Fannie Tightens Up on Second Homes; A Decline for Bank Repurchases - IMFnews

Share Register Advertise March 10, 2021 Bank Repurchases Down in 4Q20, GNMA Buyouts Too jbancroft@imfpubs.com Repurchases of single-family loans by banks and thrifts returned to normal levels in the fourth quarter of 2020, according to a new Inside Mortgage Trends analysis of call-report filings. Banks reported repurchases of $505.6 million of single-family mortgages by their mortgage banking platforms during 4Q20. That was down 53.1% from the previous period, when bank repurchases had spiked to $1.08 billion – the highest figure since the second quarter of 2015. Most of the 3Q20 surge of bank repurchases came from three institutions: Wells Fargo, JPMorgan Chase and Popular. Those three banks reported a combined $633.0 million jump in repurchase volume from the second to the third quarter. In the fourth quarter, those institutions reported a combined decline of $560.0 million. Chase and Popular returned to more normal levels while repurchases at Wells remained somewhat elevated despite a 36.8% drop from the third quarter. For full details and exclusive tables on the topic, see Inside Mortgage Trends, now available online. Few Losses on Non-QM MBS Even as Delinquencies Spiked bivey@imfpubs.com Investors in non-QM mortgage-backed securities didn’t take many losses when delinquencies surged last year due to the coronavirus. Also, only a handful of non-QM MBS took losses, while the red ink on any given deal has been below 0.05% of the original balance of the collateral, according to DBRS. Youriy Koudinov, a senior vice president at the company, noted that credit enhancement helped protect investors as borrowers missed payments. (Credit enhancement is the share of the loan balance available to cushion tranches of the MBS against future collateral losses.) On average, the cushion for the senior tranche of a non-QM MBS is roughly 30% at issuance. Koudinov noted that enhancement levels have increased post-issuance in the non-QM MBS sector due to prepayments. “The relationship between the current credit enhancement, which has grown consistently, and the delinquency rate, which has been falling, on average shows that senior bonds continue to be relatively well protected,” he said Tuesday during a webinar hosted by DBRS. For more details, see Inside MBS & ABS later this week. Ocwen Grants $700K Severance Deal for Departing Chief Growth Officer pmuolo@imfpubs.com Ocwen Financial will pay departing Chief Growth Officer Timothy Yanoti $700,000 in severance while modifying the terms of his restricted stock awards, according to a new 8-K filing with the Securities and Exchange Commission. The nation’s 17th largest servicer (according to Inside Mortgage Finance) also noted in the filing, “The separation and release agreement provides for a release of claims against the company and for Mr. Yanoti to comply with certain non-solicitation and other covenants.” No details were available on what those claims might be. A former Fannie Mae executive (SVP in charge of securitization responsible for developing the Common Securitization Platform), Yanoti lasted just over two years at Ocwen. In early February, the lender/servicer announced his departure. His final day on the job is March 31, a month longer than previously planned. A Reminder From the CFPB: ECOA Forbids Bias on the Basis of Sexual Orientation and Gender Identity lburden@imfpubs.com The Consumer Financial Protection Bureau Tuesday afternoon issued an interpretive rule clarifying that the prohibitions against sex discrimination found in the Equal Credit Opportunity Act and Regulation B include sexual orientation and gender identity. “In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity,” said CFPB Acting Director David Uejio. “The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit.” The agency noted the rule is consistent with a decision handed down by the U.S. Supreme Court last summer, Bostock v. Clayton County, Georgia, finding that sex discrimination under Title VII of the Civil Rights Act of 1964 also forbids discrimination based on sexual orientation and gender identity. The bureau specified that roughly a month after the high court’s decision, it issued a request for information soliciting public comments to identify opportunities to prevent credit discrimination and encourage responsible innovation under the ECOA and Regulation B. As part of that RFI, it asked whether the legal decision should affect how the CFPB interprets the ECOA. The CFPB said the interpretive rule is supported by many of the public comments received in response to the ECOA RFI. Short Takes: Fannie Tightens the Underwriting Reins / NAR? / Offers in the Mail / Where the 30-Year Is Right Now / Last Hired, First to Go? pmuolo@imfpubs.com As IMFnews went to press Wednesday, Fannie Mae was sending a warning letter to its sellers, noting that tighter underwriting standards were on the way regarding second homes and investment properties. How much tighter? “One of those restrictions is a 7% limit on our acquisition of single-family mortgage loans secured by second home and investment properties,” the GSE said. More to come... It stands to reason, the National Association of Realtors might have something to say on the topic… How much juice is still left in the refi grapes? That depends how small of a profit margin an originator is willing to accept. Over the past week I’ve received two refi offers: 2.65% from Caliber Home Loans and 2.50% from Secured One Capital Corp. Neither mentioned points. Secured said I don’t have to make any payments until May, adding that the closing could occur in as little time as three weeks. The Caliber mailing was light on specifics… Despite the low rates I was pitched, 30-year FRMs are now north of 3.00%, depending on points… Meanwhile, the Mortgage Bankers Association released its application reading Wednesday morning, saying new business declined 1.3% for the week ending March 5. That doesn’t sound bad but the refi index declined 5% from the week before and an ugly 43% compared to a year ago. Some reporters in the mainstream business press played up the 43% decline… One consultant told us that if applications continue to fall, the recently hired mortgage employee might be in trouble. “If these new hires’ productivity and quality don’t offset them being paid so much more than tenured employees with lesser base salaries, they will be the first to go,” he said. “This is not an unfamiliar cycle”… MORTGAGE PEOPLE: CBC Mortgage Agency, Cedar City, UT, named Tai Christensen its diversity, equity and inclusion officer for 2021. She started her career in mortgage banking as a processor 14 years ago and joined CBC in 2018. Christensen will continue in her present role as director of government affairs. Monitor the Mortgage Market Leaders, Sectors, Products Inside Mortgage Finance’s quarterly Top Mortgage Players report tracks the top performers in originations, servicing and all of the industry’s niches. With data charts and accompanying perspective, you’ll see who's leading the sectors, by how much, and what their trajectories look like. The 3Q20 edition of the report is available now; order a subscription to also get the next three quarterly reports as soon as they're available. 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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