Jumbo Mortgages

Browse articles from all of our Newsletters related to Jumbo Mortgages.

October 24, 2014 - Inside FHA Lending

GNMA Raises Net Worth, Liquidity Tests

Ginnie Mae this week provided new details to the long-anticipated plan for increased issuer net worth and liquidity and a new performance scoring method for issuer activity – changes that could adversely affect small issuers and portfolio servicers. In remarks at the Mortgage Bankers Association’s annual convention in Las Vegas, Ginnie Mae President Ted Tozer said the changes are part of a larger effort to ensure the continuing flexibility and availability of the agency’s mortgage-backed securities program to as many entities as possible. New types of issuers and counterparties have entered the agency-backed MBS market in the wake of the financial crisis, which called for adjustments and tailored approaches to the evolving housing finance market, Tozer noted. Tozer said both policy changes and staff expertise will ensure the success of ...


October 24, 2014 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


October 24, 2014 - Inside Nonconforming Markets

News Briefs

The Consumer Financial Protection Bureau this week issued a final rule providing lenders with a right to cure a mistake when the points and fees on what was intended to be a qualified mortgage inadvertently surpass the allowable points-and-fees cap on QMs. Points and fees charged to a borrower for a QM generally can’t exceed 3.0 percent of the loan principal at the time the loan is made. If a lender discovers after the loan has closed that the ... [Includes three briefs]


October 24, 2014 - Inside Nonconforming Markets

REITs See Mixed Success with Jumbo MBS

Officials at Five Oaks Investment said the real estate investment trust plans to continue its involvement in the jumbo mortgage-backed security market after aggregating some of the mortgages included in the $355.6 million JPMorgan Mortgage Trust 2014-OAK4. “This represents the culmination of our residential whole loan strategy that we have been implementing since last year, and we actively look forward to participating in additional transactions in the near future as our loan purchase volumes ...


October 24, 2014 - Inside Nonconforming Markets

Jumbo Production Remains Concentrated in CA

California continued to dominate jumbo originations in 2013, according to an Inside Nonconforming Markets analysis of data from the Home Mortgage Disclosure Act. The $96.74 billion in jumbos originated in California in 2013 accounted for 36.9 percent of total jumbo production during the year. The analysis defines jumbos as loans that exceed a county’s government-sponsored enterprise loan limit for 1-unit mortgages. If the county isn’t available, data cover ... [Includes one data chart]


October 24, 2014 - Inside Nonconforming Markets

Banks Increase Jumbo MBS Participation

Two large banks are set to continue their participation in the jumbo mortgage-backed security market, including one deal backed largely by loans from banks that have plenty of capacity to hold mortgages in portfolio. JPMorgan Chase is set to issue a $262.23 million jumbo MBS with originations largely sourced from First Republic Bank and Chase. The deal is backed solely by 15-year fixed-rate mortgages, which many banks have been willing to retain in portfolio in recent…


October 24, 2014 - Inside Nonconforming Markets

Jumbo MBS Characteristics Mixed in 3Q

Underwriting trends for jumbo mortgage-backed securities were mixed as of the third quarter of 2014, according to an analysis by Inside Nonconforming Markets. While some issuers started to include mortgages with higher loan-to-value ratios, average combined LTV ratios in jumbo MBS were actually higher for deals issued in the fourth quarter of 2013 than those priced in the third quarter of 2014. Average credit scores on issuance for the third quarter were ... [Includes one data chart]


October 24, 2014 - Inside Nonconforming Markets

Outlook Cloudy for Non-Agency MBS

It could take years for the non-agency mortgage-backed securities market to even approach the depth and liquidity it had before the housing meltdown, according to experts participating on a panel during the annual convention of the Mortgage Bankers Association this week in Las Vegas. The main reason non-agency MBS issuance does not amount to much is the huge bank demand for jumbo mortgages, said Tom Millon, president and CEO of Capital Markets Cooperative. Only about 77 percent of ...


October 24, 2014 - Inside Nonconforming Markets

QMs in Non-Agency MBS Exempt From Risk-Retention Requirements

The non-agency mortgage-backed securities market got clarity about risk-retention requirements in a new final rule approved this week by six federal regulators. Given current market conditions, it is unlikely to have any impact. The regulators created an exemption big enough to drive a truck through. Sponsors of non-agency MBS backed by qualified residential mortgages are not required to retain a 5 percent interest in the transaction. As expected, the QRM parameters were lined up with ...


October 24, 2014 - Inside MBS & ABS

Credit Unions MBS Holdings Decline; Will They Ever be Players in Jumbo Securities?

