MSR Prices Head North; Quicken Armed for Ginnie EBOs - IMFnews

Share Register Advertise March 19, 2021 Servicing Prices: Happy Days are Here Again pmuolo@imfpubs.com The days of consolidators low-balling originators in bidding on mortgage servicing rights are over. The result: This spring, MSR prices on bulk product are the best they’ve been in almost two years — or close to it. At least that’s the consensus of a handful of servicing advisors interviewed by Inside Mortgage Finance over the past week. Another positive sign: Investment bankers the likes of David Fleig at MorVest Capital are seeing a noticeable increase in mortgage bankers wanting to obtain financing on their MSRs. “Last year that market was dead,” Fleig noted. “Not anymore.” What’s going on? It’s simple: Interest rates are rising — and not just on the 10-year Treasury. Mortgage rates are creeping up as well and, when that happens, the expectations are that prepayment speeds will slow and MSRs will rise in value. “The sell-off in both Treasuries and mortgages the past two weeks has been a significant contributing factor,” said Tom Piercy, president of enterprise business development at Incenter Mortgage Advisors, Denver. For more details, see the new edition of Inside Mortgage Finance, now available online. Study Finds Chase’s Mortgagors Fared Well During the Pandemic bivey@imfpubs.com A recent report from the JPMorgan Chase Institute found that most customers with mortgages from JPM's Chase unit made it through the coronavirus pandemic unscathed, thank you very much. Stimulus checks from the federal government and, in some cases, unemployment benefits and easy access to forbearance helped borrowers, the study found. The institute, a think tank arm of the Wall Street giant, examined account and transaction-level data covering deposit accounts, credit cards and mortgages of the bank’s customers, including 617,000 residential borrowers. The clients had a mortgage and deposit account with Chase going back to at least 2019. The institute found that prior to the pandemic, fewer than 1% of Chase’s mortgage customers were receiving unemployment assistance. The share of the bank’s borrowers on unemployment peaked in May around 7.5%. By the end of 2020, around 4.5% were receiving unemployment assistance. For more on the story, see the new edition of Inside Mortgage Trends, available online Friday afternoon. A Trend in the Making: GSE Executives Searching for Greener Pastures dhollier@imfpubs.com In November, when David Brickman announced his resignation as CEO of Freddie Mac, industry watchers predicted a flurry of executive departures from the government-sponsored enterprises.  Brickman’s exit, of course, followed the Federal Housing Finance Agency’s decision to finalize a tough new capital rule, which many thought would delay Freddie’s long-expected “re-IPO.” That put the prospect of lucrative employee stock options on hold. Combined with the stress of the pandemic, this may have taken some of the shine off the C-suites at the GSEs. There seems to be some merit to this analysis — at least anecdotally. Meanwhile, executive-wise, Fannie Mae has taken a bigger hit than Freddie. Last fall, even before the Brickman surprise, Andrew Bon Salle, the well-regarded head of Fannie’s single-family business, said he would be leaving the company at the end of 2020. In January, within two weeks of his retirement, he took over as board chair at Home Point Capital. For full details and an exclusive table on GSE departures, see the new edition of Inside Mortgage Finance, now available online. A Complication Develops on Chopra Heading the CFPB: Control of the FTC lburden@imfpubs.com A Senate vote on Rohit Chopra’s nomination to head the Consumer Financial Protection Bureau hasn’t yet been scheduled but Ballard Spahr LLP theorized in a new blog posting that the nomination likely will be held up until the Biden Administration can square up some vacancies on the Federal Trade Commission. Chopra has been a commissioner at the FTC since 2018. Here’s how Ballard Spahr attorney Alan Kaplinsky explains it: FTC Chairman Joseph Simons resigned in late January, making Chopra one of two Democratic FTC commissioners. If Chopra is confirmed by the Senate, he would have to resign from the FTC before being sworn in as CFPB director. If Simons’ seat is not filled before Chopra resigns from the FTC, Republicans would have a 2-1 majority. To avoid this, President Biden would have to replace Simons with a Democratic FTC commissioner before Chopra leaves the agency. (Chopra’s resignation would create another vacancy for Biden to fill as Democrats seek to achieve a 3-2 majority.) At press time, the Senate Banking Committee had not responded to media inquiries on the matter. Earlier this month, the SBC deadlocked on the Chopra CFPB nomination, with a 12-12 partisan vote. Short Takes: Rocket Gets Some Ginnie EBO Fuel / A One-Off Switch on Subservicing? / ServiceMAc Gains a Contract / About That FTHB Tax Credit… pmuolo@imfpubs.com The (growing) worst kept secret in mortgage banking: A servicer can make a ton of money by purchasing delinquent FHA loans out of Ginnie Mae MBS pools. We know that Wells Fargo, PennyMac Financial Services, Freedom Mortgage and loanDepot – to name a few – are playing the early buyout game. We assumed that Quicken Loans (and United Wholesale Mortgage) was doing the same. In fact, a new SEC disclosure from Quicken parent company Rocket Companies reveals the mortgage banker has increased a repo line it has with JPMorgan Chase that will be used for EBOs. The new maximum line size: $2.6 billion… Earlier this week we reported that loanDepot (eventually) will bring its servicing function inhouse instead of using Cenlar as its subservicer. The portfolio is sizeable at $106 billion. We reached out to Cenlar but have yet to hear from the privately held New Jersey-based thrift. Question: Plush with cash from the refi boom, will more subservicing clients kick their vendors to the curb or is loanDepot a one-off?… Meanwhile, we understand that one fairly active servicer of non-QM loans that was doing the loan processing inhouse has opted to use ServiceMac as its vendor instead. We’re waiting to hear from that lender/servicer as well… Last year, title insurance giant First American Financial Corp. bought a stake in ServiceMac… There’s been sporadic chatter in the mortgage industry of late regarding President Biden’s proposed $15,000 tax credit for first-time homebuyers. Mortgage bankers we’ve been talking with  have their doubts about how useful it will be for once central reason: There’s such a lack of housing supply out there now, especially entry-level units.  In other words, is it really a good idea to arm FTHBs with more firepower so they can bid up prices? And then there’s the loss of tax revenue to the Treasury Department. Weigh the Pros and Cons of Offshoring Mortgage Operations Moving mortgage functions overseas can save money, but there’s a long list of hurdles — from coordination between U.S. and international resources to regulatory compliance to the impacts of weather on distant locations. Are the savings worth the extra coordination of efforts and other hassles? Learn about the benefits and burdens of moving mortgage functions to international locations in IMF’s Guide to Offshoring. 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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