Nonconforming Securitization

Browse articles from all of our Newsletters related to Nonconforming Securitization.

April 24, 2015 - Inside MBS & ABS

BofA’s $8.5 Billion Non-Agency MBS Settlement Moves Closer to Payout; Morgan Stanley Under Scrutiny

The judicial process for Bank of America’s long-pending $8.5 billion settlement involving non-agency MBS issued by Countrywide Financial is near its conclusion and investors could see payouts as soon as August, according to analysts at Barclays Capital. The settlement was announced in 2011, and after years of legal maneuvering, approved by the Appellate Division of the New York Supreme Court in March. Bank of New York Mellon is the trustee on the 530 non-agency MBS covered by the settlement. “The trustee’s approval application to the New York Supreme Court suggests...


April 17, 2015 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


April 17, 2015 - Inside Nonconforming Markets

News Briefs

The Federal Home Loan Bank of New York and MAX Exchange announced a pilot program that will allow members of the New York FHLBank to sell jumbo whole loans on an open exchange platform. MAX Exchange is a peer-to-peer trading platform and clearing house for mortgages. The pilot program will include a limited number of pre-approved traditional secondary mortgage investors and a limited number of New York FHLBank members ... [Includes six briefs]


April 17, 2015 - Inside Nonconforming Markets

Lenders Divided on Changes to CFPB Rules

Lenders of all stripes continue to push for changes to rules established by the Consumer Financial Protection Bureau. There are divisions among trade groups about which lenders deserve special treatment regarding qualified mortgages and portfolio lending, among other issues. This week, the Community Mortgage Lenders of America proposed that lenders should receive regulatory relief if they are small, largely focus on qualified mortgages and avoid regulatory ...


April 17, 2015 - Inside Nonconforming Markets

Little Movement on GSE Reform, G-Fees

The Obama administration and the head of the Mortgage Bankers Association, among others, agree that the ongoing conservatorship of the government-sponsored enterprises is unsustainable. However, with a strong divide between political parties regarding the level of government support needed in a system that replaces Fannie Mae and Freddie Mac, GSE reform remains a notion years away from completion. “Market participants are truly uncertain about the government’s longer-term ...


April 17, 2015 - Inside Nonconforming Markets

Ocwen Reports Large Loss for 2014, Still Confident

Ocwen Financial had a rough 2014, but officials at the nonbank suggest the company will be profitable in 2015 and beyond. Ocwen faces a number of outstanding issues, including questions from an independent auditor regarding the nonbank’s ability to operate as a going concern. Ocwen reported a preliminary net loss of $546.29 million in 2014 compared with net income of $310.42 million in 2013. Officials at the nonbank said the loss for 2014 incorporates the impact of ...


April 17, 2015 - Inside Nonconforming Markets

Marketplace Lender Eyes Non-Agency Mortgages

LendingHome announced this week that it has originated more than $100 million in loans since launching a year ago, focusing on flexible financing options for investors with a wide range of credit characteristics. The firm is a marketplace lender, connecting borrowers with investors. To this point, LendingHome has focused its originations on bridge loans and loans for investor properties. Officials at the lender said LendingHome plans to offer nonconforming mortgages this year with ...


April 17, 2015 - Inside Nonconforming Markets

Low Credit Enhancement on Pending Jumbo MBS

The latest jumbo mortgage-backed security from Two Harbors Investment is set to have the lowest credit enhancement levels of any deal issued this year, according to an analysis by Inside Nonconforming Markets. Strong performance and underwriting characteristics along with repeat issuance appears to have helped decrease credit enhancement requirements for the transaction. The $241.06 million Agate Bay Mortgage Trust 2015-3 received a preliminary AAA rating ... [Includes one data chart]


April 17, 2015 - Inside Nonconforming Markets

Deal Agent for Jumbo MBS Gaining Traction, But Plenty of Other Hurdles

Use of a deal agent in new non-agency mortgage-backed securities will help convince large investors to return to the market, according to industry participants. The benchmark non-agency MBS in the works with help from the Treasury Department will include a deal agent, according to Michael Stegman, counselor to the Treasury on housing finance policy. At a talk this week hosted by the Financial Services Roundtable and CoreLogic, Stegman noted that Treasury continues to ...