Although credit unions have boosted their share of new mortgage production in recent years, they continue to be only modest investors in residential MBS, a situation that isn’t likely to change anytime soon. According to figures compiled by Inside MBS & ABS, the credit union industry held $105.27 billion in residential MBS on its books at June 30, a 2.4 percent sequential decline. Compared to the same period a year earlier, their investment in mortgage securities fell by even more: down 4.8 percent. And that may not be such a bad thing. MBS prices were...[Includes one data chart]


October 10, 2014 - Inside FHA Lending

Ginnie Mae MBS Issuance Increases in 3Q14

Ginnie Mae issuance for the first nine months of 2014 totaled $207.5 billion as government-backed purchase-mortgage activity picked up in the third quarter, according to an analysis of agency data. New issuances rose 19.8 percent from the second quarter. FHA loans accounted for $116.9 billion of new Ginnie Mae issuances while VA and the Rural Housing Development funneled $75.9 billion and $14.2 billion, respectively, of new loans into Ginnie Mae pools. Mortgage securities backed by home-equity conversion mortgages are not included. Purchase mortgages totaling $140.6 billion comprised the bulk of new issuances over the nine-month period while the share of refinances totaled $49.8 billion. Modified loans accounted for $17.1 billion. Most of the FHA and VA loans originated during the first nine months came through the ... [ 2 charts ]


October 10, 2014 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


October 10, 2014 - Inside Nonconforming Markets

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]


October 10, 2014 - Inside Nonconforming Markets

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 ...


October 10, 2014 - Inside Nonconforming Markets

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 ...


October 10, 2014 - Inside Nonconforming Markets

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]


October 10, 2014 - Inside Nonconforming Markets

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 ...


October 10, 2014 - Inside Nonconforming Markets

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]


October 10, 2014 - Inside MBS & ABS

Non-Agency MBS Market Revs Up in 3Q14; Even the Jumbo Market Showed Some Life

Thanks to a heavy supply of scratch-and-dent deals and a rebound in jumbo mortgage securitizations, new issuance in the non-agency MBS market jumped by 57.4 percent in the third quarter of 2014, according to a new Inside MBS & ABS analysis and ranking. A total of $8.99 billion of non-agency MBS were issued during the third quarter, a major increase from the $5.71 billion issued in the previous three-month period. Year-to-date issuance was still off 27.3 percent from the first nine months of 2013, and it is doubtful that annual volume this year will top 2013’s total when the year is over. Issuance of prime non-agency MBS in the third quarter was...[Includes three data charts]


October 9, 2014 - Inside Mortgage Finance

MSR Firm MountainView Joins the ‘Rush’ To Non-QM Lending, Will Go Slow at First

MountainView, a firm known mostly for the market it makes in mortgage servicing rights, is branching out into non-QM lending, but company officials cautioned that its effort will start small. Moreover, a spokesman for the firm clarified that loans acquired through its new “Peak Program” will meet the ability-to-repay rule requirements, including the non-QM loans. “We expect...


September 26, 2014 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


September 26, 2014 - Inside Nonconforming Markets

Moody’s Touts Transparency with Rating Model

Moody’s Investors Service is working on revamping its process for rating new non-agency mortgage-backed securities, including allowing issuers to use the same loan-level model used in Moody’s rating process. “We are providing an unprecedented level of transparency through publication of our model,” Navneet Agarwal, a managing director of residential MBS at Moody’s, said last week during a webinar hosted by the rating service. In August, Moody’s published a request for comment on its proposed ...


September 26, 2014 - Inside Nonconforming Markets

Chase, Two Harbors Prepare Their Next MBS

JPMorgan Chase and Two Harbors Investment are preparing to issue two new jumbo mortgage-backed securities. The $483.56 million JPMorgan Mortgage Trust 2014-IVR3 is set to receive AAA ratings from DBRS and Kroll Bond Rating Agency. The deal includes a number of unique characteristics, including consisting solely of adjustable-rate mortgages and having representations and warranties that DBRS deemed as weak. The majority of the loans in Chase’s planned MBS are seven-year ARMs ...


September 26, 2014 - Inside MBS & ABS

Treasury Sees a ‘Benchmark’ Non-Agency MBS as Potential Spur for Market

The Treasury Department is considering working with an issuer to sell a non-agency MBS that would serve as a benchmark transaction, according to agency officials. The goal of the issuance is to attract investors to the sector and create a standard term sheet for issuers. “The Treasury is thinking about facilitating one or more benchmark transactions,” Michael Stegman, counselor to the Treasury Department for housing finance policy, said this week at the ABS East conference produced by Information Management Network in Miami Beach. He said...


