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Volume 9 | Issue 34 | Tuesday, August 27, 2019

The Lede


Low Mortgage Rates Hasn't Been Catalyst for Home Building, Mortgages

Despite the lowest interest rates in three years and a resulting uptick in refinancing--the Mortgage Bankers Association last week reported refinance application activity was 180 percent higher than a year ago--several reports said the rate drop doesn't appear to be having the desired effect on housing activity.


News & Trends

First American: Increasing Tenure Length Dampening Home Sales

Demand for existing homes is strong, but one can't buy what's not for sale, said First American Financial Corp., Santa Ana, Calif.

Black Knight First Look: July Prepayment Activity Hits Highest Level Since 2016

Black Knight, Jacksonville, Fla., said national delinquency rates fell in July as prepayment activity jumped to its highest level in nearly three years.

Millennial Home Buyers Increasing, But Still Face Barriers

Despite increases in Millennial participation in the home-buying market, two reports suggest Millennials continue to face barriers that impede their entry into the market.

MBA News

MBA Regulatory Compliance Conference 2019 in Washington Sept. 22-24

The Mortgage Bankers Association's annual Regulatory Compliance Conference takes place Sept. 22-24 at the Grand Hyatt in Washington, D.C. 

MBA Risk Management, QA and Fraud Prevention Forum in Chicago Sept. 15-17

The Mortgage Bankers Association's Risk Management, QA and Fraud Prevention Forum takes place Sept. 15-17 at the Sheraton Grand Chicago.

MBA Education Advanced Risk Management Concepts Workshop in Chicago Sept. 15

MBA Education presents a special edition of its Advanced Risk Management Concepts Workshop on Sunday, Sept. 15 in conjunction with the MBA Risk Management, Quality Assurance and Fraud Prevention Forum in Chicago.

MBA Education/Compliance Essentials Managing the Risks of CFPB and State Examinations Sept. 15

MBA Education and Compliance Essentials present a workshop, Managing the Risks of CFPB and State Examinations, on Sunday, Sept. 15 at the Sheraton Grand Chicago, in conjunction with the MBA Risk Management, QA and Fraud Prevention Summit.

Top National News

The Inverted Yield Curve is Doing Something Weird to Mortgage Rates

CNBC, Aug. 22, 2019--Diana Olick
It's very odd to suddenly see ARMs showing higher interest rates than the traditional 30-year fixed, which is what is currently showing for average purchase mortgage rates. Refinance rates are still lower for ARMs.

Fannie and Freddie Plan Is Likely Released Next Month

Wall Street Journal, Aug. 21, 2019--Andrew Ackerman (subscription)
The proposal comes more than a decade after the government seized the mortgage-finance firms to save them from collapse. It would likely seek to put the companies on a sounder financial footing and then release them from government control if Congress doesn't enact a more fundamental overhaul.

A Primer on the Future of Fannie, Freddie

Wall Street Journal, Aug. 27, 2019--Andrew Ackerman (subscription)
The Trump administration is close to releasing a blueprint for overhauling Fannie Mae and Freddie Mac, two companies that back half of the nation's $10 trillion mortgage market. The firms have been in government conservatorship since the 2008 financial crisis, and administration officials say it is time to return them to the private sector.

6 Banking Issues to Watch When Congress Reconvenes

American Banker, Aug. 26, 2019--Neil Haggerty, Joe Adler (subscription)
When lawmakers return from their late-summer break on Sept. 9, there are a host of unresolved financial services issues facing them, including efforts to let bankers serve the marijuana industry to reforms of anti-money-laundering requirements.

Phone Companies Ink Deal With All 50 States And D.C. To Combat Robocalls

NPR, Aug. 22, 2019--Brakkton Booker
The agreement, which amounts to a set of anti-robocall principles, is aimed at combating and preventing the phone-ringing annoyance. The tech giants will also provide other call blocking and call labeling for those customers who want more screening tools.

Mortgage Debt Has Peaked. Why Has the Share of Homeowners with a Mortgage Fallen to a 13-Year Low?

Urban Institute, Aug. 20, 2019--Michael Neal
The household-owned value of the U.S. housing market is at an all-time high of $26.12 trillion--significantly higher than the pre-crisis peak of $22.68 trillion in 2006. Housing equity and non-HELOC (home equity line of credit) mortgage debt outstanding are also at historic highs. At the same time, the share of homeowners with a mortgage, at 62.9 percent, is at the lowest level since at least 2005.

