Christopher Whalen

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.

The now-interim leader of the Federal Housing Finance Agency would give the mortgage industry much-needed stability following Calabria’s calamities, writes the head of Whalen Global Advisors.

The plan "is part of a larger democratic attack on home ownership that includes an increase in the taxes on capital gains as well as an end to 1031 exchanges for the sale of property," writes the head of Whalen Global Advisors.

For a lot of IMBs facing shrinking backlogs and falling secondary market spreads, the attraction of hitting a bid and taking the easy way out via an acquisition may become irresistible, writes Chris Whalen.

“Federal Housing Finance Authority Director Mark Calabria’s decisions to date are conservative and imply a slow death for the GSEs and IMBs operating in the conventional market,” analyst Chris Whalen writes.

And there are some brawls on the field affecting the direction of business for the rest of this year.

Both in terms of interest expense and the sheer cost of dealing with consumers, the mortgage industry is out hundreds of millions of dollars due to this unfunded mandate from Congress, analyst Chris Whalen says.

If new housing policy initiatives are not adopted by Congress, the Biden Administration may seek to push the GSEs into receivership, which would damage the conventional market, columnist and analyst Chris Whalen says.

Public agencies led by the Federal Reserve often stretch the definition of “necessary and proper” to the breaking point when seeking to fulfill public mandates, columnist Chris Whalen argues.

There are people creating a lot of unrealistic scenarios about market risk.

When new lending volumes start to recede, even with the FOMC’s actions, the shoals of credit and operational risk lurking just beneath the surface will emerge, columnist and analyst Chris Whalen says.

How we resolve millions of delinquent mortgages due to COVID is the only question that matters.

With the onset of COVID and the reaction by the Federal Reserve Board and other agencies, market pressures have reduced credit availability significantly.

The only rational strategy for holding MSRs is to be very aggressive on protecting the servicing assets via loan recapture. This is one of the chief reasons that banks have been willing to give up their share in lending and servicing as they collapse back to retail-only lending strategies.

This proposed Libor replacement is an imaginary, backward-looking benchmark dreamed up by the economists at the Fed with no discernible market.

The FHFA director’s move this week to impose an “adverse market fee” of 0.5% on most refinanced mortgages will shift billions out of the hands of American consumers and into the hands of Fannie Mae and Freddie Mac — and their private shareholders.