Banks brace for third-quarter earnings
Lenders prepare for bad news
Banks are holding their breath with third-quarter earnings expected to show a significant drop in the firms' mortgage volumes. In the meantime, lenders are trying to prepare investors for the results. Per CNBC:
Year-over-year revenue comparisons for revenue from mortgage origination fees and gains on the sale of newly originated loans—mainly to Fannie Mae and Freddie Mac—will be particularly ugly. This is because the wave of refinancing crested last year, with record low interest rates and the Home Mortgage Refinance Program, which allowed borrowers with loans sold to Fannie and Freddie to refinance their homes, even if the value of the homes had dropped significantly below the loan amounts being refinanced.