According to Bureau of Labor Statistics data, mortgage industry jobs are down 50% in the past five years. The industry hit a peak in early 2006 at 505,000 but is now at 248,000. Granted, many who shouldn’t have been in the business have left and there was excess manpower 5 years ago, but the stat is still jarring.
The FDIC’s deposit insurance fund took some serious hits during the crisis, and they just released some updates. The FDIC predicts the cost of FDIC-insured institution failures for the five-year period from 2011 through 2015 is $21 billion, compared to estimated losses of $24 billion for banks that failed in 2010 alone. The future is never certain, but most believe that the fund should become positive this year (it has increased for four consecutive quarters) and reach 1.15 percent of estimated insured deposits in 2018. Dodd-Frank rules and Consumer Protection Act require that the fund reserve ratio reach 1.35 percent by September 30, 2020.
Last October the FHA increased its MIP’s from 55 basis points to 90 basis points, and today is increasing the monthly fee to 115 basis points for higher LTV loans. The FHA insurance premiums are not “grandfathered in,” so a borrower who is currently paying low MIPs will have to pay higher MIPs if he/she were to refinance. This is a pretty clear example of what is bad for one group (originators, borrowers) is good for another (investors in existing Ginne Mae securities).
Also note that starting today FHA systems will require mortgagees to certify at the time of requesting a case number that they have an active application for the borrower and property, and provide the borrower’s name and social security number for all new construction. And FHA systems will automatically cancel any uninsured case number where there has been no activity for 6 months since the last action except for loans where an appraisal update has been entered and/or loans where the UFMIP has been received.
CitiBank earnings came in slightly higher than expected, although earnings were slightly below. Net credit losses were down 25% in the first quarter, and analysts are hoping for more good news ahead. It had a 10% loan growth in the first quarter, but repurchase requests are expected to take a toll on future earnings.
According to a Bloomberg report: “Fannie Mae told mortgage servicers to halt a practice that could help them avoid repurchasing flawed home loans. In a notice to banks today, the company said servicers are prohibited from entering into loss-sharing or indemnification agreements with mortgage insurers. The deals help servicers avoid having their policies revoked.”