KBW: Mortgage volumes to fall further in 2014


A continuing absence of refinancing activity could have mortgage origination volumes off as much as 30% in 2014, say KBW's Bose George and Jade Rahmani, even as purchase volumes rise more than 10%. Their forecast of $1.15T in total activity next year is $50B less than the MBA's estimate, and against about $1.8T in 2013.

For the mortgage sector: Decline earnings from originators and title insurers, stability for the servicers, and increasing earnings for the insurers.

The mortgage insurers - RDN, MTG, ORI, ESNT, NMIH, GNW - will benefit not only from the rise in purchase activity, but from an FHA continuing to cede more market share to the private players.

The team is also bullish on owners of MSRs like Home Loan Servicing Solutions (HLSS) and New Residential (NRZ -0.3%), but neutral on Ocwen (OCN +0.7%) after a big run this year.

KBW also continues to believe the common stock of Fannie (FNMA -0.4%) and Freddie (FMCC +0.8%) is worthless and reform of the GSEs isn't coming until at least 2015.

Comments (7)
  • Ahmed Amin
    , contributor
    Comments (18) | Send Message
     
    Fannie and Freddie common stock is not worthless... They have been saying that for years now and the stock keeps shooting up despite all the negativity speculators rumor out. Initially they say Fannie and Freddie stocks are bad, now they change it to say common stock is bad...

     

    Reality is, FNMA and FMCC have been doing great and support from major investors, banks, and key real state institutions have come out publicly and said that any changes to the two GSEs can and will impact the housing recovery which is one of the foundations for our economy.

     

    No one with little brain can think of removing the GSEs. Obviously, the white house said back in 2008 that they want other players in the game to narrow down the GSEs, up until today not one company jumped over saying they can carry the weight.

     

    Just think of the fact of the risk of doing something like that and they destabilize the economy as a whole will mean the end of that person's career and will go in the history book as a big failure.
    17 Dec 2013, 01:31 PM Reply Like
  • Palenque
    , contributor
    Comments (395) | Send Message
     
    I continue to believe that FnF are the trade of the century. They are worth $50 and up!.
    17 Dec 2013, 02:22 PM Reply Like
  • 4thethrillofit
    , contributor
    Comments (53) | Send Message
     
    When?
    17 Dec 2013, 03:48 PM Reply Like
  • Palenque
    , contributor
    Comments (395) | Send Message
     
    As soon as Congress and Treasury understand that cheating the people in order to favor the big banks and stealing from shareholders in order to mend the budget is not "the way"
    18 Dec 2013, 09:21 AM Reply Like
  • Blitztour
    , contributor
    Comments (61) | Send Message
     
    here, here!
    18 Dec 2013, 11:28 AM Reply Like
  • Blitztour
    , contributor
    Comments (61) | Send Message
     
    WHAT IS THE PROBLEM HERE?
    These companies have functioned profitably, for 71 of their 75 years!
    YEAH, the management at F&F did not execute due diligence on everything that came in during the "boom" period but the volume and speed at which those transactions were generated and approved is unprecedented and the unscrupulous brokers, bankers and managers took advantage of those condition to line their pockets at tax payer expense.

     

    It’s beyond obvious with the recent paybacks from C, BOA and others that there were fraudulent instruments passed on the Fanny and Freddie and APPROVED BY THE S&P as sound, triple A investments.
    Who holding their feet to the fire?

     

    The Government has illegally seized these companies from “we the shareholders” (common and preferred) and is now milking it dry!
    They need to retroactively apply the dividends to debt, tale a fair return on the investment and RETURN THESE COMPANIES TO THE PUBLIC!

     

    IMHO
    18 Dec 2013, 11:26 AM Reply Like
  • dgfurr
    , contributor
    Comments (66) | Send Message
     
    KB Who? Must be getting killed on the short side or just missed the great gains on the long side. Dubya and Hank thought the same thing and tried to steal em. That was a lie too. Scuse me if I ignore this flash.
    18 Dec 2013, 05:42 PM Reply Like
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