It’s been more than a decade since the last true purchase market. In the interim,
record or near-record low rates artificially propped up the refinance side of the
business and inflated the profits of many lenders. The days of low rates and
easy-to-find borrowers are gone for the time being, however. Refinance activity
was down 60 percent year over year, and the total U.S. mortgage market for
2014 was only about $1 trillion, according to Freddie Mac.
This down cycle will most likely be different than past troughs. Today, nearly
half of all homeowners with a mortgage have an interest rate that is lower than
4. 5 percent, according to CoreLogic, so many current homeowners won’t be in
the market for a refinance anytime soon.
Against this backdrop, it’s safe to assume that many major lenders have taken
a long, hard look at their business models and are developing new ways to
source purchase deals, control costs and grow business. Meanwhile, smaller
mortgage companies and producers are faced with a true test of strength in
the face of a smaller, highly regulated and ultra-competitive market. >>
Executive managing director
W.J. Bradley Mortgage Capital
By Howard Michalski
95 Scotsman Guide Residential Edition |
ScotsmanGuide.com | June 2015
Many people who earn their living in the residential mortgage industry are eager to see the private-label
securitization (PLS) market come back to life in a responsible way. Recent deals such as the first few rated
reperforming loan transactions are encouraging signs that rating agencies will become more comfortable
moving across the credit spectrum over time.
There is a long way to go to establish a truly vibrant market for new origination PLS — or for term-finance
legacy PLS for that matter. It’s not just a case of simply rebranding an old package and shipping it out.
Bringing PLS back to the market will require real change, because risk-based pricing and a wider credit box
can only return if they are nurtured by a sensible and healthy private-label securitization market. >>
Returning private-label securitization
to the housing market will require
more than rebranding
By Ed Fay,
Founder and CEO, Fay Servicing