Feb. MBS Volume Rock Solid; UWM Broker 'Fines' Could Top $50k - IMFnews

Share Register Advertise March 05, 2021 Agency MBS Issuance Eases in February but Not By Much jbancroft@imfpubs.com Single-family MBS production at Fannie Mae, Freddie Mac and Ginnie Mae eased up in February but the party looks far from over according to a new analysis and ranking from Inside MBS & ABS. The agencies issued $304.15 billion of new single-family MBS in February — the fifth straight month over the $300 billion mark, a level never seen until August of last year. Issuance was down 9.1% from January, which can be partly blamed on fewer business days and a seasonal low spot for purchase-mortgage business. The agencies saw a combined 22.0% drop in purchase-loan volume, with Fannie and Ginnie recording bigger declines. Despite the February slump, the agency purchase business in the first two months of 2021 was up 38.6% from the same period in 2020. For full details and exclusive issuance tables, see the new edition of Inside MBS & ABS, now available online. Nation’s Largest Wholesaler UWM Takes Aim at Two Competitors; Rocket Fires Back mvolkova@imfpubs.com United Wholesale Mortgage – the nation’s largest table-funder – is giving its broker partners an ultimatum: If you work with Rocket Mortgage or Fairway Independent Mortgage, you can’t  work for UWM. How much of an ultimatum? The publicly traded nonbank is altering its broker contract, telling third-party salespeople if they violate this “representation and warranty” they must pay the wholesaler damages ranging from $5,000 to $50,000. Four different broker/industry sources provided IMFnews with a copy of the broker amendment. Needless to say, these brokers were not happy while others said they supported UWM. The dustup started Thursday afternoon after UWM CEO and partial owner Mat Ishbia during a live Facebook session singled out the two competitors for “hurting the wholesale channel.” Specifically, he accused Fairway of “soliciting [loan officers] and talking negatively about brokers right now. They are calling and trying to steal your loan officers [brokers], they are aggressive and they aren’t doing right by the broker channel.” Although Fairway declined to comment, we obtained an email from Rocket executive Austin Niemiec, which said, “We will never take away choice because it’s what moves our business forward …The incredible growth of Rocket Pro TPO [the wholesale unit of the firm], which had a 125% increase in business in 2020, clearly has UWM very concerned.” And there’s more. For full coverage, see Inside Mortgage Trends, available Friday afternoon. -Paul Muolo also contributed to this report. Florida Court Grants Ocwen Summary Judgement in CFPB Case lburden@imfpubs.com A federal court in Florida late Thursday granted Ocwen Financial summary judgment on most of the claims filed against the company by the Consumer Financial Protection Bureau, which had alleged servicer misconduct. “We are pleased that the district court has granted summary judgment in our favor on 9 of 10 counts at issue in the CFPB’s complaint,” Ocwen said in a statement. “Throughout this litigation we have remained steadfast in our belief that the CFPB’s claims regarding Ocwen’s past servicing practices were without merit.” The publicly traded lender/servicer said it will continue to vigorously defend itself on the single remaining count and “on any claims the Court allows to proceed concerning periods after February 26, 2017.”  The court provided an opening for the CFPB to pursue claims raised in the parties’ motion for summary judgment alleging loan servicing misconduct after Feb. 26, 2017, pending the submission of a supplemental statement from the bureau.  The CFPB sued the Florida-based company in April 2017, claiming that Ocwen’s “years of widespread errors, shortcuts, and runarounds cost some borrowers money and others their homes.” Ocwen allegedly botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance. The servicer was also accused of illegally foreclosing on struggling borrowers, ignoring customer complaints, and selling off the servicing rights to loans without fully disclosing the mistakes it made in borrowers’ records. A CFPB spokesman declined to comment. Goldman: Long-Term Returns on Agency MBS Could Go Negative dhollier@imfpubs.com Monetary policy has consequences. That’s the gist of a recent report from Marty Young, senior mortgage strategist at Goldman Sachs. He began with a simple observation: The spreads between Treasuries and agency MBS have been historically tight and are likely to remain so for some time. After briefly exceeding 150 basis points at the start of the pandemic, spreads have plunged below 70 bps, based largely, but not entirely, on the monetary policy of the Federal Reserve. And there’s no reason to assume these trends will suddenly reverse themselves. Part of the problem, Young noted, is that Treasury debt has grown much faster than agency MBS debt. Since 2009, Treasury issuance has doubled compared to a mere 25% increase in MBS volume. This phenomenon has only accelerated since 2019, and pandemic-related stimulus spending will likely maintain the surge. As a result, Treasuries will continue to cheapen. In addition, Young said, favorable financing in the repo markets has increased demand for MBS, notwithstanding the tight spreads. Overnight rates have fallen to 15 bps, and the low rates extend out to 12-month terms. Dollar roll funding costs are effectively negative, he added, and will likely hover close to zero if mortgage lending remains strong in 2021. For more on the story, see the new edition of Inside MBS & ABS, now available online. Short Takes: Rumble in Michigan / If You’re Not With Us… / Brother, Can You Spare $50,000? / SFA to Attendees: Make That October pmuolo@imfpubs.com, bivey@imfpubs.com One thing you can say about United Wholesale Mortgage CEO Mat Ishbia: He’s not shy… Thursday afternoon our email inbox was exploding with comments from a wide array of industry professionals regarding Ishbia’s edict that his broker/ partners have a choice to make: If you work with Rocket Mortgage (wholesale) or Fairway Independent Mortgage, you can’t work for UWM. The message was delivered via social media on Facebook… Needless to say there are a lot of different angles to the story, including the long-simmering rivalry between the two Michigan-based nonbank mortgage giants. Also: The monetary damages UWM will impose on brokers that cross the company: upwards of $50,000. How do you enforce such a thing?... Stated simply, Ishbia is not fooling around. And all this from a company that is running hot, earning money hand over fist. MEETINGS NOTICE: The Structured Finance Association again delayed its annual conference in Las Vegas, moving the dates to Oct. 3-6 from July 25-28. SFA said the delay was “in response to the strong desire of our sponsors and members to have an in-person conference.” Get IMF’s Data Tailored to Your Unique Needs Inside Mortgage Finance publishes thousands of pages of accurate, reliable industry market statistics each year — and has for more than three decades. But we collect so much data that a lot doesn’t even make it out of our databases. If you need some market data that isn’t available in the Data section of our website, or need additional information on one of the sets that is there, contact our custom-data authority, Gwen Jones, to tailor a data project to your needs. To ensure delivery to your inbox, add news@imfpubs.com to your address book or safe sender list. 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