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Freedom Mortgage dominates the MSR market

These latest offerings come on the heels of an active year in 2021 on the MSR front, which new data shows was dominated by one lender: Freedom Mortgage.
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Another large mortgage-servicing rights bulk offering is on the market this week on the heels of a $10 billion MSR package that went out to bid earlier this month. 

The latest deal is being marketed by New York-based Mortgage Industry Advisory Corp., or MIAC. It is a $6.23 billion bulk-sale offering of agency MSRs, with bids due by Jan. 20. The seller is not identified.

“MIAC, as exclusive representative for the seller, is pleased to offer for your review and consideration a $6.23 billion Fannie MaeFreddie Mac, and Ginnie Mae mortgage servicing portfolio,” bid documents for the new MSR offering state. “The portfolio is being offered by a mortgage company that originates loans with a California concentration.”

In early January, Denver-based Incenter Mortgage Advisors also launched 2022 by unveiling a $10 billion bulk-sales package of mortgage-servicing rights tied to Fannie Mae and Freddie Mac loans. The seller is not identified in the offering, which indicates the deadline for final bids was Jan. 12. Incenter Managing Director Tom Piercy would only say that the seller is a “nonbank.”

These latest offerings come on the heels of an active year in 2021 on the MSR front, which new data shows was dominated by one lender that can be named: Freedom Mortgage.

The new MSR package being marketed by MAIC is composed of 17,609 loans, most of which are Fannie and Freddie mortgages, with Ginnie-backed loans composing less than 8% of the package by loan volume. The average loan size, according to the MSR-offering bid documents, is $353,763, and the average FICO credit score of the borrowers is 750. The servicing-fee cut is set at 0.258%, with the average interest rate on loans in the MSR package at 3.023%.

Slightly more than 56% of the loans in the servicing package were originated in California, based on principle balance. The other leading states for loan originations for the MSR bundle are Washington, 12.27%; Illinois, 5.34%; and Oregon, 4.27%.

Combined, the two MSR bulk offerings kicking off the start of the year, with loans valued in total at more than $16 billion, are a sign that the MSR market is on a roll right now.

“We’re approaching … a peak [in the market] again,” said Piercy. “We’ve been on the phone … advising our customers that this is happening. 

“We’re … seeing values trending up, and I’m pretty bullish on this for the foreseeable future.”

Rankings released recently by New York-based mortgage data-analytics firm Recursion offer some insight into the state of the MSR market and its major players as the new year begins to unfold. 

Leading the pack on multiple fronts is Freedom, which bills itself as the leading Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) lender in the country. That also explains, in part, Freedom’s role as a leading servicer in the Ginnie Mae market as of year-end 2021. 

Ginnie’s unique program

Ginnie serves as the government-backed securitization pipeline for loans insured by government agencies that provide loan-level mortgage-insurance coverage through their lending programs. Unlike Fannie and Freddie, however, Ginnie does not purchase loans. 

Rather, under the Ginnie program, lenders originate qualifying mortgages that they can then securitize through the agency. Ginnie guarantees only the principal and interest payments to purchasers of its bonds, which are sold worldwide. The underlying loans carry guarantees, or a mortgage insurance certification, from the housing agencies approving the loans — which include single-family mortgages guaranteed by the FHA, VA and U.S. Department of Agriculture.

The holders of Ginnie Mae MSRs, primarily nonbanks today, are the parties responsible for assuring timely payments are made to bondholders. And when loans go unpaid due to delinquency, those servicers still must cover the payments to the bondholders. 

“Ginnie Mae as an organization, their function is to a make sure that there’s a market for buying these Ginnie Mae bonds, and then they have to manage the servicers to ensure that the integrity of the bonds is maintained,” Piercy explained. “The servicer retains the obligation to pass through the principal and interest to the bondholder.”

Under Ginnie’s program, then, lenders can securitize through the agency qualifying loans they purchase or originate, and then they can choose to retain or sell the servicing rights to the loans backing the Ginnie Mae securities issued. 

That’s where Freedom Mortgage shines, based on information provided by Recursion. In terms of Ginnie Mae securitizations, including new issuance and net MSR purchases, Freedom is by far the largest Ginnie servicer.

