Originations of interest-only mortgages declined in the first quarter of 2018 among a group of prominent IO lenders, according to a new ranking and analysis by Inside Nonconforming Markets. The 15 lenders originated an estimated $4.17 billion of IOs in the first quarter of 2018, down 24.9 percent from the previous quarter and down 17.4 percent from the first quarter of 2017. The drop in IO production was worse than the decline in total originations ... [Includes one data chart]

Starwood Property Trust announced this week that it agreed to purchase up to $600.0 million of non-qualified mortgages originated by Impac Mortgage Holdings in the next 12 months. The real estate investment trust also revealed that it has already acquired $900.0 million of non-QMs from Impac. “We are excited to formalize our partnership with Impac, which we believe will help scale our opportunity to provide non-QM loans to high-quality borrowers while sourcing ...

Originations of adjustable-rate mortgages declined in the first quarter of 2018 from the previous period, according to a new ranking and analysis by Inside Nonconforming Markets. ARM production slowed even with a rise in interest rates, and the products don’t appear to be popular with borrowers seeking purchase mortgages. An estimated $44.0 billion of ARMs were originated in the first three months of the year, down 20.0 percent from the fourth ... [Includes one data chart]

A $329.1 million non-agency mortgage-backed security issued by Flagstar Bank at the end of May could be a trendsetter. The deal was backed solely by investment-property mortgages eligible for sale to the government-sponsored enterprises. Moody’s Investors Service noted that pricing policies set by Fannie Mae and Freddie Mac will likely encourage similar deals. “We expect to see more private-label securities backed by GSE-eligible investment-property loans,” the rating service said ...

Fannie Mae and Freddie Mac holdings of nonprime mortgage assets continued to decline in the first quarter of 2018, although changes in how the two government-sponsored enterprises report this data make comparisons to earlier periods difficult. Fannie reported $3.42 billion fair market value of its nonprime MBS holdings as of the end of March, though this appears to result from moving some of these assets from its available-for-sale portfolio to ... [Includes one data chart]

Redwood Trust raised $194.0 million this week with the sale of convertible senior notes. Redwood said it will use the proceeds for various business and investment activities. The Capital Corps will launch a non-qualified mortgage program later this year. “The Capital Corps’ nontraditional prime borrowers come from the estimated $100.0 billion of homeowners seeking mortgages with loan-to-value ratios of less than 65.0 percent who are turned ... [Includes three briefs]

The credit risk profile of incoming FHA business has shifted significantly since the beginning of last year, according to a new Inside FHA/VA Lending analysis of Ginnie Mae mortgage-backed securities data. The biggest development has been the growth of loans with high debt-to-income ratios. There has also been a significant increase in the share of refinance loans that are cash-out transactions. FHA officials are well aware of these developments, having publicly mentioned them in testimony on Capitol Hill and at industry conferences. Officials have also raised concerns about FHA loans with downpayment assistance, although the MBS data don’t seem to indicate that there has been much change on that score. Among FHA loans endorsed in April and May, only 41.9 percent were at or below the benchmark DTI test for qualified mortgages, which is 43 percent. Through 2015 and 2016, well over half of new ... [Chart]

The issues behind the Department of Housing and Urban Development’s draft FHA condominium rules are “too complex” but lenders may expect a final rule in September, said HUD Secretary Ben Carson. Carson’s announcement of a release date for the long-anticipated condominium rules eases the mounting pressure on the secretary and the department to finalize the draft rules. On June 18, 54 senators and 120 members of the House signed a letter urging Carson to implement the changes in H.R. 3700, the Housing Opportunity Through Modernization Act, which would ease FHA requirements for financing condo purchases and refinancings. The bill was signed into law on July 29, 2016, and HUD published a proposed condo rule two months later. “We have been pushing it,” Carson said during a House committee oversight hearing this week. “It is a complex issue because when you are talking ...

Ginnie Mae will be working with FHA, VA and the U.S. Department of Agriculture to standardize origination policies and requirements for digital mortgages as it moves into the digital age of its secondary market business. Ginnie will coordinate with the agencies while developing technical standards for electronic closings, digital mortgage instruments and electronic vaults. All this work is part of the agency’s three-year strategy, Ginnie Mae 2020, to modernize its mortgage-backed securities program and platform, strengthen its counterparty risk management capability, and explore new ways to lower or eliminate risk from the system. As part of the modernization effort, Ginnie envisions a process that would allow it to accept digital promissory notes and other digitized loan files as eligible collateral for its MBS. It would encompass loan application through securitization. The plan calls for gradual implementation of ...

FHA purchase loan originations, which comprise the bulk of the agency’s business, declined during the first quarter of 2018 as mortgage interest rates continued to rise. Approximately $34.8 billion in FHA-insured purchase mortgages were made during the first three months, down 13.5 percent from the previous quarter. Purchase originations also fell 12.0 percent year-over-year, data showed. Purchase loans accounted for 71.1 percent of all FHA loans made to consumers in the first quarter. Fairway Independent Mortgage Corp. led all lenders with $880.8 million. This week, the benchmark 30-year fixed-rate mortgage rose by 1 basis point to 4.71 percent from last week, according to Bankrate’s weekly survey of large lenders. Four weeks ago, the rate was 4.64 percent. Over the past 52 weeks, the 30-year fixed has averaged 4.31 percent, Bankrate added. This week’s rate is 40 basis points higher than the ... [Charts]