April 17, 2015 - Inside MBS & ABS

Prime ARMs Went Delinquent 30 Percent More Often When Privately Securitized, Fed Economist Finds

Vintage prime adjustable-rate mortgages went delinquent at a rate 30 percent higher when they were securitized privately, according to an economist with the Federal Reserve System. The study was based on mortgages originated in 2005 and 2006, at the height of the aggressive underwriting in the non-agency mortgage market. “We find that private-securitized loans perform worse than observably similar, non-securitized loans, which provides evidence for adverse selection ...


April 17, 2015 - Inside MBS & ABS

Deal Agent Seen as ‘Centerpiece’ of the Benchmark Non-Agency MBS Transaction Treasury Is Helping to Facilitate

In an effort to convince large investors to buy AAA tranches of non-agency MBS, the benchmark transaction under development with help from the Treasury Department will include a deal agent or transaction manager. “Part of the centerpiece [of the non-agency MBS benchmark transaction] is around the role of a new player in these transactions, an independent deal agent that represents the interests of the investors,” said Michael Stegman, counselor to the Treasury ...


April 17, 2015 - Inside MBS & ABS

Jumbo MBS Issuance Reached Post-Crisis High In Early 2015, Overall Non-Agency Market Firm

Overall non-agency MBS issuance dipped slightly in the first quarter of 2015, but the jumbo mortgage sector hit its biggest production volume since the financial crisis in late 2008, according to a new Inside MBS & ABS analysis and ranking. A total of $21.94 billion of non-agency MBS were issued during the first three months of this year, down 0.2 percent from the fourth quarter. The lion’s share of these deals were backed by seasoned loans, either ... [Includes two data charts]


April 10, 2015 - Inside Mortgage Trends

New Residential and HLSS Switch From Merger to Asset Purchase

New Residential Investment plans to complete an asset purchase with Home Loan Servicing Solutions instead of a merger, the firms announced this week. New Residential agreed to pay HLSS $1.4 billion, largely in cash. The sale substantially mitigates servicer advance funding risk, according to industry analysts. The firms said New Residential acquired substantially all of the assets of HLSS and assumed substantially all of HLSS’ liabilities ...


April 3, 2015 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


April 3, 2015 - Inside Nonconforming Markets

News Briefs

Non-qualified-mortgages accounted for 1.8 percent of mortgages originated in the fourth quarter of 2014 by 22 lenders surveyed by the National Association of Realtors. NAR noted that most of the lenders in the survey don’t portfolio their originations, which could skew the non-QM share significantly lower compared with lenders that hold non-QMs in portfolio. Some 5.0 percent of originations by lenders surveyed by NAR in the third quarter of 2014 were non-QMs ... [Includes three briefs]


April 3, 2015 - Inside Nonconforming Markets

Principal Reduction Mods Less Frequent

Large bank servicers significantly reduced their use of principal reduction loan modifications in the past year, according to new data from the Office of the Comptroller of the Currency. Principal reduction mods – which are largely limited to non-agency mortgages – were used in 6.5 percent of the loan mods completed in the fourth quarter of 2014 by eight large bank servicers tracked by the OCC. In the fourth quarter of 2013, large bank servicers employed principal reduction on ...


April 3, 2015 - Inside Nonconforming Markets

Impac Expects Strong Growth from Non-QMs

Originations of loans that don’t meet standards for qualified mortgages have been off to a slow start but officials at Impac Mortgage Holdings suggest that non-QM lending is poised for growth. Joseph Tomkinson, Impac’s chairman and CEO, said the government-sponsored enterprises’ dominance of mortgage originations has limited non-QM originations. “We knew going into this that it would be a slow growth,” he said this week during a call with investors ...