As of the final month of last year, the lender controlled 13.2% of Ginnie Mae’s $1.95 trillion outstanding servicing book of business — with a $261 billion balance comprised of both new-issuance securitizations and net purchases, according to Recursion’s data.

The figures for the other Ginnie servicers among the top five — again, based on new issuance and net purchases — as of the same time frame are the following:

  • PennyMac Financial Services, $222 billion, 11.2%.
  • Lakeview Loan Servicing, $203 billion, 10.3%.
  • Wells Fargo, $125 billion, 6.4%.
  • Quicken Loans, $101 billion, 5.1%.

Diving down into the numbers a bit, the total volume of newly issued Ginnie Mae securities year to date through Dec. 1 last year stood at $780 billion, including $102 billion for the leading issuer, Freedom. The other leaders in that category:

  • PennyMac Financial Services, $96 billion
  • Quicken Loans, $56 billion.
  • Lakeview Loan Servicing, $45 billion
  • Caliber Home Loans, $26 billion.

Li Chang, founder and CEO of Recursion, points out that Wells Fargo “only delivered $19 billion in new issuance,” to the Ginnie market year to date through Dec. 1, 2021 — far less than Quicken Loans. But “Wells has a huge legacy book” of Ginnie MSR business, she added, so it ranks above Quicken in Ginnie-servicing market share based on the lenders’ outstanding loan balances.

Freedom also was the top buyer of Ginnie MSRs from other servicers over the 11-month period, based on loan volume, at $71.2. billion in net purchases, followed by Lakeview Loan Servicing, $50.4 billion; Mr. Cooper (formerly Nationstar Mortgage), $21.7 billion; and Carrington Mortgage Services, $7.3 billion.

Loan delinquency rates

The loan-delinquency rate for Ginnie loans in Freedom’s MSR portfolio as of Dec. 1 of last year was 9.7% — representing all loans 30 days or more past due. That’s down from 14.3% in 2020, the initial year of the pandemic. Freedom declined to comment for the story.

Freedom’s late loans accounted for 22.1% of all outstanding loans on Ginnie’s books that were 30 days or more late as of early December 2021, the Recursion data shows. In general, nonbanks reported higher delinquency rates for their Ginnie MSR portfolios than did banks. Trailing Freedom’s double-digit figure on that measure are Lakeview Loan Servicing, with an 11.4% share of the Ginnie late-loan pool; PennyMac, 8.2%; Mr. Cooper/Nationstar Mortgage, 6.4%; NewRez, 4%; and Quicken Loans, 3.1%. 

“Banks typically have lower delinquency rate than nonbanks,” Chang said, “as they have the access to capital to repurchase delinquent loans out of Ginnie Mae pools.”

Piercy explained that once a loan in a pool of Ginnie-securitized loans is 90 days past due, the servicer has the right to buy it out of the pool at par and modify it as needed because that lender now owns the loan. If the lender can then get the borrower to make six monthly payments in a row, it “can reissue that loan into a Ginnie Mae security” and earn a profit on the spread.

“The conventional-loan world is much different than the Ginnie world because of the inherent risks tied to the credit around Ginnie Mae servicing, versus conventional servicing,” Piercy said. “And why is that? 

“[With] first-time homebuyers, low down-payment programs, the demographics [of Ginnie loans] are such that you’ve got a greater propensity to fall into a default category.”

In the bigger picture, servicing rights for Fannie Mae and Freddie Mac loans also can be bought and sold, just as the MSRs for loans carrying Ginnie Mae’s stamp are bought and sold. So, Recursion also provided a ranking of all agency MSR transfers — which includes sales and purchases of Freddie, Fannie and Ginnie MSRs.

And, once again, the leading purchaser year to date through Dec. 1 of last year was Freedom Mortgage, with $143.4 billion in total agency MSR purchases, Recursion’s data shows. That includes $40 billion in Fannie Mae servicing rights, $32 billion in Freddie MSRs and $71 billion in Ginnie MSRs.

Freedom’s all-agency MSR purchases over the period are double its closest rival: PHH Mortgage, at $68 billion. Trailing PHH in the category are JP Morgan, $62 billion; Lakeview Loan Servicing, $51 billion; and Matrix Financial, $46 billion.

