Just a week after commenting that the bottom on mortgage rates was possibly reached, Freddie Mac reported that they fell 6 basis points to another record low. The 30-year fixed-rate mortgage averaged 2.81% for the week ending Oct. 15, down from last week when it averaged 2.87%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.69%. (Read full story here.)
Guild Mortgage becomes the latest mortgage lender to go public
Guild Mortgage is the sixth mortgage company to go public in recent weeks, expecting the deal will price between $17 per share and $19 per share.
Guild's IPO will consist of 8.5 million Class A shares with an additional 1.275 million shares that could be sold as part of the underwriters' option. At the midpoint of the price range, with the additional shares included, Guild would raise approximately $176 million. (Read full story here.)
Ginnie Mae MBS issuance shatters record
The white-hot originations market of 2020 drove Ginnie Mae's securitized mortgage volume to an all-time high, sailing well past its old record. Ginnie closed its 2020 fiscal year by issuing $748 billion in MBS, eclipsing the $451.6 of FY 2019 and its previous record of $504 billion in FY 2017. (Read full story here.)
Fannie Mae predicts 2020 originations will top $4T
Annual mortgage originations are likely to top $4.1 trillion for the first time ever, as there will be more refinancings this year than total loans produced in 2019, Fannie Mae said. The agency's latest forecast calls for $2.6 trillion in refinance originations in 2020, along with $1.5 trillion in purchase volume. Last year, originations totaled $2.46 trillion, with $1.3 trillion coming from home purchase activity and $1.1 trillion from refis. The previous best year on record was in 2003, with total volume of $3.7 trillion, according to Fannie Mae's data. (Read full story here.)
Borrowers missed $19.4B in third-quarter mortgage payments
A study from the Mortgage Bankers Association's Research Institute for Housing America showed 12.4% of homeowners missed loan payments across the second and third quarters, including 7.1% — an estimated 3.37 million borrowers — for September alone.
About 4.7% of borrowers missed one payment over the past two quarters, 2% missed two, 1.5% missed three and 4.2% missed four or more. Third-quarter deferrals amounted to $19.4 billion in missed mortgage payments. The research revealed a slight improvement in the third quarter as more people returned to work, but that may not be indicative of future loan performance as uncertainty lies ahead. (Read full story here.)
Wells Fargo faces growing pressure to slash costs
One year into his tenure, the clock is ticking for Wells Fargo CEO Charlie Scharf, as frustrated investors itch for a comprehensive cost-reduction plan.
In January, Scharf described the San Francisco company as “extraordinarily inefficient.” Six months later, he argued that its expenses were at least $10 billion higher than they should be. So when Wells Fargo reported its third-quarter earnings on Wednesday, Wall Street was anticipating a detailed road map for cutting costs.
What Scharf provided instead was a promise to give an update in three months about shorter-term spending cuts, but no commitment about when the company will release a long-term plan for slashing its expenses. (Read full story here).
Finance of America joins the ranks of nonbanks going public
Finance of America Equity Capital, a holding company whose business units are involved in forward and reverse mortgages, commercial real estate and fixed-income investing, is going public by merging with a special-purpose acquisition company.
The SPAC, Replay Acquisition Corp., was founded by Edmond Safra, Gregorio Werthein and Gerardo Werthein. Among Finance of America's current investors is Blackstone Group, which, along with FOA's management will retain 70% of the company after the merger is completed. (Read full story here.)
While some industry forecasts predicted origination volumes would fall 7% quarter-to-quarter in 4Q, early earnings numbers from Wells Fargo, JPMorgan Chase, Citi and PNC Bank show they were down just 3% when purchased loans are excluded.
The FHFA and Treasury will allow Fannie Mae and Freddie Mac to hold more capital as part of the Trump administration's plans to release the companies from conservatorship. But it is unclear whether the incoming Biden administration will keep the mortgage giants on the same reform path.