February 2014

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Th e M Rep o RT | 45 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING The LaTesT Big deals of 2013 The transactions that may still have a lasting effect in 2014. W hile 2013 wasn't exactly a banner year for origina- tion numbers, the fizzle of 2012's refinance boom and the publishing of new regulatory guidelines were no small source of stress for lenders; it was a decid- edly different story for mortgage servicing rights (MSR) deals. Here are some of the biggest wheelers and dealers in the last year. NatioNstar: Last year had barely started when Nationstar and Bank of America (BofA)announced a $1.3 billion deal involving $215 billion worth of MSRs. Nationstar entered the agreement with back- ing from Newcastle Investment Corp.; according to a release pub- lished at the time, each company retained one-third interest in the MSRs, with Nationstar servicing all the loans. The deal brought Nationstar's customer base up to 1.5 million, and its servicing portfolio grew to an estimated $425 billion. Walter iNvestMeNt MaNageMeNt Corp.: Nationstar wasn't the only firm want- ing a piece of BofA's MSRs. At the same time, the bank struck an agreement with Walter Investment: $93 billion worth of Fannie Mae-backed residential ser- vicing assets for $519 million. The portfolio included 650,000 loans. The firm also made moves in the reverse mortgage world, acquiring more than 76,000 reverse loans for its subsidiary (Reverse Mortgage Solutions) from Wells Fargo. With an unpaid principal balance of about $12.2 billion, the acquisition ef- fectively doubled the size of Walter Investment's serviced book. Walter Investment also an- nounced another deal in January last year to acquire MetLife Bank's mortgage servicing plat- form, though the assets didn't involve servicing rights. oCWeN FiNaNCial CorporatioN: It was certainly a busy year for Ocwen, which spent the first half of 2013 continuing with its aggressive expansion in the field of MSRs. The firm was one of a few companies that made a grab for Ally's servicing rights in March as the bank worked to move away from mortgages. In its own deal, Ocwen procured about $90 billion worth for around $585 million. (That announcement came on top of Ocwen's acquisition of ResCap's servicing assets in a sale that concluded last February.) A few months later, Ocwen and OneWest Bank announced a $2.5 billion deal for a $78 billion portfolio. Commenting on the deal, Quicken CEO Bill Emerson made it clear the company was looking to grow in the servicing field: "We have not been bashful in making the market aware of our interest in acquiring servicing rights. This transaction with Ally Bank allows us to purchase a well-performing pool of loans and will help us grow our servicing footprint." tWo Harbors: Just in time to make it on the 2013 list, Two Harbors announced in mid-De- cember the acquisition of a $40.7 billion portfolio from Flagstar through the former's subsid- iary, Matrix Financial Services Corporation. The $500 million agreement covers loans originated mostly after 2010 and serviced for Fannie Mae and Ginnie Mae, the companies said. Per the agree- ment, Flagstar will act as the subservicer on all of the loans underlying the MSRs. cFPB seeks comments on mortgage closing Process Customer feedback is important to the agency. t he Consumer Financial Protection Bureau (CFPB) put out a call for feedback on the mortgage closing process and how both consumers and professionals view the experience. According to a release, as part of its mission to simplify and streamline mortgage lending, CFPB is looking for information on key consumer hurdles and how those issues might be addressed by the adapting market. "The stories and information [provided] will be used to research and test solutions that address some of the biggest pain points associated with closing on a mortgage, both for consumers and for professionals," the bureau said in a blog post. "The comments will inform our work going forward on improving the closing process for consumers and industry participants alike." Queries posed by the agency cover a range of topics, including the length of the process, important questions consumers should ask, and common errors and how they're detected and addressed. The full list of questions can be found on the Federal Register website. Comments must be sent to CFPB by February 7, at which point the bureau will review the feedback before sharing it at a later date. credit concerns still real Credit availability continues to tighten as lenders limit offerings. a fter experiencing a small bump in October, mortgage credit availability reversed course in November as lenders ceased offering certain easy-credit products. The Mortgage Bankers Association's (MBA) Mortgage Credit Availability Index (MCAI) slipped 1.2 percent to settle at 110.2 in November, wiping out the 0.7 percent gain recorded a month prior. A decline in the index in- dicates that lending standards are tightening; the index was bench- marked to 100 in March 2012. According to MBA, the drop comes from the discontinuation of a "significant number" of loan programs for loan-to-value ratios of more than 95 percent and pro- grams for borrowers with low-to- mid-range FICO scores. Investors also continued to pull back from products featuring terms longer than 30 years and interest-only programs as the mortgage indus- try prepared for the arrival of last month's new regulations. Those decreases were partly offset by investors increasing cash-out offerings to well-qualified borrowers, MBA reports.

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