Corporate finance

The Seattle-based bank underestimated single-family loan declines in the larger market but was able to improve margins slightly with cost-cutting and by diversifying with a shift toward apartment lending.

The mortgage investor reported core earnings per share slightly below estimates and a loss in comprehensive income but may ultimately outperform competitors, analysts said.

Earnings posted by the two bank holding companies show increased production on a quarter-to-quarter basis, although gain on sale sank at both.

Like other mortgage lenders, the San Francisco megabank has been cutting staff since refinancing volumes started to fall. Additional layoffs are expected over the next couple of quarters, according to the bank’s chief financial officer.

These results are likely to be mirrored by the nonbank lenders when they report earnings, said Keefe, Bruyette & Woods.

Wells Fargo missed analysts’ earnings estimates as home lending slowed and the bank set aside more than expected for potentially soured loans as the Federal Reserve’s rate hikes started to cool the once-hot housing market.

The San Francisco bank reported a 31% increase in loan originations during the second quarter. Analysts are wondering whether it will be able to secure enough low-cost funds to avoid eroding margins.

The outspoken former Trump administration official recently made headlines when he referred to the mortgage industry as a “ticking time bomb.”

Capital adequacy at the four largest underwriters remained strong at the end of 2021 even with a slight decline from the prior year, Fitch Ratings said.

The fast-paced rise in rates should be good for banks — until it isn't. The higher interest earned on loan payments will at some point be offset by higher interest paid on deposits. The only questions are: When, and by how much?

If it works as intended, by calming inflation, it will help to keep mortgage rates low in the long-term.

The effects on nonbanks will depend on the mix between their production and servicing operations, Fitch Ratings said.

The government-sponsored enterprises will start releasing information similar to what large banks already do, starting in the first quarter of 2023.

Servicers unfamiliar with the registry's requirements of having up-to-date policies and procedures in place are responsible for the increase in findings, MetaSource found.

Revenue was also slashed by lower per-employee productivity and slipping application pull-through.

First quarter gain-on-sale at nine originators tracked by Keefe, Bruyette & Woods averaged 149 basis points, much higher than the 5 bps recorded for independent mortgage bankers tracked by the MBA.

But the REIT, which invests in mortgages that have to be verified through nontraditional means like bank statements, has seen an improvement in its outlook since the first quarter.

Higher rates and tight margins are affecting its non-QM and conforming businesses.

Only Stewart reported a quarter-to-quarter increase in net income, while upstart Doma is reducing headcount by 15%.

The sale of its correspondent business to Planet Home Lending, divestment in a reverse mortgage lender, Longbridge Financial, and the outsourcing of mortgage servicing rights all reinforce its focus on wholesale, company management said.