 26, 2021 A Blowout 1Q21? Originators Preview Strong Production. However… pmuolo@imfpubs.com With just days remaining in the first quarter, mortgage bankers are predicting rock-solid originations for the period, just not as good as the record $1.25 trillion produced in the fourth quarter of 2020. Then again, no one is complaining about a lack of business and some shops are even predicting that the first quarter of 2021 might match 4Q. Sound impossible? “March might turn out to be a record month for us,” said Eddy Perez, CEO of Equity Prime Mortgage, Atlanta. “Maybe. Will the first quarter match the fourth quarter of last year? It will be close.” In general, other nonbank executives interviewed this week by Inside Mortgage Finance were similarly bullish, though most admitted the period would more than likely fall short of the phenomenal pace established in the fourth quarter. “Volume is holding up pretty strong,” said Bill Lowman, CEO of American Pacific Mortgage, Roseville, CA. For the full story, see the new edition of Inside Mortgage Finance, now available online. Annaly Inks Deal to Sell CMBS Unit Via Repo Maneuver bivey@imfpubs.com Annaly Capital Management, the nation's largest "mREIT," is winnowing its investments to put an even greater emphasis on residential assets. The real estate investment trust late Thursday announced it’s selling its commercial-mortgage investing unit to Slate Asset Management for $2.33 billon. The sale, accomplished via a master repurchase agreement, includes CMBS and related assets valued at $2.3 billion. The commercial unit accounted for 2.3% of Annaly’s assets at the end of the year. The REIT's main focus historically has been agency mortgage-backed securities. “This transaction delivers compelling execution for our shareholders and will provide additional capacity to further expand our leadership and operational capabilities across all aspects of the residential mortgage finance market, which has been the cornerstone of Annaly’s strategy since our founding,” said David Finkelstein, Annaly’s CEO and chief investment officer. Eric Hagen, a director at BTIG, estimated that Annaly was generating a return of around 11% from its commercial investments and the REIT will likely redeploy the bulk of capital from the sale into agency MBS and related assets with returns of 9-10%. “We support the sale because we think it allows more flexibility for the company to focus on managing its agency premium and duration exposure while spreads are tight,” he said.   Wells Fargo Settles LO ‘Wage Theft’ Lawsuit lburden@imfpubs.com Wells Fargo has agreed to pay $95.7 million to settle a class-action lawsuit with mortgage consultants who alleged that the nation’s second-ranked home lender indulged in wage theft. The lawsuit, which combined two legal actions, was brought on behalf of 5,377 loan consultants employed by the bank in California between 2013 and 2019. In one of the legal actions, the plaintiffs, led by James Kang, said Wells compensated its mortgage sales force through advances on commission but then engaged in clawbacks. They also alleged that the bank did not pay loan officers for non-sales work, such as mandatory meetings, training and coaching sessions, loan processing and tracking, customer surveys and attending open houses and other business functions. The plaintiffs claimed LO vacation time and paid time off were deducted from commissions. For more details, see the new edition of Inside Mortgage Finance, now available online. Flow Deal Could Net Buyer $1.2 Billion of MSRs pmuolo@imfpubs.com The “flow” servicing market continues to see an improvement, with auction notices picking up the past few weeks. The latest offering: a $50 million to $100 million per month delivery via advisory firm Phoenix Capital. The seller, as usual, was not disclosed except for a reference to being “well-capitalized.” The Denver-based MSR broker said deliveries would skew toward Fannie Mae product at 89% of the total, with Freddie Mac receivables making up the balance. Based on the monthly figure, the buyer could net between $600 million to $1.2 billion a year in conventional receivables. Bids are due April 1. Short Takes: A Rate Reprieve / Mortgage Stocks? / Regulators No Longer Worried? / Chock Full of Warehouse Credit / JPM’s New MBS pmuolo@imfpubs.com, bivey@imfpubs.com As the weekend approached, the yield on the 10-year Treasury had simmered down to 1.64% from recent highs of 1.74%. Mortgage stocks, meanwhile, continued to inch lower, including members of the 2020/2021 IPO class: loanDepot, Rocket Companies and United Wholesale Mortgage... Meanwhile, PennyMac Financial, one of the public “granddaddies” of the industry, was up slightly on the day... We took a look at one of UWM’s SEC filings this week. The company kindly breaks down for investors all the warehouse lines of credit it has garnered from commercial banks. The credits range in size from $150 million to $3.0 billion... Have you noticed of late that regulators haven’t voiced their concerns about the financial health of nonbanks? Perhaps they’ve seen the stellar 2020 results of the above-mentioned firms, realizing it’s a case of “never mind”... JPMorgan Chase is preparing two separate jumbo non-agency MBS: a $1.28 billion deal and a $360.6 million issuance. Loans in the MBS have seasoned for an average of around three months and were originated by various lenders. GOOD WORKS: The Gilbert Family Foundation and Rocket Community Fund this week unveiled a $500 million philanthropic investment over the next ten years to build economic opportunity in Detroit neighborhoods. The GFF will contribute $350 million, and the Rocket Community Fund will invest $150 million. Rocket Companies, the parent of Quicken Loans, is based in Detroit. IMF’s Website Keeps You Current on the Ever-Changing Mortgage Market The news affecting the mortgage industry is coming fast and furious these days. Stay up-to-date with all the changes — whenever it’s convenient for you — at InsideMortgageFinance.com. Whether on a laptop, desktop or mobile device, you can read current issues and archives of IMFnews, and connect to the data charts, industry studies, data reports, newsletters and articles you’ve purchased or subscribe to.  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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