Jumbo Mortgages

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

July 15, 2016 - Inside FHA/VA Lending

Senate Passes Legislation Easing Condo Recertification Process

The U.S. Senate this week passed legislation that includes reforms to current FHA restrictions on condominium financing, among other provisions. H.R. 3700, the Housing Opportunity Through Modernization Act of 2016, was approved without amendment by unanimous consent. The bill passed in the House of Representatives by a vote of 427-0 in February. The bill addresses problems facing buyers and sellers of condominiums. Specifically, the bill modifies the Department of Housing and Urban Development’s rental assistance and public housing programs, FHA’s requirements for condo mortgage insurance and the U.S. Department of Agriculture’s single-family housing guaranteed loan program. Among other things, the bill requires the FHA to make recertifications “substantially less burdensome,” while lowering the ownership-occupancy requirement from 50 percent to 35 percent. The current ...


July 15, 2016 - Inside FHA/VA Lending

GOP Critics Blast DASP Changes, Claim Move is Politically Motivated

House Republicans this week accused the Department of Housing and Urban Development of giving preferential treatment to political favorites in changes to FHA distressed asset sales. House Financial Services Committee Chairman Jeb Hensarling, R-TX, denounced changes HUD Secretary Julian Castro made to the Distressed Asset Sale Program (DASP), saying the moves help liberal special interests at the expense of private investors. Hensarling said the changes would create “preferential bidding” for certain buyers and restrict investor options. HUD expanded DASP in 2012 as a conduit for selling nonperforming FHA loans to investors with the proviso they must first help borrowers save their homes from foreclosure and foreclose only if all loan-modification options have been exhausted. Distressed note sales also helped stabilize FHA’s Mutual Mortgage Insurance Fund and have contributed more than ...


July 15, 2016 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


July 15, 2016 - Inside Nonconforming Markets

News Briefs

Social Finance is originating $70 million per month in jumbo mortgages and is considering issuing a jumbo mortgage-backed security, according to industry participants that have met with officials at the marketplace lender. Adjustable-rate mortgages accounted for approximately 25.0 percent of jumbo originations in May, according to Black Knight Financial Services. The firm said the jumbo ARM share of originations has declined from 29.0 percent as recently as ... [Includes five briefs]


July 15, 2016 - Inside Nonconforming Markets

SEC Charges Against Thornburg Officials Rejected

A federal jury in late June ruled in favor of former officials from Thornburg Mortgage in a lawsuit brought by the Securities and Exchange Commission in 2012. The charges centered on disclosure and accounting issues the jumbo lender faced in early 2008. The trial involved 10 counts against Larry Goldstone and Clay Simmons, the former CEO and chief financial officer of Thornburg, respectively. The jury ruled in favor of the former Thornburg officials on six counts and was ...


July 15, 2016 - Inside Nonconforming Markets

Impact of Deal Agent Differs Based on Type of MBS

The costs and benefits of a deal agent will vary based on loan characteristics, according to a new analysis by Fitch Ratings. Costs for jumbo mortgage-backed securities will be relatively low, while costs for nonprime MBS will be higher, along with potentially greater benefits when assessing the representations and warranties on a deal. Non-agency MBS issuers continue to work toward including a deal agent in new transactions as some investors have called for the feature ...


July 15, 2016 - Inside Nonconforming Markets

Jumbo MBS Underwriting Loosens Slightly

Underwriting characteristics on the jumbo mortgage-backed securities issued in the second quarter of 2016 loosened slightly, according to a new analysis by Inside Nonconforming Markets. The average combined loan-to-value ratio increased somewhat compared with recent quarters and average credit scores declined. Small fluctuations in average debt-to-income ratios have also been seen in the past years. The underwriting characteristics for ... [Includes two data charts]


July 15, 2016 - Inside Nonconforming Markets

Mixed Results in Moody’s Review of Redwood

An aggregator review of Redwood Trust by Moody’s Investors Service included an affirmation of an “above average” assessment of the firm’s prime jumbo activities along with some criticism of Redwood’s quality control process, among other issues. Moody’s assessment of Redwood’s quality control and audit activities was lowered from average to below average “because Redwood eliminated its independent third-party review quality control process in lieu of due diligence results ...


July 15, 2016 - Inside Nonconforming Markets

Jumbo Conduit Stops as Annaly Acquires Hatteras

Annaly Capital Management completed its acquisition of Hatteras Financial this week, prompting a hold on jumbo operations at Hatteras, according to a message reviewed by Inside Nonconforming Markets. Hatteras formed its jumbo conduit, Onslow Bay Financial, in 2013, with a focus on adjustable-rate mortgages. In a note sent to conduit sellers recently, an official at Onslow Bay Financial said Annaly notified the conduit that the real estate investment trust stopped ...


July 15, 2016 - Inside MBS & ABS

Mixed Jury Verdict in SEC Suit, Court Finds Repo Demand Analysis Unprotected, Morgan Stanley Loses

A New Mexico jury handed the Securities and Exchange Commission a split verdict in a 2008 financial crisis-related lawsuit against two senior executives of the now-defunct Thornburg Mortgage who were accused of fraud and misrepresenting the financial condition of the company. The jury found for defendants Larry Goldstone, former Thornburg CEO, and Clarence Simmons, former chief financial officer, on half of the counts but failed to reach a verdict on the most significant charges based on fraud and lying to the company’s outside auditors. In the lawsuit, the SEC alleged...


