The sudden drop-off in subprime and alternative-A lending from $700 billion in the first half of this year to $300 billion in the second half will be "very disruptive" for mortgage banks that relied on nonagency originations for the bulk of their profits, according to a Friedman Billings Ramsey report.The FBR report notes that lenders are quickly switching their production to loans that meet the requirements of the secondary-market agencies -- Fannie Mae and Freddie Mac -- since the secondary market for nonagency loans has "basically dried up." But selling loans to Fannie and Freddie is "not profitable today," FRB analyst Paul Miller says in the report. "We believe it will take two or three quarters before originators make the proper adjustments and profitability returns." FBR analysts are forecasting that nonagency originations in 2008 will total $500 billion, down from $1.9 trillion in 2006 -- a 75% decline over that two-year period. Meanwhile, agency originations will increase from $1.1 trillion in 2006 to $1.4 billion in 2007 and remain at that level in 2008, according to FBR's forecast. FBR can be found on the Web at http://www.fbr.com.
-
The new Financial Stability Oversight Council report also recommends an expanded Ginnie Mae PTAP facility and an industry-funded liquidity resource.
3h ago -
The publicly traded title holding companies all had stronger earnings as the mortgage market improved from one year prior.
4h ago -
One in every 37 residential properties nationwide had a loan-to-value ratio of 125% or greater to begin the year, according to a new report.
5h ago -
There's temporary leeway on formal compliance with replacement-cost value requirements in order to sort out insurer concerns with a recent re-emphasis on them.
6h ago -
Max Levchin, CEO of the buy now/pay later lender, said recent tests show young adults prefer interacting with intelligent chatbots over phone-based agents, but the company doesn't foresee major cost savings from generative AI for a few more years.
7h ago -
Test your knowledge of the biggest mortgage headlines of the week. No. 2 pencil not required!
May 10