April 3, 2015 - Inside Nonconforming Markets

Chase’s Jumbo MBS Conduit Rated Above Average

JPMorgan Mortgage Acquisition Corp. is an “above average” aggregator of jumbo mortgages, according to a rating issued last week by Moody’s Investors Service. “JPMMAC’s strengths include the financial strength of its parent company and extensive controls which ensure consistent production quality,” the rating service said. Chase’s jumbo conduit operation buys closed loans from approved sellers and doesn’t originate mortgages. Of the approximately 9,800 jumbos ...


April 3, 2015 - Inside Nonconforming Markets

Jumbo MBS Issuance Hits Post-Crisis High in First Quarter of 2015 Led By JPMorgan Chase

Some $4.60 billion in jumbo mortgage-backed securities were issued in the first quarter of 2015, the highest quarterly volume seen in the aftermath of the financial crisis, according to Inside Nonconforming Markets. Jumbo MBS activity has had large swings in recent years due to shifting investor appetite and volume hasn’t been anywhere near the levels seen before 2008. However, the market recovered from an unexpected increase in interest rates ... [Includes one data chart]


April 3, 2015 - Inside MBS & ABS

Fannie Working With Bank of America on Different Fronts But New MBS Isn’t Part of It, At Least Not Yet

At least three years have passed since Bank of America stopped selling new purchase-money loans into Fannie Mae securities, a drought that has benefitted at least one party: Freddie Mac. According to new figures compiled by Inside MBS & ABS, in the first quarter of 2015 BofA sold $9.57 billion of mortgages into Freddie securities, beating out Wells Fargo ($8.194 billion), which traditionally has ranked first in sales to both government-sponsored enterprises. Then again, there is...


April 3, 2015 - Inside MBS & ABS

Will a Young Nonbank Lender Called Angel Oak Break the Drought in Nonprime MBS Issuance?

A little known lender called Angel Oak Mortgage Solutions hopes to fund $540 million of product this year and generate the industry’s first nonprime non-agency MBS of the “new era” with financing provided by Nomura. According to industry officials who have viewed investor materials issued by the company – a copy of which was provided to Inside MBS & ABS – Nomura has even agreed to provide “gestation repo” warehouse credit to the privately held originator. One source who claims to have knowledge of the arrangement said...


April 3, 2015 - Inside MBS & ABS

Securitization Market Rebounded in 1Q15, Most Sectors See Solid Gains From Last Year

Mortgage and asset securitization started 2015 with improving issuance volume and a chance to reverse last year’s paltry output. A total of $335.1 billion of residential MBS and non-mortgage ABS were issued during the first three months of 2015, according to a new Inside MBS & ABS analysis. That was up 7.7 percent from the fourth quarter of 2014, and it was a big 34.3 percent jump from the first quarter of last year. The first quarter of 2014 was...[Includes two data charts]


March 27, 2015 - Inside MBS & ABS

Nomura Unlikely to Take Ratings Hit; Court Allows NCUA Suit Against RBS, HSBC; AIG Investors Win

Nomura Holdings is unlikely to suffer a hit in ratings because of the Federal Housing Finance Agency’s mortgage-backed securities lawsuit, but the litigation may yet prove costly to the Japanese financial holding company, according to a recent report from Fitch Ratings. Nomura went to trial on March 16 to defend itself against allegations that it misrepresented the underlying asset quality of MBS it sold to Fannie Mae and Freddie Mac prior to the financial crisis ...


March 27, 2015 - Inside MBS & ABS

Ocwen Refutes Accusations From Non-Agency MBS Investors, Claims No Ongoing Events of Default

Ocwen Financial pushed back this week against claims from large investors that have worked to remove the nonbank as servicer on 119 non-agency MBS. “By all indications, the holders employed unsupportable assumptions and manipulated their analysis to advance their agenda,” Timothy Hayes, an executive vice president and general counsel at Ocwen, wrote in a letter to the trustees of the MBS in question. The letter was a response to claims made ...