Piercy stresses that the MSR market is fluid in terms of sales and purchases, and for varied reasons. So, he cautions against drawing conclusions out of context from figures like delinquency rates, existing market share, or any lender’s ranking relative to another.

“You know, there’s a lot that can be involved, and different lenders are buying and selling MSRs for various reasons, even if they’re a net buyer,” he said. “They are buying or selling for portfolio management. Maybe they need to improve a [borrower-class] profile, or maybe they’re not having success in recapturing [refinancing] a certain profile. 

“So, they’ll strip that out and try to sell it [those MSRs] to someone who thinks they can do it better. I mean, that’s what the market really is all about.”

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About 35% of People Who Received Placebo in Vaccine Trials Report Side Effects and More COVID-19 News

According to a recent study conducted by researchers at Harvard Medical School and Beth Israel Deaconess Medical Center, 76 percent of the adverse side effects (such as fatigue or headache) that people experienced after receiving their first COVID-19…

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About 35% of People Who Received Placebo in Vaccine Trials Report Side Effects and More COVID-19 News

The placebo effect is where a person who received a placebo instead of a drug or vaccine shows clinical signs, positive or negative, associated with the actual treatment. Much has been made about the side effects of the COVID-19 vaccines, but a new study found a startlingly high number of adverse events associated with people who received placebos in clinical trials. For that and more COVID-19 news, continue reading.

COVID-19 Vaccine Side Effects: Real or Placebo Effect?

A recent study out of Harvard Medical School and Beth Israel Deaconess Medical Center evaluated 12 COVID-19 vaccine trials with a total of 45,380 participants. The study found that 76% of the adverse side effects reported, such as fatigue or headache, after the first shot were also reported by participants who received a placebo. Mild side effects were more common in people receiving the vaccine, but a third of those given the placebo reported at least one adverse side effect. The statistics from the study showing that 35% of placebo recipients reported adverse side effects is considered unusually high. Several experts suspect that there’s such a high report of adverse events because of the amount of misinformation found on social media about the dangers of the vaccines and the amount of media coverage.

This is not to say that the adverse side effects felt by people who received the vaccines are all in their heads. People do have side effects to vaccines, but this study reports on an unusually high level of the placebo effect. Nocebo is used to describe a negative outcome associated with the placebo.

Source: BioSpace

“Negative information in the media may increase negative expectations towards the vaccines and may therefore enhance nocebo effects,” said Dr. Julia W. Haas, an investigator in the Program in Placebo Studies at Beth Israel Deaconess and the study’s lead author. “Anxiety and negative expectation can worsen the experience of side effects.”

Four Factors for Long COVID

A study published in Nature Communications identified specific antibodies in the blood of people who developed long COVID. Long COVID is not well understood and has a range of up to 50 different symptoms, and it is difficult to diagnose because there is no one test for it. The study, conducted by Dr. Onur Boyman, a researcher in the Department of Immunology at University Hospital Zurich, compared more than 500 COVID-19 patients and found several key differences in patients who went on to present with long COVID. The most obvious was a significant decrease in two immunoglobulins, IgM and IgG3. The study found that a decrease in these two immunoglobulins, which generally rise to fight infections, combined with other factors, such as middle age and a history of asthma, was 75% effective in predicting long COVID.

75% of COVID-19 ICU Survivors Show Symptoms a Year Later

A study out of the Netherlands found that a year after being released from an intensive care unit (ICU) for severe COVID-19, 75% of patients reported lingering physical symptoms, 26% reported mental symptoms, and up to 16% noted cognitive symptoms. The research was published in JAMA. The research evaluated 246 COVID-19 survivors treated in one of 11 ICUs in the Netherlands. The mental symptoms included anxiety (17.9%), depression (18.3%), PTSD (9.8%). The most common new physical symptoms were weakness (38.9%), stiff joints (26.3%), joint pain (25.5%), muscle weakness (24.8%), muscle pain (21.3%) and shortness of breath (20.8%).

Pennsylvania Averaging Most COVID-19 Deaths Per Day in a Year

In general, COVID-19 deaths are dropping across the country. However, in two states, Pennsylvania and New Jersey, the numbers are increasing. Pennsylvania is averaging 156 COVID-19 deaths per day over the past seven days, which is a 17% uptick compared to two weeks ago. The number of deaths per day in Pennsylvania is below what was hit in January 2021, largely due to the availability of vaccines. New Jersey averages 111 deaths from COVID-19 per day, an increase of 61% over the last two weeks and the highest since May 2020. Similarly, New Jersey cases and hospitalizations are declining.

