Subservicing, Compliance, and Warehouse Products; Private Mortgage Insurance Trends
Folks heading to the MBA’s Secondary conference should know that there are 329 street-level newsstands in New York City. (The peak was 1,500 in the 1950s.) By law, the maximum price for anything at a newsstand is $10, meaning that newspapers are a significant part of that business. Finance & news about it make the world go ‘round, and thanks to Steve A. for passing along a new essay where Pope Francis calls for intensified regulation of the “sophisticated technologies” of financial markets.
Private Mortgage Insurance News
“The Community Home Lenders Association (CHLA) writes to ask FHFA to investigate the pricing practices of private mortgage insurers (PMIs) with respect to use of volume discounts and other proxies for this in the offering of mortgage insurance for Fannie Mae and Freddie Mac loans.”
“Rob, thanks for the use of quotes around MI ‘granularity’ in your recent commentary. It smells like a ‘redline.’ As I recall, regulators allowed UG to go ‘granular’ – down to the MSA only – after being taken over after the mortgage meltdown, and there were visions of lined maps dancing in heads. And, back then, UG reps said they could ‘drill down’ to census tracts. Thanks for listening – I couldn’t keep my yap shut on ‘granularity’.”
How have those crafty MI companies been doing in real life? Can they afford to sponsor all those nice events at conferences around the nation? Private mortgage insurers reported substantial declines in new insurance written during the first quarter of 2018, losing market share to both the FHA and VA. But Inside Mortgage Finance’s analysis calculates that private Mis “passed a historic milestone” as the total amount of the industry’s insurance in force hit $1.011 trillion, a 1.7 percent increase from the end of 2017. That figure includes an estimated $30.52 billion in runoff at three defunct MIs.
“Private MIs generated $58.37 billion in traditional flow business during the first quarter, a 16.5 percent drop from the fourth quarter,” notes IMF. “The slump was largely due to the seasonal decline in home-purchase lending and the overall 21.1 percent decline in first-lien originations.
The six active MIs reported a $9.73 billion decline in purchase-mortgage business from the fourth quarter while new insurance written on refinance loans was down $1.72 billion.”
KBW’s Bose George writes, “We calculate that 1Q18-ending insurance-in force (IIF) grew by about +1.7% QOQ and +10.8% YOY for private mortgage insurers (PMIs) versus +0.7% QOQ and +3.9% YOY at the FHA. The figures for PMIs include both the six public MIs, as well as our estimate of remaining IIF from the legacy companies in run-off (Triad, Old Republic, and PMI Corp.), which we calculate using GSE disclosures. Mortgage debt outstanding grew at a pace of 3% annualized (through 4Q17). This suggests that the growth in private mortgage insurance (and FHA IIF) remains well above the pace of growth in mortgage debt outstanding. We expect this trend to persist for the foreseeable future.
The earnings reports from the private MIs show that New Insurance Written (NIW) is +23% versus 2017 (purchase +20%, refinance -19%), so, per Compass Point Research and Trading, LLC, “MI is gaining market share from the FHA and is experiencing mix benefits from a higher percentage of borrowers being first-time homebuyers. The MI industry continues to face pricing concerns, but the underlying fundamentals are the best they have been in years.”
National MI reported solid earnings driven by higher net premiums earned and higher share count (-$0.03) from a previously announced share issuance. Both NIW of $6.5bn and ending IIF of $56.6bn came in above some estimates, and NMI generated a 16.1% ROE. KBW wrote, “Management noted that it is evaluating different options in terms of pricing and is likely to make an announcement shortly. As a reminder, we previously reduced estimates for all the MIs when MTG cut prices on expectations of price cuts from the peers. Management also stated that the company believes it has not lost a single loan to the IMAGIN program and believes that that program has had limited traction with lenders so far.”
Radian reported decent earnings that included the add-back of $18.9m of investment losses and a lower loss provision). NIW of $11.7b exceeded some estimates. Radian’s earnings call indicated that pressure on premium margins should stabilize, excluding the impact of any price cuts.