March 27, 2015 - Inside MBS & ABS

Non-Agency Investors See Better Value In Securities Outside of Jumbo MBS

It’s not just structural issues that are keeping investors away from jumbo MBS; they are finding better value in other non-traditional mortgage securities products, including Fannie Mae and Freddie Mac risk-share transactions and deals backed by seasoned loans. During the fourth quarter of 2014, Javelin Mortgage Investment sold all of its holdings of prime, fixed, senior bonds from new-issue jumbo MBS. The real estate investment trust sold a total of ...


March 20, 2015 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


March 20, 2015 - Inside Nonconforming Markets

News Briefs

The outstanding balance of non-agency mortgage-backed securities increased in February on a monthly basis, according to a Standard & Poor’s analysis of remittance data. The increase was a rare occurrence as non-agency MBS outstanding has regularly declined since 2009. Of the more than 20,000 jumbo mortgages Redwood Trust has acquired as part of its jumbo conduit activities since 2010, only 11 have gone 60-plus days delinquent ... [Includes five briefs]


March 20, 2015 - Inside Nonconforming Markets

Market Need Seen for an Alternative Mortgage

Thirty-year fixed-rate mortgages have served borrowers relatively well, but there are issues that could be addressed by an alternative product, according to new research from staff at the Federal Reserve Bank of New York. “Ideally, an alternate mortgage instrument would alleviate the downpayment constraint associated with the transition to homeownership, eliminate any scope for discrimination in mortgage qualification or pricing and allow ...


March 20, 2015 - Inside Nonconforming Markets

HAMP Servicers Faulted for Processing Delays

Non-agency servicers participating in the Home Affordable Modification Program have room for improvement, according to the latest testing results completed on behalf of the Treasury Department. While no servicers were in danger of having HAMP incentive payments withheld, the Treasury said Nationstar Mortgage, Ocwen Financial and Select Portfolio Servicing were all in need of “moderate” improvement as of the fourth quarter of 2014 ... [Includes one data chart]


March 20, 2015 - Inside Nonconforming Markets

Mixed Trends for ARM Originations in 2014

Originations of adjustable-rate mortgages were nearly level in 2014 compared with the previous year, according to a new ranking by Inside Nonconforming Markets. The ARM share of total originations increased because mortgage production overall was down in that time, though some big banks that dominate ARM originations also slowed their production. An estimated $198.0 billion in ARMs were originated in 2014, up 1.0 percent ... [Includes one data chart]


March 20, 2015 - Inside Nonconforming Markets

Varied Reps on Jumbo MBS Seen as Effective

The two main types of representation-and-warranty frameworks used in jumbo mortgage-backed securities can both effectively protect investors, according to Moody’s Investors Service. Each framework presents different risks, and industry participants suggest that other aspects of deals carry more importance for investors. Jumbo MBS issued in recent years have largely included either an open-ended rep-and-warrant framework or a prescriptive framework ...


March 20, 2015 - Inside Nonconforming Markets

Five Oaks Joins FHLB System, Plots Jumbo Growth

A moratorium of real estate investment trusts gaining membership in the Federal Home Loan Bank system ended recently when the captive insurer of Five Oaks Investment was approved as a member of the FHLBank of Indianapolis. The REIT revealed this week that Five Oaks Insurance gained FHLBank membership on Feb. 24. “FOI is currently negotiating agreements for advances with the FHLBank and, although no assurance can be given, FOI anticipates ...


March 20, 2015 - Inside Nonconforming Markets

WinWater, Two Harbors Prep Jumbo MBS

WinWater Home Mortgage and Two Harbors Investment are preparing to issue separate jumbo mortgage-backed securities, according to presale reports. WinWater’s deal is set to include some non-qualified mortgages while Two Harbors’ jumbo MBS sticks with the type of mortgages that have dominated jumbo MBS issued in recent years. The $287.74 million WinWater Mortgage Loan Trust 2015-3 is set to receive AAA ratings with credit enhancement of ...