Omicron Surge: Shattering Cases and Hospitalizations, but Less Severe

According to the CDC, although the current Omicron surge is setting records for positive infections and hospitalizations, it’s less severe than other waves by other metrics. Omicron has resulted in more than 1 million cases per day in the U.S. on several occasions, and reported deaths are presently higher than 15,000 per week. However, the ratio of emergency department visits and hospitalizations to case numbers is lower compared to COVID-19 waves for Delta and during the winter of 2020–21. ICU admissions, length of stay, and in-hospital deaths were all lower with Omicron. They cite vaccinations and booster shots as the likely cause. Although the overall result is that Omicron appears less severe, it’s not completely clear if that’s because the viral variant doesn’t infect the lower lung as easily as other variants, or because so much of the population has either been vaccinated or exposed to the virus already. It is clearly far more infectious than other strains, which is placing a real burden on healthcare systems. The number of emergency department visits is 86% higher than during the Delta surge.

J&J Expects Up to $3.5 Billion in COVID-19 Vaccine Sales This Year

Johnson & Johnson projected annual sales of its COVID-19 vaccine for 2022 to range from $3 billion to $3.5 billion. This was noted during the company’s fourth-quarter 2021 report. In December 2021, the U.S. Centers for Disease Control and Prevention recommended the PfizerBioNTech or Moderna shots over J&J’s due to a rare blood condition observed with the J&J shot. By comparison, Pfizer and BioNTech project their vaccine will bring in $29 billion in 2022, after having raked in almost $36 billion in 2021. Moderna expects approximately $18.5 billion this year, with about $3.5 billion from possible additional purchases. Although final figures for Moderna aren’t in yet, they projected 2021 sales between $15 and $18 billion.

BioSpace source:

https://www.biospace.com/article/about-35-percent-of-people-receiving-placebo-in-vaccine-trials-report-side-effects-and-more-covid-19-news

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COVID-19 cases at highest ever in Americas – regional health agency

New cases of COVID-19 in the Americas in the past week were the highest since the pandemic began and the very contagious Omicron variant has clearly become the predominant strain, the Pan American Health Organization said on January 26.

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COVID-19 cases at highest ever in Americas – regional health agency

BRASILIA, Jan 26 (Reuters) – New cases of COVID-19 in the Americas in the past week have been the highest since the pandemic began in 2020 and the very contagious Omicron variant has clearly become the predominant strain, the Pan American Health Organization said on Wednesday.

There were more than 8 million new cases, 32% higher than the previous week, while fatalities throughout the region also increased by 37%, with 18,000 new deaths caused by COVID-19.

The United States continues to have the highest number of new infections, although cases decreased by nearly 1 million over the last week, the regional health agency said.

Mexico’s southern states have seen new infections triple and Brazil has seen new cases surge 193% over the last seven days, PAHO said in weekly briefing.

Medical workers take care of patients in the emergency room of the Nossa Senhora da Conceicao hospital that is overcrowding because of the coronavirus outbreak, in Porto Alegre, Brazil, March 11, 2021. REUTERS/Diego Vara

Children in the Americas are facing the worst educational crisis ever seen in the region, with millions of children yet to return to classes, according to PAHO, which recommended that countries try to get them safely back to school to protect their social, mental and physical wellbeing.

It urged parents to get their children vaccinated.

Many countries have already authorized and are safely administering COVID vaccines to adolescents, PAHO said.

Last week, the WHO’s expert group on immunization authorized the COVID vaccine developed by Pfizer Inc (PFE.N) for children aged 5 to 12 years, offering a roadmap for countries to roll out vaccines for them, the regional agency said.

Reporting by Anthony Boadle; Editing by David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

 

Reuters source:

https://www.reuters.com/world/americas/covid-19-cases-highest-ever-americas-says-regional-health-agency-2022-01-26

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Don’t believe the claim that only 17,371 people have died from COVID in England and Wales

A freedom of information request is only useful if you know how to read the data.