July 15, 2016 - Inside MBS & ABS

Non-Agency MBS Market Faltered in Second Quarter, Stumbling To Lowest New Issuance Since End of 2013

The non-agency MBS market shriveled up and nearly blew away in the second quarter of 2016 as new issuance totaled only $6.96 billion, according to an Inside MBS & ABS analysis. New production tumbled 17.0 percent from the first quarter of the year, which failed to top the $10 billion mark in issuance. The second-quarter total was the lowest output since the end of 2013, when just $6.11 billion of new non-agency MBS was produced. While there was a stiff decline in re-securitization activity from the first quarter, scratch-and-dent securitizations of nonperforming, re-performing and other dinged-up assets increased...[Includes two data tables]


July 8, 2016 - Inside MBS & ABS

Due Diligence, Cures of Errors Seen as Adequate To Protect Jumbo MBS from Major TRID Losses

The concerns among participants in the jumbo MBS market regarding the TILA-RESPA Integrated Disclosure rule might have been much ado about nothing. A new report from Moody’s Investors Service suggests that TRID violations won’t materially increase losses in jumbo MBS. The rating service said third-party due diligence reviews will identify loans in violation of TRID, and lenders and aggregators will be able to cure many TRID violations before the mortgages are placed in jumbo MBS. Three jumbo MBS have included...


July 8, 2016 - Inside MBS & ABS

SoFi Contemplating a Jumbo MBS Deal? Firm Recently Came To Market with $380 Million Consumer Bond Transaction

Marketplace lender Social Finance is contemplating a securitization of jumbo mortgages, according to industry officials who claim to have knowledge of the firm’s operations. The news comes amid an interesting time for the jumbo loan market: production volumes are generally strong and likely will be boosted even more by the recent decline in interest rates. But even established nonbank players have been avoiding the securitization route, opting instead to sell newly originated jumbos to commercial banks. SoFi, as the privately held company is known, has been placing...


July 8, 2016 - Inside MBS & ABS

Fitch Expects Minimal Rating Impact for Deal Agent in Non-Agency MBS, Some Help for MBS with Weak R&W

Issuers considering including a deal agent in new non-agency MBS will have to look to investors to pay up for the feature as there won’t be much of a rating benefit, according to Fitch Ratings. Some investors have been pushing for a deal agent that would have oversight of various participants in the transaction along with a fiduciary duty to investors. Broad outlines for deal agent responsibilities have been established, but details regarding compensation remain uncertain. Some issuers, including Redwood Trust, have indicated...


July 7, 2016 - Inside Mortgage Finance

Fannie/Freddie Business Surged in Second Quarter As Nonbank Sellers Claimed Over Half the Market

Fannie Mae and Freddie Mac saw significant increases in the flow of both refinance loans and purchase-money mortgages during the second quarter of 2016, according to a new ranking and analysis by Inside Mortgage Finance. And for the first time in a long while, nonbank mortgage companies delivered over half of the single-family mortgages securitized by the two government-sponsored enterprises. Fannie and Freddie securitized...[Includes three data tables]


July 1, 2016 - Inside FHA/VA Lending

FHA Announces More Changes to DASP to Better Protect Borrowers

Investors in FHA’s distressed note sales program would be required to do more for homeowners to help them avoid foreclosure and keep their homes, thanks to improvements to FHA’s Distressed Asset Stabilization Program (DASP) announced this week by the agency. The changes appear aimed at consumer groups’ criticism of the Department of Housing and Urban Development for allowing profit-oriented investors to purchase the troubled HUD assets at a discount and flip the homes for a profit without ever helping the distressed homeowner. Although the transactions make good economic sense for investors and the government, struggling homeowners end up losing their homes without having tried any loan modification option that could have helped them avoid foreclosure. HUD launched the DASP in 2010 under pressure from Congress to help stabilize the FHA’s Mutual Mortgage Insurance Fund, which ...


July 1, 2016 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


July 1, 2016 - Inside Nonconforming Markets

Fitch Updates Non-Agency MBS Criteria

New criteria from Fitch Ratings for rating non-agency mortgage-backed securities include provisions regarding due diligence grades and the deal agent position planned by some issuers. The criteria published this week include a “realignment” of items that result in C grades and D grades on mortgages reviewed by third-party due diligence firms. The changes include reviews for compliance with the Truth in Lending Act/Real Estate Settlement Procedures Act ...


July 1, 2016 - Inside Nonconforming Markets

Jumbo Interest Rates Decline, Outlook Uncertain

The “Brexit” vote in the United Kingdom last week helped significantly reduce interest rates on new jumbo mortgages. Looking forward, it’s not clear if rates will remain low, which would boost refinance volume, or if banks will make further adjustments. The Brexit vote prompted investors to increase their holdings of 10-year Treasury notes, pushing down yields. Interest rates on mortgages tend to follow trends in the 10-year Treasury, though rates on jumbo mortgages can be ...