March 20, 2015 - Inside Nonconforming Markets

Bank/Thrift First-Lien Holdings Up in 2014

Bank and thrift portfolio holdings of first-lien mortgages increased in 2014, according to an Inside Nonconforming Markets analysis of call reports. Retention of new jumbo mortgages and even some conforming loans helped outpace portfolio runoff. Banks and thrifts held a total of $1.77 trillion in first-lien mortgages at the end of the fourth quarter of 2014. The holdings increased by 0.3 percent compared with the previous quarter and were up ... [Includes one data chart]


March 20, 2015 - Inside Nonconforming Markets

Non-Agency Lending – Beyond Jumbos For Affluent Borrowers – A Difficult Goal

The non-agency mortgage business looks attractive to many companies, but it is a difficult market to get into, according to experts speaking at a mortgage servicing conference sponsored by Information Management Network this week in New York. Non-agency originations outside of portfolio jumbos have been limited due to certain allowances for the government-sponsored enterprises and the lack of demand for mortgage-backed securities, among other issues ...


March 20, 2015 - Inside MBS & ABS

Underwhelmed by Returns on Agency MBS, Two Harbors Focuses on Diversification, Jumbo MBS

Returns on agency MBS are “uninspiring,” according to Thomas Siering, president and CEO of Two Harbors Investment, which has worked to diversify its assets, including putting an emphasis on jumbo conduit activities and commercial MBS. “We have a diversified business model and our operating platform obviates the need to jack up leverage to generate some return in the agency space because we think we can get attractive returns in ...


March 20, 2015 - Inside MBS & ABS

Non-Agency MBS Investors in Subordinate Tranches Support Ocwen as Servicer

A number of non-agency MBS investors with mezzanine and subordinate positions in deals serviced by Ocwen Financial support the troubled servicer, according to industry participants. The investors have pushed back against an effort by other investors holding senior tranches to get servicing transferred from Ocwen. “Ocwen is a critically important servicer in private-label residential MBS,” John Devaney, CEO of United Capital Markets, wrote in a recent letter ...


March 20, 2015 - Inside MBS & ABS

Pressure Grows on FHFA to Push Common Securitization Platform Planning Beyond Focus on Existing GSE Business

A bipartisan group of U.S. Senate lawmakers this week urged the Federal Housing Finance Agency to move the budding common securitization platform for Fannie Mae and Freddie Mac “past the duopolistic tendencies of the past.” The FHFA originally directed the two government-sponsored enterprises to develop the CSP so that it would be open to and functional for all residential mortgage securitizers, but the agency last year detoured slightly ... [Includes one data chart]


March 20, 2015 - Inside MBS & ABS

MBS Market Inched Higher in 4Q14, Agency Sector Growing Steadily

Steady growth in the outstanding supply of agency single-family MBS offset the ongoing decline in non-agency MBS in the fourth quarter of 2014, according to a new Inside MBS & ABS analysis. Outstanding single-family MBS edged up 0.1 percent from the third quarter to finish the year at $6.357 trillion. Although that was the third straight quarterly gain, the yearend total still came up 0.6 percent short of the total outstanding at the end of 2013 ... [Includes one data chart]


March 19, 2015 - Inside Mortgage Finance

Mixed Outlook for Non-QM Originations Outside of Loans to Affluent Borrowers

More than a year after standards for qualified mortgages took effect, a number of lenders are willing to offer non-QMs, but production has been concentrated on affluent borrowers. Lenders seem less willing to offer non-QMs to borrowers with lower credit scores or higher loan-to-value ratios. For the past year, Nationstar Mortgage has been working toward offering a non-QM refinance product. The loan would target non-agency borrowers in the nonbank’s large servicing ...


March 19, 2015 - Inside Mortgage Finance

Mortgage Servicing is ‘Trending’ as 1-4 Family Debt Outstanding Increases for Second Consecutive Quarter

The supply of home mortgage debt outstanding grew for the second consecutive quarter during the final three months of 2014, eking out a slim 0.1 percent gain from the end of September. The Federal Reserve late last week reported that $9.862 trillion of 1-4 family mortgage debt was outstanding at the end of last year. It may not sound like much, but it marked the first time since ... [Includes one data chart]


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