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There is no doubt that the pandemic has led to many deaths; however, in the past week, new claims have emerged that the true number of people who have died from COVID in England and Wales is much lower than previously thought. These claims have been widely shared on social media and even amplified by a senior MP. Can it really be true that new data shows that COVID has killed far fewer people than we previously thought?

To arrive at an answer, we first need to delve into the various ways that COVID deaths are counted in England and Wales. There are two main sources of this data: the first, published by the UK Health Security Agency (UKHSA) and featured prominently on the government’s coronavirus dashboard, is a simple count of all deaths that occur within 28 days of a positive COVID test.

The second, published by the Office for National Statistics (ONS) is based on death certificates that list COVID as a cause of death. Being based on a medical assessment of the circumstances of each individual death, the ONS figures represent the gold standard.

The UKHSA figures will include some deaths that are clearly unrelated to COVID – for example, somebody who has a mild case of COVID and is involved in a car accident three weeks later – and exclude some COVID deaths where someone is in hospital for more than 28 days. The UKHSA data gives us a picture of what is happening now – albeit an imperfect one – while the ONS data takes several weeks to process.

We also need to understand how death certificates work in England and Wales. When somebody passes away, a medical professional completes a death certificate. This includes a field for the “disease or condition directly leading to death” – often called the “underlying cause”. It also includes the option to list one or two diseases or conditions that were not the underlying cause, but which contributed to the death (“contributory causes”).

The data that the ONS publishes shows that, in 2020 and 2021 combined, 157,889 deaths were registered where COVID was mentioned on the death certificate. Of these, 139,839 listed COVID as the underlying cause. In almost 90% of cases where COVID was a factor in somebody’s death, it was considered by medical professionals to be the primary reason they died. So where does the figure of 17,371 COVID deaths come from?

Freedom of information request

This figure originates from a freedom of information request to the Office for National Statistics that asked for the number of deaths where COVID was the only cause of death recorded. This is complicated by the fact that often COVID itself can cause complications, such as severe respiratory difficulties or organ failure, which will then be listed alongside COVID on the death certificate.

To exclude these deaths, the ONS responded by giving the number of deaths where no “pre-existing conditions” were listed on the death certificate. Which comes to 17,371 for the period up to the end of September 2021. But what is a “pre-existing condition”?

Pre-existing conditions and their International Classification of Diseases (ICD) codes

Office for National Statistics

This list is extensive, including high blood pressure, asthma, COPD, diabetes and a wide range of other common conditions. The argument being made by some is that 17,371 is the true number of COVID deaths, because people with these pre-existing conditions, who make up the vast majority of deaths that list COVID on the death certificate, were already sick. But even a cursory glance at the list makes it clear that this will be incorrect for a great many people.

Over a quarter of adults have high blood pressure, 4 million people in England have diabetes and a similar number have asthma. Having one of these conditions is neither a death sentence nor a sign of being in poor health. You almost certainly know several people with one or more of them, or are living with one yourself.

The idea that people with a pre-existing condition are at death’s door is simply untrue. Over half of people aged 50 and over have at least one long-term health condition. But if someone with one of these conditions is unlucky enough to catch COVID and subsequently die, all it takes is for the condition to have some impact for it to end up being listed as a contributory cause on the death certificate.

Let’s take asthma as an example. COVID frequently attacks victims’ lungs, leading them to require ventilation. As a respiratory condition, asthma may well exacerbate these difficulties and will therefore be listed on the death certificate if the person dies. It would be bizarre to claim that the person died of asthma on this basis. Perhaps they would not have died if they didn’t have asthma, but they certainly wouldn’t have died if they hadn’t got COVID.

The vast majority of people who get seriously ill with COVID were living full, independent lives before they were hospitalised. And reasonable estimates suggest that the average number of years of life lost per COVID death is around ten. The idea that people who died from COVID are all extremely ill and would have died soon anyway is not borne out by the facts.

To argue that the deaths from COVID of people with pre-existing conditions don’t count as true COVID deaths is to say that people with pre-existing conditions don’t matter; that their lives are expendable and shouldn’t be considered when assessing the impact of the pandemic. Over 140,000 people with pre-existing conditions have died of COVID in the last two years. We should be mourning this tragic loss of life, not minimising it.

Colin Angus does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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