July 1, 2016 - Inside Nonconforming Markets

Prime Non-Agency MBS Issuance Down Sharply in 2016, Only Two Deals in 2Q16

The issuance of prime non-agency mortgage-backed securities in 2016 is well below the relatively meager levels seen in recent years, according to a new ranking and analysis by Inside Nonconforming Markets. Some industry participants have blamed the lack of activity on the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule that took effect in October. Although there are signs the market has adjusted to TRID, only two ... [Includes one data chart]


July 1, 2016 - Inside MBS & ABS

Downgrades for MBS and ABS Still Relatively Limited With Few Defaults and Strong Loan Performance

Upgrades of ratings on structured finance products hit an all-time high in 2015, according to a study released this week by S&P Global Ratings. The study tracked ratings across sectors and the world, while the U.S. residential MBS sector showed mixed performance. S&P said it had 30,359 ratings outstanding on global structured finance securities at the beginning of 2015. During the year, 9.8 percent of the ratings were upgraded. The rating service said upgrades in 2015 were most prevalent on structured credit deals in Europe and the U.S. Some 11.2 percent of S&P’s ratings were downgraded...


June 24, 2016 - Inside MBS & ABS

FDIC Revises Securitization Safe-Harbor Rule to Jibe With CFPB Mortgage Loan Servicing Requirements

The Federal Deposit Insurance Corp. this week revised its securitization safe-harbor rule to clarify loss mitigation standards for mortgage servicers to synchronize it with the similar requirements issued by the Consumer Financial Protection Bureau. The FDIC safe-harbor rule sets standards under which the agency will not attempt to capture assets of a failed bank that are transferred to qualifying securitizations. Under the previous rule, servicers of residential mortgages backing MBS that enjoy safe-harbor status were required to take loss mitigation action within 90 days after the loan becomes delinquent. In January 2013, the CFPB adopted...


June 23, 2016 - Inside Mortgage Finance

Jumbo Market Closely Tracked Overall Trends in 1Q16 Mortgage Originations, Non-Agency Fared Slightly Better

Jumbo mortgage originations declined by 2.0 percent during the first quarter of 2016, mirroring the modest downturn in overall mortgage lending from the previous quarter. Jumbo originations – including loans that were within the high-cost loan limits for Fannie Mae, Freddie Mac, FHA and VA – totaled $100.61 billion in the first quarter, according to a new analysis and ranking by Inside Mortgage Finance. The sector accounted for 26.5 percent of total originations during the first three months of the year, down slightly from a 26.7 percent share in the fourth quarter. The jumbo share of total originations has generally been...[Includes three data tables]


June 17, 2016 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


June 17, 2016 - Inside Nonconforming Markets

Chase’s Jumbo MBS Dinged for Reps and Warrants

A $412.66 million jumbo mortgage-backed security planned by a unit of JPMorgan Chase received high marks from rating services save for the representations-and-warranty framework on the MBS. Presale reports on JPMorgan Mortgage Trust 2016-1 were published last week, with AAA ratings from DBRS, Fitch Ratings and Moody’s Investors Service. Some 15 lenders contributed to the planned MBS, led by New Penn Financial with a 19.7 percent share, Primary Capital Mortgage ...


June 17, 2016 - Inside Nonconforming Markets

Non-Agency Market Adapting to TRID

The issuance of three non-agency mortgage-backed securities in quick succession suggests that industry participants have adjusted to liability posed by the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule. Jumbo MBS from JPMorgan Chase and Redwood Trust along with a nonprime MBS from Lone Star Funds all included mortgages subject to TRID and loans with TRID exceptions. TRID was seen as a major impediment to non-agency MBS issuance ...


June 17, 2016 - Inside Nonconforming Markets

Wells Fargo Tops Jumbo Servicers, By Far

Wells Fargo services more than a third of the jumbo mortgages serviced by the top 30 lenders in the sector, according to a new analysis by Inside Nonconforming Markets. Wells serviced a portfolio of jumbo mortgages with an unpaid principal balance of $268.16 billion as of the end of the first quarter of 2016. The bank’s jumbo servicing portfolio increased by 13.0 percent compared with the first quarter of 2015. The group of 30 companies handled ... [Includes one data chart]


June 13, 2016 - Inside the CFPB

Still Some Trading in TRID Defects, But Jumbo Market Looking Up

According to investors in scratch-and-dent TRID mortgages and traders who play in the space, auctions of mortgages with errors (of all sorts) have continued apace ever since the CFPB announcement on TRID 2.0 rulemaking in early May and show little sign of slowing down. At the same time, the TRID mortgage disclosure rule appears to be less of an obstacle for the jumbo mortgage-backed securities market these days as JPMorgan Chase prepares a deal that will include residential loans subject to the rule.


Poll

The yield on the benchmark 10-year Treasury fell to all-time low of 1.34% recently. How much better will originations be at your shop in the second half compared to 1H, if at all?

Better by 1% to 10%.
Better by 11% to 25%.
Off the charts better. Applications are great now.
Worse than 1H, but not by much.
A lot worse. But not sure on the damage.

vote to see results
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