Essent reported net income for the quarter ended March 31, 2018 of $111.1 million or $1.13 per diluted share, compared to $66.6 million or $0.72 per diluted share for the quarter ended March 31, 2017. As of March 31, 2018, Essent had insurance in force of $115.3 billion and consolidated stockholders’ equity of $2.0 billion.
Training and Webinars
Register for Plaza’s free webinar “Beyond Schedule C” on May 21st.
There is Fannie Mae’s May 23rd HomeReady Mortgage webinar. Learn how to help your low- to moderate-income borrowers become homeowners with as little as 3% down. Register for the webinartoday and visit the HomeReady page to find more resources.
LinkedIn can be an extremely powerful tool for you. That’s why on Thursday, May 24th from 10-11 AM PST/1-2 PM EST, Sierra Pacific Mortgage is starting a series on using this tool. It’s a free, fun, and informative 3-part webinar series entitled “LinkedIn”. You’ll learn how to optimize your profile, be engaging, and prospect quickly! Click here to register.
Register for the Mortgage Quality & Compliance Committee (MQAC) “Hot Topics in State Regulation” upcoming webinar on May 24th.
MERSCORP Holdings is holding an eMortgage Boot Camp on Wednesday, June 20th, as an add-on to its annual MERS® User Conference. Learn about eNotes and the benefits of implementing an electronic mortgage process.
ACUMA is holding a workshop for mortgage-lending credit unions in Charleston SC May 22-23, and another in Minneapolis in mid-June.
The Indiana Mortgage Bankers is having its 2018 IMBA State Convention and 60th Anniversary Gala in early June in Indianapolis.
Investors mulled the implications of the 10-year Treasury rising to 3.11%, its highest level since 2011. News that China offered President Donald Trump a $200 billion reduction in the bilateral trade gap with the U.S. was food for thought as well. Despite my personal feelings that this may be an overreaction, the outcome of these talks is seen by many as making or breaking the global economy.
May’s employment report showed notable declines in unemployment claims, as all readings are at roughly 50-year lows now. And greater strength may be in store for the factory sector following today’s Philly Fed report which, led by new orders and enormous traction in selling prices, is one of the strongest we have seen in several decades.
Today’s economic news calendar is nearly non-existent. (Next week is light as well, save for the release of the FOMC minutes on Wednesday.) Friday starts with the 10-year yielding 3.10% and agency MBS prices better .125-.250 versus last night’s close.
Lender Products, Business Opportunities, and Developments
Bay Equity Home Loans announces its first E-Close funded loan transaction through its BE EXPRESS CLOSING. Bay has had E-Close in a pilot program and is ready to roll the program methodically throughout its footprint of offices nationwide. The new E-Close platform brings innovation and efficiency to the closing of purchase transactions with our customers, Realtors and referral partners. Bay differentiates itself as a leader in mortgage technology including its close partnership with Microsoft and its deployment nationwide of the Microsoft Surface to branches and originators. In addition, Bay’s loan advisors are bringing efficiencies and a great customer experience through the company’s BE SECURE Loan Portal. If you would like to learn more about an innovative mortgage platform that brings a family culture to its valued team members reach out to Sean Wilson for more information.
In correspondent news, AmeriHome’s Correspondent Scratch and Dent Program continues to help originators sell loans with origination defects. The AmeriHome program is designed to save clients time and money shopping for buyers and negotiating new contracts by having AmeriHome handle these transactions. A sampling of the issues that can be priced include DTI/Income/loan amounts, investor overlays, TRID/compliance, incomplete documentation, uninsurable loans, and non-agency jumbo fallout. AmeriHome is an industry-leader in service and operational support and is committed to providing the same accurate and timely communication on your S&D business. If interested, please contact your AmeriHome Correspondent Sales Representative and add our direct email email@example.com to your email distributions.
Whole Loan Capital is identifying warehouse lending consolidation opportunities for a national bank. The goal is to identify any banks that are considering exiting the warehouse lending business and enabling the transition of that business to the national bank, thereby reducing or eliminating any discontinued operations charges for the exiting bank.