September 18, 2014 - Inside Mortgage Finance

Purchase-Mortgage Demand Drove 2Q14 Production Surge, But Lenders Brace for Seasonal Slowdown

Purchase-mortgage originations jumped 44.3 percent from the first quarter of 2014 to the second quarter, according to a new Inside Mortgage Finance analysis and ranking, with first-time homebuyers representing about 43.9 percent of agency activity in the sector. Purchase mortgages accounted for 64.1 percent of total mortgage production during the second quarter. That’s the highest purchase share since 1995, when financing for home purchases represented 67.2 percent of total originations. At the midway point of 2014, purchase-mortgage originations were up...[Includes four data charts]


September 12, 2014 - Inside FHA Lending

FHA Jumbo Production Slips Further in 2Q14

The first-quarter decline in FHA jumbo production spilled over into the second quarter as volume dropped another 21.7 percent, ending the first half of the year with $4.7 billion in new government-insured jumbo loans, according to an Inside FHA Lending analysis of agency snapshot data. On a year-over-year basis, volume fell 56.7 percent over the six-month period compared to the same period last year. Jumbo loans make up a tiny percentage of FHA’s overall portfolio. The FHA has been weaning itself away from jumbos after Republican members of Congress accused the agency of straying from its mission by subsidizing purchases of million-dollar houses. A statutory readjustment this year brought the FHA loan limit in high-cost areas down to $625,500, the same level as the high-cost loan limits for conforming mortgages in high-cost areas. The baseline loan limits for both conforming and FHA loans in 2014 ... [1 chart]


September 12, 2014 - Inside FHA Lending

MMIF in Negative Cash Flow in 2Q14, Says Report

The FHA Mutual Mortgage Insurance Fund account balances fell by $0.5 billion during the second quarter of 2014 to $45.3 billion due to higher claim payments and property expenses. Observers, nonetheless, remain optimistic the fund will return to full stability in 2015 with no further change in the mortgage insurance premium charged to borrowers. The MMIF’s total balances peaked at $48.4 billion in the third quarter of 2013 and then slipped gradually over the last three quarters, according to data in the FHA’s latest report to Congress regarding the financial health of the Mutual Mortgage Insurance Fund. Total revenues from premium collections, property sale, and note sale proceeds were $4.3 billion, while $5.1 billion was paid to cover claims and property expenses in the second quarter. This resulted in a negative$821 million cash flow in the quarter, the smallest outflow since ...


September 12, 2014 - Inside Nonconforming Markets

Impact of SEC’s Reg AB2 Disclosure Rule Unclear

Officials at the Securities and Exchange Commission see the final rule on disclosures recently issued by the federal regulator as bringing major changes to the non-agency mortgage-backed security market. However, whether issuers will offer non-agency MBS subject to the disclosure requirements is largely in the hands of investors that have been willing to buy securities not subject to the SEC’s standards. Beginning in 2017, issuers of publically registered non-agency MBS will have to disclose 270 data points, mostly at loan level. The disclosure requirements in the SEC’s Reg AB2 rule do not apply to 144A offerings, although some observers expect the SEC eventually to extend them to private placements.


September 12, 2014 - Inside Nonconforming Markets

Redwood MBS Achieves Geographic Diversity

Redwood Trust’s planned $329.95 million jumbo mortgage-backed security is the second straight MBS from the issuer to have adequate geographic diversity, according to Fitch Ratings. Almost every jumbo MBS issued since 2010 has taken a hit from default expectations and had higher credit enhancement because of geographic concentration. Sequoia Mortgage Trust 2014-3 is scheduled to be issued around Sept. 19. Fitch, Kroll Bond Rating Agency and Moody’s Investors Service gave the deal preliminary triple-A ratings with credit enhancement of 6.55 percent on the top-rated tranche. The credit enhancement level is one of the lowest in recent years on jumbo MBS backed by 30-year fixed-rate mortgages. It is particularly low considering that due diligence was completed on less than 100 percent of the loans, and the MBS will include two loans that do not meet standards for qualified mortgages.


September 12, 2014 - Inside Nonconforming Markets

Bank First-Lien Portfolios Grow As Lenders Stock Up on Jumbos

Banks large and small continue to add mortgages to their portfolios, with new additions outpacing runoff from refinances and foreclosures. The new additions to bank portfolios are largely jumbo mortgages, though some lenders are retaining agency-eligible loans. Banks and thrifts held a total of $1.76 trillion of first-lien mortgages in portfolio as of the end of the second quarter of 2014, according to an Inside Nonconforming Markets analysis of call reports. The first-lien holdings were up 1.4 percent compared with the previous quarter and level compared with the second quarter of 2013. Among the four largest holders of first liens, only Bank of America decreased its portfolio in the second quarter. Compared with the second quarter of 2013, JPMorgan Chase was the only bank among the big four to increase its first-lien holdings.


Poll

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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