Origination

Regulators have recently moved to curb growth at non-bank servicers amid concerns about their practices—and that might actually be for the best, say analysts for Moody's Investors Service. At the same time, they worry that companies might attempt to offset any slowdown in growth by shifting business models and originating non-prime mortgages, “a net credit negative.”

The Mortgage Bankers Association (MBA) reported a seasonally adjusted 8.5 percent drop in loan application volume for the week ending February 21, bringing application numbers even lower after a 4.1 percent decrease the previous week. “[T]his is the time of year we would expect a significant pickup in purchase activity, and we are not yet seeing it,” remarked MBA chief economist Mike Fratantoni.

JPMorgan Chase announced Tuesday it plans to cut an additional 6,000 mortgage banking jobs in 2014 as the bank adapts to a continued spiral in loan demand. The announced cuts come on top of an estimated headcount reduction of 11,000 last year, the bank revealed in an investor presentation. At this time in 2013, JPMorgan was shooting to bring the headcount down at its mortgage wing by 13,000-15,000 over the following two years.

Noting that “several credit metrics for 2013 vintage deals have deteriorated, including expansion of interest only loans, higher use of subordinated debt and higher LTV [loan-to-value] ratios,” the Fitch Ratings in a release put out Monday urged all title insurers to conduct thorough search and examination processes to head off future losses.

Freddie Mac released Thursday its Primary Mortgage Market Survey for the week ending February 20, showing the average 30-year fixed-rate mortgage (FRM) coming up 5 basis points to a rate of 4.33 percent (0.7 point). This time last year, the 30-year FRM averaged 3.56 percent. Frank Nothaft, VP and chief economist for Freddie Mac, said the change reflects market forecasts of what the Federal Reserve’s next move might be.

Examining a sample of applications passing through its network, Ellie Mae reports refinance mortgages made up 47 percent of originations in January, up slightly from December. Refinance share bottomed out at 39 percent in October 2013 and has slowly risen since. The increase in refinances compared to purchase loans matches Freddie Mac’s latest outlook, which observed a “second wind” for remortgaging as interest rates resist lifting factors.

Days after announcing the addition of Brandon Goldstein as managing director of capital markets, Valuation Vision (V2) recruited Loretta Zeballos as VP of business development and customer relations.

After seeing their first notable drop of the year in February’s first week, mortgage applications continued to slide down a slipperier slope approaching the middle of the month, the Mortgage Bankers Association (MBA) reported. According to MBA’s Weekly Mortgage Applications Survey, loan application volume dropped 4.1 percent on a seasonally adjusted basis for the week ending February 14. Unadjusted, the index was down a smaller 2 percent.

Wells Fargo is reportedly looking to return to the subprime market by bringing in customers with credit scores as low as 600, according to Reuters. Lenders venturing back into the high-risk loans market are even using a subtle marketing trick to assuage fear and spur demand—subprime loans become "another chance mortgages" or "alternative mortgages," shedding the stigmatized "subprime" label, the report says.

Although the new qualified mortgage (QM) rules are expected to bring stability to loan manufacturing, the many nuances of compliance have resulted in doubling the cost of loan origination. This assessment was offered by Tom Showalter, chief analytics officer at Digital Risk. In an interview on Mortgage Markets Today, Showalter explained the threat of ""manufacturing risk,"" or the risk that key elements of data defining the loan are either corrupted or misrepresented.