MReport July 2017

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8 | TH E M R EP O RT MONTH IN REVIEW 1 The Federal Housing Finance Agency and the U.S. Treasury have urged the D.C. Circuit Court not to rehear claims from a group of Fannie Mae and Freddie Mac investors. The investors believe a panel decision that allows Fannie and Freddie to al- locate profits to the Treasury violates the reasonable expectations they had when originally purchasing stock in the GSEs. A federal judge threw out most of the group's claims earlier this year. 2 The case of the Consumer Financial Protection Bureau v. PHH Corp. recently went before a Court of Appeals in the District of Columbia Circuit. The court agreed to revisit its October panel decision that the CFPB's leadership structure is unconstitutional. PHH Corp. originally brought the lawsuit in 2015, after the CFPB sued the company, alleging it illegally referred consumers to mort- gage insurers. 3 Melvin Watt, Director of the Federal Housing Finance Agency, recently testified before the U.S Senate Committee on Banking, Housing, and Urban Affairs regarding the status of the GSEs after nine years of conserva- torship. According to Watt, the GSEs must be reformed soon, or taxpayers could be left footing a serious bill in 2018, once Fannie and Freddie's buffers drop to $600 million. 4 A federal judge has opted to slow down a bid by Ocwen Financial Corporation to speed up the court's decision on the constitu- tionality of the Consumer Financial Protection Bureau. Ocwen filed three motions with the court in hopes of expediting a ruling in the CFPB v. PHH Corp. case in late April, after the CFPB sued the lender for allegedly "failing borrowers at every stage of the mort- gage servicing process." 5 Fannie Mae continued to show growth, with its recent monthly summary showing a compound annual- ized growth rate of 1.3 percent. Its gross mortgage portfolio also jumped, rising at an annualized rate of 52.5 percent. Over the first four months of 2017, Fannie's gross portfolio is 6.9 percent ahead of the same period last year. 6 Freddie Mac's portfolio also saw growth this month, rising at an annualized rate of 0.5 percent since April 2016. In total, the GSE completed $28 billion in mortgage purchases or issuances, $4.1 billion in sales, and $23 billion in liquida- tions for the month of April. Freddie has funded $127 billion in mortgages year-to-date. 7 According the recent Mortgage Monitor report from Black Knight Financial Services, purchase origina- tions, refinance loans, and foreclosure starts all fell over the first quarter of the year. Overall originations dropped 34 percent over Q1, while foreclosure starts hit a 12-year low, dropping to just 52,800 for the quarter. Refinance loans experienced the steepest drop, falling 45 percent for the quarter and 20 percent over the last year. 8 A report from the National Credit Union Administration revealed that credit unions are on the rise, increasing in membership, assets, and lending over the first quarter of 2017. Nationwide, membership in credit unions grew 4.2 percent in the last year, while assets jumped 7.8 per- cent. Lending rose by $85 billion—or 10.6 percent—for the same period. 9 According to STRATMOR's recent Insights Report, the average FICO score of a U.S. mortgage borrower has dropped to its lowest point since 2008. Currently, the average borrower has a score of 729. Broken down by lender type, borrowers of bank-origination loans had a higher average score (743) than those who used an independent nonbank lender (719). The Letter of the Law Much of this month's headlines revolved around the legal system. With a number of federal agencies embroiled in litigation, and Congress hard at work on finance reform and the national budget, the industry saw some serious legal change in recent weeks. MReport has it all for you—and more—right here.

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