TheMReport — News and strategies for the evolving mortgage marketplace.
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The latest a na ly t ic s Se r v ic i ng Or ig i nat ion SERVICING s e c on da r y m a r k e t These specialty servicers are ramping up activity as larger banks are relinquishing some of their market share, according to FBR. Specialty Servicers Swoop in as Big Banks Relinquish Market Share As banks continue to release MSRs, specialty servicers are moving in to bolster their books of business. A fter first releasing a mortgage origination forecast of $349 billion for the third quarter, FBR Capital Markets recently revised its estimate to between $400 billion and $420 billion for the quarter. FBR explains its revision is in part due to the $388.5 billion of mortgage-backed securities (MBS) issued over the quarter. Traditionally, a good estimate of 42 | The M Report originations is 92 to 97 percent of MBS issuances in a quarter, according to FBR. FBR continues to stand behind its forecast of $1.4 trillion in originations for 2014, relying on a strong spring homebuying season and an uptick in refinances as rate hikes stall. Despite the coming increase, FBR anticipates "the next two quarters could be somewhat sluggish." FBR anticipates a rise in refinances under the Home Affordable Refinance Program (HARP) as small specialty servicing shops are "still playing catch-up" from the recent boom. "While many will argue that refi activity will not resume as the market has already burned out, we believe there are still plenty of loans that are eligible for HARP refis," FBR stated. FBR continues to anticipate strength among specialty servicers, partly because of "their ability to effectually mine acquired portfolios for refinancing opportunities." FBR estimates Nationstar originated about $6.8 billion in loans in the third quarter, and about $6.5 billion from Walter Investment Management Corp. Nationstar's MBS issuance to the GSEs rose 80.3 percent over the third quarter of this year, and Walter Investment's loan sales ticked up 93.2 percent. These specialty servicers are ramping up activity as larger banks are relinquishing some of their market share, according to FBR. Wells Fargo, for example sold the GSEs 19.5 percent of the MBS they purchased in the third quarter, down from 23.4 percent a year ago and 30 percent in early 2012. JPMorgan Chase scaled its MBS sales back 0.2 percent, while Bank of America scaled back 0.7 percent, according to FBR.