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Volume 2014 - Number 15

July 18, 2014

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Loan Quality Remains Pristine in Jumbo MBS, But It’s Still Hard to Get Deals Done

The characteristics of mortgages included in jumbo mortgage-backed securities remained strong in the second quarter of 2014, according to a new analysis by Inside Nonconforming Markets. However, the high quality of jumbo MBS has not attracted enough investors to make issuance more appealing for banks than retaining the loans in portfolio. Debt-to-income ratios on loans included in the $1.03 billion in jumbo MBS issued in the second quarter averaged ... [Includes one data chart]

Impac Offering Correspondent Non-QM Products

Impac Mortgage recently launched a suite of products that don’t meet the Consumer Financial Protection Bureau’s standards for qualified mortgages. The non-QMs are available via the correspondent channel and are aimed at prime borrowers. The lender refers to its offerings as “Alt QMs,” including a jumbo option, a program for loans slightly outside of agency guidelines and a program that purposefully excludes analysis of a borrower’s tax returns ...

Redwood Quick with Unique New Jumbo MBS

Redwood Trust revved up its latest jumbo mortgage-backed security in a hurry with plans to issue a new deal that includes some loans that don’t meet standards for qualified mortgages. The deal also includes less than 100 percent due diligence. The weighted-average loan age on the $306.05 million Sequoia Mortgage Trust 2014-2 is 1.4 months, according to Kroll Bond Rating Agency. The latest issuance from JPMorgan Chase included mortgages that were ...

Credit Suisse Readies Its Next Jumbo MBS

Credit Suisse plans to issue a $367.84 million jumbo mortgage-backed security, according to a preliminary term sheet obtained by Inside Nonconforming Markets. The deal is scheduled to close around July 30. While presale reports on CSMC Trust 2014-IVR3 have not been issued, Credit Suisse expects that the deal will have credit enhancement of 7.25 percent on the AAA-rated tranches, according to the term sheet. Some 56 percent of the mortgages ...

Jumbo Borrowers Often Use Their Primary Bank

Jumbo borrowers in the market for mortgage financing often decide to work with the bank they already have a relationship with, according to new qualitative survey results from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Real estate agents participating in the survey were asked what factors drive an affluent homebuyer’s lender selection when opting for mortgage financing instead of an all-cash home purchase. “I’ve found they like to ...

Mixed Feedback on CFPB’s QM DTI Ratio Query

The Consumer Financial Protection Bureau’s request for comments on whether to allow for a right to cure on debt-to-income ratio issues for qualified mortgages prompted the typical divisions between lenders and consumer advocates. Lenders suggest that borrowers would benefit from the adjustment to QM standards, while consumer advocates warn that the change would weaken QM protections and encourage sloppy underwriting. The 43 percent DTI ratio standard for ...

Lenders See Opportunities in Non-QM Market

While originations of loans outside of standards for qualified mortgages appear limited thus far, lenders continue to flood into the non-QM market. And industry analysts suggest that the sector has plenty of room to grow, particularly if the government-sponsored enterprises exit conservatorship. W.J. Bradley announced this week that it’s offering a number of new non-agency mortgage products, including non-QMs for prime borrowers. “We have recognized ...

Regulators Get Serious with HAMP Enforcement

SunTrust Banks settled criminal allegations this month relating to activity under the Home Affordable Modification Program. The $320 million settlement marked the first time a HAMP servicer paid a monetary penalty under the program. To this point, penalties for violations of HAMP guidelines have been relatively lenient, with the harshest maneuver being a temporary stop in incentive payments from the program. However, an investigation led by ...

News Briefs

CORRECTION: The jumbo mortgage-backed securities issuers and underwriters ranking published in the July 4, 2014, issue of Inside Nonconforming Markets has been revised due to a data error. The revised chart is available online. Citigroup agreed to a $7.0 billion settlement this week with federal regulators and certain states related to non-agency MBS activities prior to 2009. Associate Attorney General Tony West suggested that ... [Includes seven briefs]

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


Home-equity lending is beginning to show new life. My company (pick one):

Plans to enter this market over the next 12 months.
Is already making home equity loans and hopes to increase the offerings.
Is in the market but don’t expect much growth.
Is not making second liens and has no plans to do so.

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Housing Pulse