Retail Gains Jumbo Market Share; No FHA MIP Cut in Near-Term - IMFnews

Share Register Advertise March 30, 2021 Retail Lenders Continue to Dominate Jumbo Sector bivey@imfpubs.com The retail channel, the predominant source of jumbo mortgage originations, gained market share in 2020, according to a new analysis by Inside Nonconforming Markets. The channel accounted for 88.8% of production by a group of 38 lenders tracked by INM, up from 80.9% in 2019. Combined, this select group of originators funded $303.90 billion of jumbos. The correspondent channel’s market share declined to 9.8% while brokers accounted for just 1.5% of total jumbo production. The trend suggests big banks that originate jumbos through the retail channel weathered disruptions from the coronavirus better than others. For more details and exclusive rankings, see the new edition of Inside Nonconforming Markets, now available online. United Wholesale Plans $700 Million Debt Offering bivey@imfpubs.com United Wholesale Mortgage, whose share price has been trending downward of late, announced late Monday that it intends to sell $700 million worth of debt through a private placement. A press statement from the firm notes the sale is underway but buyers were not identified, nor was the yield. The nation’s largest wholesaler, which went public earlier this year, said the net proceeds will be used to “repay amounts outstanding under its mortgage servicing rights facility and the remainder for general corporate purposes.” UWM’s stock price is down roughly 40% from its high when it started trading in January and was trading at  $7.66 per unit as IMFnews went to press. Forbearance Tallies Fall Below 5%. Is the Industry Out of the Woods? pmuolo@imfpubs.com The number of residential mortgages in COVID-related forbearance fell 9 basis points to 4.96% of outstandings for the week ending March 21, according to figures released Monday afternoon by the Mortgage Bankers Association. On Friday, industry data vendor Black Knight released its forbearance tally, finding a below-5.00% reading as well – at 4.90%. If you believe both these sources, the trend is clear: Mortgage problems sparked by the pandemic of 2020-2021 are getting better. Across the board, forbearance improvements touched on all loan types. The Ginnie Mae relief reading is now below 7.00% at 6.83%, a steep 20-bps decline for the week, according to MBA’s measurement. “New forbearance requests remained at their lowest level since last March, and the pace of exits increased,” said Mike Fratantoni, MBA’s SVP and chief economist. Then he offered this: “More than 17% of borrowers in forbearance extensions have now exceeded the 12-month mark.” Meanwhile, industry consultant Christopher Whalen noted, “What a difference a year makes. Twelve months ago, some of the industry’s largest independent mortgage banks were in danger of tipping over due to the liquidity wave unleashed by the Federal Open Market Committee in response to COVID. A federal rescue nearly occurred for several IMBs a year ago. These same firms are flush after a year of feasting on record lending volumes, but now face a labyrinth of risk in resolving delinquent loans now under the protection of the Coronavirus Aid, Relief and Economic Security Act and state lending moratoria.” SOFR Option Recommended for New MBS and ABS bivey@imfpubs.com New issuance of mortgage- and asset-backed securities should reference a 30-day average of the Secured Overnight Financing Rate, according to a group of industry participants convened by the Federal Reserve. SOFR has long been pushed as an alternative to the London Inter-Bank Offered Rate, though industry participants have been waiting for the development of a forward-looking term rate based on SOFR. With no guarantee that term SOFR will come to fruition, the Alternative Reference Rates Committee suggests issuers of MBS and ABS use actual SOFR rates from the 30-day period before the applicable reset date when setting adjustable-rate terms. The recommendation and other operational issues were included in a white paper from the ARRC published Monday. “We've seen strong investor demand for the SOFR issuances that have occurred so far,” said Tom Wipf, ARRC chairman and vice chairman of institutional securities at Morgan Stanley. “This paper aims to help institutions make that important transition smoother by providing clear insight and a methodology for issuing new SOFR-based securitized products.” Short Takes: No FHA MIP Cut in Near-Term / Regulators Investigating Eviction Practices / Jefferies Downsizes Warehouse Securitization / Angel Oak Commercial Expands to Wholesale / Regulators Looking into AI lburden@imfpubs.com; bivey@imfpubs.com FHA mortgage insurance premium pricing will remain static for the moment, according to Marcia Fudge, secretary of the Department of Housing and Urban Development. "Given the current FHA delinquency crisis and our duty to manage risks and the overall health of the fund, we have no near-term plans to change FHA's mortgage insurance premium pricing," she said Tuesday... The Consumer Financial Protection Bureau and the Federal Trade Commission on Monday issued a statement declaring a federal investigation is underway regarding eviction practices. The agencies said the targets include "major multistate landlords, eviction management services and private equity firms."... Jefferies Funding downsized a planned warehouse lending facility securitization, according to Moody's Investors Service. The deal was cut in half to $350,000... Angel Oak Commercial Lending is expanding into the wholesale channel. The unit focuses on loan amounts of less than $5 million for various property types... A group of federal regulators published a request for information Monday regarding financial institutions' use of artificial intelligence. The request covers fraud prevention, personalization of customer services, credit underwriting and other operations. 24/7 Access to Thousands of Data Charts An IMF web-access data subscription delivers a wide set of data that describes the mortgage market, including a range of statistics on originations, servicing, the government market, the nonconforming market, profitability, mortgage-backed securities, asset-backed securities and more. You'll be able to instantly download charts covering historic periods up to 30 years ago through the most recently reported quarter — the data is updated throughout your year-long subscription so you always have access to the latest information. To ensure delivery to your inbox, add news@imfpubs.com to your address book or safe sender list. 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