Servicing

A few studies released Tuesday add to expectations that the small number of mortgages remaining in forbearance will contribute to a higher foreclosure rate in the future.

Only Essent saw a decline in profitability on a quarter-to-quarter basis during what ended up being a much better period for the business than for its mortgage lender clients.

The changes, which appear to be separate from a controversial nonbank proposal that's pending, will reduce red tape for credit unions and housing finance agencies and clarify a calculation for loans eligible for repurchase.

Waning mortgage activity slashed net income 72% in the second quarter to $58.3 million.

The company is withdrawing from consumer-direct lending and making other reductions given that widening spreads failed to offset savings from aggressive layoffs and gains in servicing advisory services.

The company managed a small profit even though industry-wide challenges were compounded by struggles in its reverse mortgage business lines.

While declining to comment on the pending Black Knight transaction and reporting a decline in earnings from the first quarter, management remains bullish on the home lending business.

The REIT is paying a $10.5 million premium to acquire the company, which will allow it to bring servicing in-house.

Servicing income and cost cutting bolstered the company's earnings, but not enough to prevent a reduction compared to comparable quarters.

But many expect only a slight increase in completions, with the rate at which delinquent mortgages cure outperforming the historic average, according to Auction.com.