PHH Mortgage, the nation’s 5th largest subservicer, was recently awarded with the Fannie Mae STAR Performer for Servicing and is a proud sponsor of the 2018 MBA Secondary Market Conference. If you plan on being in NYC from May 20-23, make time to meet with members from our Subservicing Team. Learn how PHH can on-board your portfolio in under 90 days and reduce your fixed costs through their concierge-level subservicing and portfolio retention services. Contact VP Chris Sabbe to schedule a meeting time.
The Hub launches 2.0, adding project management, chat, shared calendars, a document designer, document distribution and signature workflows, upgrades to the look and feel, easier navigation, global search, and advances to workflow and reporting. This release introduces document authoring and signature workflows to assist corporate governance and onboarding in ensuring policies and procedures are read. The Hub is a mortgage-specific intranet tool that ensures your teams stay informed, have access to the most current job aids and other corporate resources, and follow consistent simple-to-use workflows. The Hub is offering a free 15-day trial and they’ll waive your setup fee if you sign up on 2.0 before June 1st. More at http://thegrindhub.com.
Provide a decreased payment, with increased options by utilizing Lakeview’s No MI program. An alternative to LPMI, Lakeview’s program provides borrowers better pricing with this innovative program. Eligible on standard conventional products, the No MI program is available up to 97% LTV, 620+ FICO, up to 50% DTI. Learn how to provide high LTV borrowers the lowest payment possible. Contact Lakeview Wholesale or Lakeview Correspondent today.
In the mortgage industry, some of the biggest drivers of working capital often fall outside of our control, which is why it makes sense to build a relationship with a bank that offers credit products designed to help increase liquidity. Texas Capital Bank, N.A. specializes in serving mortgage lenders and servicers by offering unique credit solutions such as MSR Lines of Credit, Working Capital Lines of Credit, HECM Tail Credit Facilities and Servicing Advance Facilities. Contact its Mortgage Specialty Lending team to learn how it can help your business succeed.
Here’s the latest from NCS (National Credit-reporting System, Inc.) on recent Congressional developments requiring the IRS to create an API for order/delivery of IRS Tax Transcripts (4506-T). Also, of note, the IRS had proposed truncating PII (personally identifiable information) on tax transcripts this August. NCS is a long-time industry champion for the IRS to modernize the IVES program. The company is joined by industry peers and trade groups in this latest advocacy effort. NCS Pres/CEO, Curtis Knuth wrote, “We continue to push IT & advocacy funding into NCS core competencies like TRV Services or 4506-T processing & VOE. We’re pushing white papers to the IRS, working the Hill, etc. We want your readers to understand our commitment of injecting beneficial modernization, such as machine learning (AI) into manual verifications. We’re scheduling demos via NCS’ Jeff Gentry and Casey Hughes at MBA National Secondary next week. See everyone there!”
Paramount Residential Mortgage Group, Inc. (PRMG) furthers its commitment toward supporting the Association of Independent Mortgage Experts (AIME), along with the brokers who put their boots to the ground every day to make the American Dream of Homeownership a reality for borrowers across the country. For more information on how PRMG serves the broker community, please contact Kevin Peranio, Chief Lending Officer.
In retail job news, Evergreen Home Loans adds to its awards and product line-up. In 2018, the company was named the #1 BEST Place to Work in Financial Services and Insurance nationally by Fortune and Great Place to Work® and added innovative products designed to help originators close more loans. In addition to their suite of core products, the company offers Evergreen +Plus down payment protection and is one of the few independent mortgage bankers offering one-time close construction loans for stick-built homes as well as manufactured homes. Evergreen is the first lender in Washington to offer the USDA one-time close construction loan and among the first to originate it in other west coast states. Evergreen will continue this growth by hiring high-touch loan officers seeking a great place to work. Candidates can learn about the Evergreen culture on their awards and recognition page and job openings on the Careers page.