Industry balks at new loan limits-IMFnews

Share Register Advertise March 23, 2021 Lenders Amplify Criticism of PSPA Amendment dhollier@imfpub.com The mortgage industry has intensified its criticism of the new loan volume restrictions that were imposed in January when Treasury and the Federal Housing Finance Agency amended the preferred stock purchase agreements. On Monday, both the Community Home Lenders Association and the Mortgage Bankers Association sent letters to Treasury Secretary Janet Yellen and FHFA Director Mark Calabria to lodge their complaints. The CHLA letter asked that the new restrictions on Fannie Mae and Freddie Mac lending be suspended pending a complete review of their potential impact on access to mortgage credit. Among the concerns raised by CHLA was the possibility new caps on "higher risk" loans will have a disproportionate impact on minorities and low- and moderate-income borrowers. Like CHLA, MBA noted that the market has already tightened in response to the caps, imposing loan-level price adjustments on these loans. If similar restrictions are implemented on higher-risk loans, first-time homebuyers and low-income families will suffer. For more information on lender concerns, see this week's Inside Mortgage Finance.  Headed in the Right Direction: Residential Forbearance. However… pmuolo@imfpubs.com The number of residential loans in forbearance fell 9 basis points to 5.05% of outstandings for the week ending March 14, according to figures released Monday afternoon by the Mortgage Bankers Association. The tally is the lowest reading since March 2020 when the pandemic became front page news, and began to devastate wide swaths of the U.S. economy. On Friday, industry data vendor Black Knight Financial released its forbearance measurement, finding an even better reading: 4.9% of mortgagors in forbearance for the seven-day period ending March 16, or 2.59 million homeowners overall. The weekly drop: 16,000 units. MBA found that Fannie Mae/Freddie Mac forbearance fell to 2.83%, a 5-basis-point drop for the week while Ginnie Mae relief declined 13 bps to 7.03%. The private-label/portfolio ratio shed 14 bps to 8.91%. "More than 11% of borrowers in forbearance have now exceeded the 12-month mark," said Mike Fratantoni, MBA SVP and chief economist. "We anticipate that servicers will be busy over the next month, with many homeowners opting for the extension for up to 18 months recently made available for federally-backed loans." Originations Level Off and Net Income Declines at Guild in 4Q bivey@imfpubs.com Mortgage originations were essentially flat at Guild Mortgage in the fourth quarter of 2020 on a sequential basis and net income declined. The retail-focused nonbank based in San Diego is a newly public company. Guild, which ranked 22nd among all mortgage lenders in 2020, had $10.6 billion in originations in the fourth quarter. The nonbank generated net income of $77.7 million in the quarter, down 57.3% from the third quarter as gain-on-sale margins shrank. In the first two months of 2021, Guild originated a total of $6.1 billion and margins were level compared with the fourth quarter of 2020, according to Amber Elwell, a senior vice president and chief financial officer at the firm. For the full year, Guild originated $35.2 billion of loans and reaped net income of $370.6 million. The nonbank had a servicing portfolio with a total unpaid principal balance of $60.0 billion at the end of 2020, up 6.3% from the end of September.  MBS Investors Seek Transparency on Rating Services’ Oversight bivey@imfpubs.com Interest in the structured-finance market remains strong, but investors continue to struggle with protection and transparency issues.  In a recent statement, the Securities and Exchange Commission's Investor Advisory Committee called on the regulator to provide greater disclosure of its oversight of rating services. "Investors would benefit, credit rating agencies would be more accountable and market transparency would be aided if SEC were to enhance the transparency of its annual inspection reports," the IAC said. The IAC was established under the Dodd-Frank Act to advise the SEC on matters such as regulatory priorities, trading strategies, fee structures and disclosure effectiveness, among other things. For full details, see the new edition of Inside MBS & ABS, now available online. Short Takes: Delinquency Hiccup / loanDepot Issues Debt Notes / IMBs’ Gains Down, Volumes Up dhollier@imfpubs.com The national mortgage delinquency rate reversed course in February, climbing 15 basis points to 6%, according to Black Knight data. That was the first increase in nine months. Rest easy, though. Black Knight says that February may have been a statistical novelty. It ended on a Sunday, and was a short month anyway, so there were a limited number of days to process payments. Nevertheless, that's on datum headed the wrong way…   loanDepot subsidiary LD Holdings Group LLC is set to tap the debt market with plans to off $500 million in senior unsecured notes. Apparently, the proceeds will be used to pay down some debt and to fund a special dividend.  But don't rush out to buy the notes. They're only available to qualified institutional buyers through a confidential offering memorandum… Margins plummeted in the fourth quarter for independent mortgage banks and the mortgage subsidiaries of chartered banks, according to the latest figures from the Mortgage Bankers Association. The net gain on each loan fell from $5,535 in the third quarter to just $3,738 for the last three months of 2020. On the plus side: production volume remained astronomical, with IMBs averaging nearly $1.5 billion per company in the fourth quarter... Is Your Compensation in Line With Your Peers? Inside Mortgage Finance's 2021 Salary Survey will be closing soon! Don't miss your chance to be counted in this important effort to benchmark mortgage industry compensation … and to receive a free report on compensation levels in the industry. Please make time today — just a few minutes — to share some details about your job function, salary, benefits and career satisfaction. It's quick, easy and completely confidential. 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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