2Q09 Mortgage Originations Expected to Top $700 Billion

With one week still left, the second quarter of 2009 is shaping up to be a very big period for mortgage volume. According to new numbers compiled by Inside Mortgage Finance, some $548.1 billion in agency MBS already has been produced this quarter–making 2Q09 the third largest quarter ever. This near-record agency MBS issuance is expected to translate into more than $700 billion in mortgage originations for the second quarter. This would mark a 57 percent jump from the first quarter when $445 billion in loans were made, according to Inside Mortgage Finance.

While the second quarter is expected to end with a bang in terms of total mortgage activity, less clear is what will happen in the third quarter as the impact of higher mortgage rates starts to be felt. The Mortgage Bankers Association this week reduced its mortgage origination forecast for the full year to $2.1 trillion. That would mean that third and fourth quarter mortgage originations will average only about $500 billion per quarter in the second half.

Increased Loss Mitigation Failing to Keep Pace with Defaults, Foreclosures

The Federal Housing Finance Agency reported yesterday that Fannie Mae and Freddie Mac significantly stepped up their foreclosure prevention activities in the first  quarter of 2009. But those efforts failed to keep pace with both the jump in serious delinquencies and foreclosures started with government-sponsored enterprise mortgages during the three-month period. The latest FHFA numbers show that completed actions to prevent foreclosure–including loan modifications–rose to 86,600 at the GSEs. But those numbers were dwarfed by the rise in 60 days or more delinquent loans (173,700) and the huge jump in foreclosures started on Fannie/Freddie loans in the first quarter (243,800).

Inside Mortgage Finance is hosting an audio conference on the latest loss mitigation efforts tomorrow, Thursday June 25, at 3 pm EDT. Click here for more info.

CitiMortgage SVP to Speak on Loss Mitigation Efforts at IMF Event

Bryan Bolton, senior vice president for loss mitigation at CitiMortgage, has joined the lineup of experts who will be discussing the latest innovations and strategies for reducing foreclosures and losses at Inside Mortgage Finance’s upcoming audio conference on loss mitigation. The event, Loss Mitigation Update: the New Rules, is slated for June 25 at 3 pm EDT and also will feature Meg Burns from HUD, legal expert Don Lampe from Womble Carlyle Sandridge & Rice and Tom Deutsch from the American Securitization Forum. Click here for more info.

Largest Banks Hold Most Second Mortgages, New Analysis Reveals

The biggest mortgage servicers in the country, who currently are grappling with how to deal with a flood of problem first mortgages, also happen to be the largest holders of second mortgages. According to new numbers compiled by Inside Mortgage Finance, some $211 billion in closed end second mortgages were held by banks and thrifts as of March 31, 2009.

Citigroup was the top holder of second mortgages with $33.9 billion in volume, followed by Bank of America ($33.2 billion), Wells Fargo ($24.6 billion) and JPMorgan Chase ($15.7 billion). The concentration of second mortgage holdings among the top four banks theoretically should make it easier to modify or otherwise deal with defaulted first mortgages that carry seconds. In practice, however, second mortgage holders have been reluctant to agree to workouts that reduce or wipe out their investments.

Mortgage Rates Retreat to 5.35%, Offering Hope for More Activity

Long-term mortgage rates this week retreated from their recent climb that has cast a dark cloud over mortgage activity in the months ahead. According to the Inside Mortgage Finance weekly sample of mortgage rates, the average 30-year rate at mid-week was 5.35 percent  or 40 basis points below the 5.75 percent rate seen a week ago.

The fortunes of the mortgage origination market increasingly have been tied to the 10-year Treasury rate, which has climbed along with investor concerns about the debt levels in the U.S. and the potential for increased inflation. But this week’s major economic indicators showed little potential for a hike in inflation. And a two-day drop in the Dow Jones average combined with a rise in the U.S. dollar helped push long-term Treasury rates lower.

New Study to Analyze Future Direction of Home Purchase Market

Inside Mortgage Finance is sponsoring a new study that examines the current characteristics and future direction of the housing market as it relates to the mortgage industry. The research will be based on a nationwide survey of real estate agents and brokers that was fielded last week by Campbell Communications. Early results reveal that investors have emerged as the primary buyers of damaged real estate owned while first-time homebuyers are key buyers of homes through short sales.

The study, Real Estate Agents Report on Home Sales and Mortgages, also will include ratings of mortgage lenders as well as actions that servicers and asset managers can take to improve their handling of troubled mortgages. A copy of the survey being used can be found at Campbellsurveys.com  Click here.