As U.S. Watchdog Retreats, Mortgage Firms Reprise Cozy Marketing Arrangements

Reuters, Aug. 22, 2019--Katanga Johnson, Michelle Price
U.S. mortgage firms are getting back into joint marketing and advertising arrangements, reviving a controversial practice that was effectively banned in the aftermath of the 2007-2008 subprime mortgage crisis.

Mortgage Market Reopens to Risky Borrowers

Wall Street Journal, Aug. 21, 2019--Ben Eisen (subscription)
More than a decade after home loans triggered the worst financial crisis in a generation, the strict lending requirements put in place during its aftermath are starting to erode. Home buyers with low credit scores or high debt levels as well as those lacking traditional employment are finding it easier to get credit.

Regulators Aren't Done Rolling Back Volcker Rule

American Banker, Aug. 25, 2019--Hannah Lang (subscription)
Banks notched a clear victory this past week when regulators approved a significant rollback of the Volcker Rule. But the agencies aren't finished revamping the Dodd-Frank Act restrictions on bank trading.

Regulators Scrap Proposed Volcker Rule Compliance Standard

American Banker, Aug. 20, 2019--Hannah Lang (subscription)
The Federal Deposit Insurance Corp. board approved a final rule Tuesday that removes the so-called accounting prong. Last year, the agencies had proposed using fair value accounting as an alternative to the current standard, which financial services firms have also found burdensome.

Citigroup, Credit Suisse Re-Enter Risky Home Loans Market

Yahoo! Finance, Aug. 21, 2019
Citigroup C and Credit Suisse CS have re-entered the risky mortgage loans market or non-qualified mortgage, wherein they provide new home loans to borrowers with poor credit scores. However, per Mike Fratantoni, chief economist with the Mortgage Bankers Association, these non-QM loans are not like the Alt-A/subprime loans that were distributed prior to the housing crash.

Study: Upping the VA Home Loan Funding Fee is a Bad Move

National Mortgage Professional, Aug. 20, 2019--Phil Hall
A new study published by NDP Analytics has determined that increasing the funding fee on VA home loans could result in fewer servicemembers and veterans becoming homeowners.

Freddie Mac Updates Servicing Data Corrections, Modifications Policies

National Mortgage News, Aug. 20, 2019--Bonnie Sinnock (subscription)
Freddie Mac is replacing a manual form submission process used to correct post-settlement and real estate owned data with new technology.

Mortgage REITs Were Doing Great--Until the Yield Curve Inverted

The Real Deal, Aug. 20, 2019--Rich Bockmann
Three of the largest real estate investment trusts that buy up residential mortgages and package them into securities have cut their dividends so far this year. The cuts came after the yields on three-month and 10-year treasuries inverted in March for the first time in more than a decade.

Santandar Bank Cuts Back on Its Mortgage Business

Philadelphia Inquirer, Aug. 20, 2019--Joseph N. DiStefano
Santander Bank NA, the U.S. arm of Spain-based multinational lender Banco Santander, will lay off 66 staff at its Villanova mortgage offices this fall, the bank told the Pennsylvania Department of Labor in a federally required WARN Act notice.

Most Homeowners Underestimate Hurricane-Related Damage Costs

National Mortgage Professional, Aug. 21, 2019--Phil Hall
This year's hurricane season is now underway through November, and while there are no storms on the near-term horizon that should raise red flags, a new study by found many homeowners in high-risk states expressed either ignorance or nonchalance regarding the property damage costs of hurricanes.

RMBS Trustees Worry that Consent Process Will Slow Down Libor Switch

National Mortgage News, Aug. 21, 2019--Brad Finkelstein (subscription)
Trustees are concerned about obtaining proper consents from legacy residential mortgage-backed securities investors in a timely fashion in order to make the switch from Libor to another index, Fitch Ratings said.

Here's Why You Might Want to Rethink Getting an Adjustable-Rate Mortgage

CNBC, Aug. 26, 2019--Sarah O'Brien
If you've been considering a mortgage with an adjustable rate, your reasons for going that route might be disappearing.

Millennial Mortgage Debt Levels Could Soon Top All Other Generations

National Mortage News, Aug. 23, 2019--Elina Tarkazikis (subscription)
Millennial mortgage debt is on pace to reach levels higher than any other generation, according to Experian.

FICO Scores for Refi Borrowers Reach Six-Year High, Ellie Mae Says

HousingWire, Aug. 26, 2019--Kathleen Howley
The average credit score of borrowers who refinanced mortgages in July with loans backed by Fannie Mae and Freddie Mac rose to a six-year high, according to an Ellie Mae report. The score was 750, up from 742 in June.

About Servicing NewsLink

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