Christopher Whalen

As the MBA meets in Nashville, many IMBs will be looking for buyers or wondering whether to turn off the lights entirely and go home, writes the Chairman of Whalen Global Advisors.

The Fed may be the big factor in the massive fluctuations seen daily in the TBA markets, but traders and credit analysts now also fear a new problem in the heretofore peaceful world of Ginnie Mae, writes the chairman of Whalen Global Advisors.

"To talk about 95% of issuers by count being compliant without recognizing that a very large number of issuers hold few MSRs is disingenuous," one industry executive told the chairman of Whalen Global Advisors.

Ginnie Mae has constructed a perfectly counter-cyclical capital regime that would crush the government loan market if left unaltered, the chair of Whalen Global Advisors writes.

A significant divergence between the FHFA and the Ginnie Mae issuer rules could greatly disrupt the secondary market — and that is precisely the outcome that now faces the mortgage industry, writes the chairman of Whalen Global Advisors.

The Fed's tests have become a menacing countercyclical force that could further drive down liquidity in the mortgage market over the next year, the chairman of Whalen Global Advisors writes.

Unlike two years ago, when the surge of refinance loans created a vast pool of free financing for the industry to use, today lenders must pay for it by the drink.

At the Mortgage Bankers Association Secondary Conference this week, issuers noted their concern about rising delinquency levels, accusations of racial bias in lending, and whether regulators in Albany and Washington are preparing a new campaign against “abuses” in mortgage servicing, the chairman of Whalen Global Advisors writes.

The big threat to the mortgage banking community comes from any future Fed sales of mortgage-backed securities.

The Secured Overnight Financing Rate is a concept in search of an actual forward market, writes Whalen.

If put into force, the Federal Housing Finance Agency’s plan will severely impact the working capital and profitability of IMBs, and reduce volumes in the industry, Whalen argues.

This regulatory development is both good news and bad news, depending upon where you happen to sit in the mortgage process.

COVID loan forbearance championed by progressives has created a new, permanent class of distressed borrower, Whalen writes.

The Consumer Financial Protection Bureau seems to have been turned loose by Chopra in a redux of the bad old days under former director Richard Cordray, when the agency inflicted punishment on the mortgage industry often without any basis in fact, writes Whalen.

The Federal Housing Finance Agency should consider allowing small depositories — those defined by regulators to be below $10 billion in total assets — to again make use of structured transactions for seasoned, performing loans, writes the chairman of Whalen Global Advisors.

Last week, the world of mortgage servicing got an unpleasant surprise. Cenlar FSB, the nation’s largest subservicer of residential mortgages, was hit with a consent order by the Office of the Comptroller of the Currency alleging “unsafe and unsound” banking practices.

Kind Lending founder Gary Stearns told the National Association of Mortgage Brokers that the wholesale channel always feels the pain first in a slowdown and that changes were coming to the industry after a remarkable run, writes the chairman of Whalen Global Advisors.

The biggest issues facing the mortgage industry involve public policy and all of them feature a political narrative that is ill-informed and largely at odds with market realities, Whalen writes.

Regulators should create a simple liquidity formula that allows the secondary market to function rather than using depository rules as a model, writes the head of Whalen Global Advisors.

The more challenging operating environment for lenders means that expense management is coming back into vogue, writes Whalen.