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Volume 2014 - Number 21

October 10, 2014

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Jumbo MBS Issuance Spikes in 3Q14, Volume Still Down From Last Year

Some $3.05 billion in jumbo mortgage-backed securities were priced in the third quarter of 2014, nearly triple the volume seen in the previous quarter, according to a new ranking and analysis by Inside Nonconforming Markets. Issuance through three quarters is still below the level of jumbo MBS activity in 2013 but industry analysts suggest that the jumbo MBS market looks strong heading into the fourth quarter and beyond. Credit Suisse was the top issuer of jumbo MBS ... [Includes one data chart]

Combined LTV Ratios on Jumbo MBS on the Rise

A shift from refinances to purchase mortgages has helped push combined loan-to-value ratios on jumbo mortgage-backed securities to the highest levels since the financial crisis. The higher LTV ratios are prompting an increase in credit enhancement requirements. JPMorgan Chase this week issued a $355.64 million jumbo MBS with an average combined LTV ratio of 74.0 percent. And WinWater Home Mortgage is preparing a $276.91 million jumbo MBS with an average combined LTV ratio of ...

Lenders Prep Wider Range of Non-QM Offerings

To this point, most products offered outside of standards for qualified mortgages have targeted super-prime borrowers, often with jumbo loan balances. However, competition among lenders in that sector has been strong and there are plenty of borrowers with somewhat less than perfect credit looking for non-QMs, prompting some lenders to work on expanding their non-QM offerings. Brian Simon, COO of New Penn Financial, said the nonbank is launching a non-QM for borrowers who have ...

Jumbo Lending Dominated by Banks in 2013

Only one nonbank claimed more than a 1.0 percent share of originations of non-agency jumbo mortgages in 2013, according to a new Inside Nonconforming Markets analysis of Home Mortgage Disclosure Act data. Quicken Loans, the 10th-ranked jumbo lender in 2013, accounted for 1.26 percent of jumbos originated during the year, even after growing its originations at more than double the industry average compared with 2012. Banks were the top nine jumbo lenders in 2013 ... [Includes one data chart]

Non-Agency Market Looks to Address Second Liens

A number of participants in the non-agency market are working to address the risks posed by second liens taken out by borrowers after the origination of the first mortgage. Some potential investors in non-agency mortgage-backed securities have balked at buying into new issuance due to concerns about borrower leverage and equity positions. “That’s a big problem for insurance companies and institutional investors, that debt can morph over time,” Fred Matera, a managing director at Redwood Trust ...

Non-Agency MBS Likely to Remain in 144A Market

Issuers of non-agency mortgage-backed securities appear likely to continue working in the private 144A market as opposed to issuing deals in the public market, according to industry participants. Redwood Trust was issuing jumbo MBS in the public market, but it switched to the 144A market even before new requirements from the Securities and Exchange Commission made private issuance more attractive. Most other jumbo MBS issuers in recent years have also stuck with offering their deals in ...

Manufactured Housing Industry Faults CFPB

Lenders in the manufactured housing sector have taken issue with the Consumer Financial Protection Bureau after the agency issued a white paper on the industry. “These consumers may be more financially vulnerable and benefit from strong consumer protections,” said Richard Cordray, the CFPB’s director. “The bureau is committed to ensuring that consumers have access to responsible credit in the manufactured housing market.” The Manufactured Housing Institute said it was pleased that the CFPB ...

News Briefs

Social Finance, a nonbank that has focused on refinancing student loans, launched a jumbo mortgage lending program this week. The lender is offering loans with downpayments as low as 10 percent and balances as high as $3.0 million with no requirement for private mortgage insurance. SoFi is offering 30-year fixed-rate mortgages and adjustable-rate mortgages, including a 5/5/20 ARM with a 10-year interest-only period. SoFi said it is looking to originate ... [Includes one brief]

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


What is it going to take to convince lenders to loosen the credit box (i.e., remove underwriting overlays)?

The recent rep and warranty changes announced by the Federal Housing Finance Agency should go a long way in protecting lenders from future buybacks and help expand mortgage credit.
There won’t be any significant elimination of underwriting overlays until the government stops seeking huge mortgage-related penalties and settlements from lenders.
There shouldn’t be any expansion of the mortgage credit box since looser underwriting is what caused the recent mortgage crisis.

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