MBA Declares Refi Binge Officially Laid to Rest

The surge in refinancing, now down to a virtual trickle, was officially pronounced dead and gone at the Mortgage Bankers Association's annual secondary market conference in New York.

"We've lost borrowers who have the ability (to refinance) and those who have the ability no longer have the incentive," Michael Fratantoni, the MBA's director of research and economics, told the meeting.

While the market is "close to the turnaround point" in purchase mortgage volumes, Fratantoni said, "the refi portion is essentially over."

The share of borrowers with loans at rates above 5.5% either don't have jobs, have lost too much equity or have poor credit, the MBA economist explained. Or they simply don't want to refinance for some unknown reason.

While the loss of easy loans is a blow to lenders, it is good news to servicers who are impacted by the loan runoff. But servicers also received a bit of bad news from the MBA's chief economist, Jay Brinkman, who pointed out that mortgage debt outstanding is continuing to fall. Worse, he said, the "likelihood of a turnaround is not good." And the anticipated increase in purchase volumes "may not be enough" to replace the loss.

According to data gleaned from the group's weekly applications survey, the mortgage business has settled down into a "plain vanilla market." But the pattern of refinances indicates that the composition of those loans is changing, as borrowers opt to "de-leverage" with shorter payback periods, leading to the decline in debt outstanding, Fratantoni pointed out.

Nearly 24% of those who refied went with a 15-year amortization period, and almost 12% more took loans with durations of 10 years or less.

Government controlled mortgage giant Freddie Mac posted its first true net profit in almost two years, earning $676 million in the first quarter — even after paying the U.S. Treasury a $1.6 billion dividend on the preferred stock it owns.

The city of Los Angeles filed a civil lawsuit Wednesday against Deutsche Bank, claiming the German bank failed to maintain foreclosed properties and illegally evicted hundreds of low-income renters.

A House Financial Services subcommittee Wednesday approved a bill that creates a five-member commission to steer the new Consumer Financial Protection Bureau instead of a single director.

Thanks to lower interest rates, mortgage applications increased 4% on a seasonally adjusted basis for the week ending April 29, according to new figures released by the Mortgage Bankers Association.

Genworth Financial earned $82 million in the first quarter, a 54% drop from the year ago, as continued losses at its mortgage insurance unit held back the company’s financial recovery.

Some mortgage vulture funds may be heading for the exits, but not the publicly traded PennyMac Mortgage Investment Trust, the brainchild of former Countrywide Financial Corp. president Stanford Kurland.

Secondary and primary market representatives at an industry conference Wednesday morning said their concerns about governmental changes like GSE reform and Dodd-Frank largely center on their potential to tighten mortgage credit availability and exacerbate a still-struggling housing market.

The House Capital Markets and GSE subcommittee late Tuesday advanced a bill to create a U.S. covered bond market but major issues need to be worked out first before the measure is ready for a full committee markup.

PHH Corp., Mt. Laurel, N.J., earned $49 million in the first quarter, up from $8 million in the same period last year, driven in part by a 77% increase in mortgage closings and a $68 million pre-tax gain on the sale of 50.1% of its appraisal business to CoreLogic.

Moody's Investors Service late Tuesday downgraded Bank of America’s residential servicing ratings, citing continuing challenges the nation’s largest servicer faces with its 2008 purchase of Countrywide Financial Corp.

Investigators keep finding skeletons in the closets of companies that participated in the mortgage boom. In a case the government filed against Deutsche Bank AG on Tuesday, the “closet” part is literally true.

After three consecutive months where the national commercial mortgage-backed securities delinquency rate was leveling off, the latest report from Trepp signaled the recovery is nowhere in sight.

Residential Finance Corp., Columbus, Ohio, has hired Daniel Jacobs, former 1st Metropolitan CEO, to head up its new retail branching operation, ProLending Network.

Frank Keating, the head of the American Bankers Association, late Tuesday reneged on his endorsement of Elizabeth Warren as director for the Consumer Financial Protection Bureau within hours of saying the trade group would "be fully supportive" of her nomination.

CRIF, the Italian financial services provider, this week continued its buying spree of credit union lending software companies with the acquisition of Cypress Software Systems.