The absence of a ready secondary market for mortgages that don’t fit into the safe harbor or rebuttable presumption categories of a qualified mortgage under the Consumer Financial Protection Bureau’s ability-to-repay rule is discouraging mortgage lenders of all sizes from originating non-QMs – at least in the initial phase of the rule’s implementation. “A common question we’ve received … is whether we plan to write non-QM loans,” William Emerson, CEO of Quicken Loans, said before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit during a hearing this week on the effect of the CFPB’s new rule. “I can tell you categorically that Quicken Loans, like the overwhelming majority of lenders, will not lend outside the boundaries of QM. “In fact, even if we wanted to, we wouldn’t be able...
The long-anticipated final implementation of the so-called Volcker rule this spring will have a limited impact on securitized products, according to a recent report by Barclays. A requirement of the Dodd-Frank Act to prohibit banking entities from engaging in proprietary trading and making investments with private-equity funds and hedge funds, the Volcker rule was finalized by five federal regulators last month and becomes effective April 1, 2014. Banks should expect...
Ginnie Mae is helping Japan and Russia as they shift from antiquated secondary mortgage market structures to ones modeled after the agency’s successful securities program. On Jan. 9, Ginnie Mae President Ted Tozer and President Shinya Shishido of the Japan Housing Finance Agency signed a joint memorandum of understanding to exchange information and facilitate discussions regarding Japan’s plan to adopt a Ginnie Mae-style securitization program. Japanese Prime Minister Shinzo Abe has directed...
Citadel Loan Servicing, arguably the largest active originator of nonprime mortgages, plans to move forward with its first non-agency MBS by the middle of this year. Company founder and CEO Dan Perl told Inside MBS & ABS that the firm has already picked a custodian as well as what he calls a “watchdog” to review the collateral. The watchdog in question appears to be Clayton Holdings, said one source, but officials at both firms would not discuss the matter. Perl declined...
Banks with the capacity to hold jumbo mortgages in portfolio were major contributors to jumbo mortgage-backed securities issued in 2013, according to a new ranking and analysis by Inside Nonconforming Markets. Fixed-rate mortgages also dominated the population of loans bundled into jumbo MBS last year. First Republic Bank was the biggest originator of securitized jumbos in 2013, with a market share more than double the next closest lender. Some $2.16 billion in originations from [Includes two data charts]
Issuance of jumbo mortgage-backed securities has ground to a halt recently but that hasn’t stopped lenders that were participating in the jumbo MBS market from originating loans. Instead, some have shifted their output of jumbos to whole-loan sales. PrimeLending, W.J. Bradley Mortgage and other jumbo lenders whose loans helped fuel the surge in jumbo MBS issuance in the first half of 2013 have shifted to selling whole loans directly to investors, often banks. Scott Eggen, director of capital markets at PrimeLending ...
While many major banks plan to offer mortgages that don’t meet qualified mortgage requirements, the originations will largely be limited to interest-only mortgages for well-heeled borrowers. A handful of smaller players have plans to offer a different sort of non-QM, aimed at borrowers with higher debt-to-income ratios or via hybrid adjustable-rate mortgages. Among the firms targeting the non-QM space beyond IOs is Fenway Summer, headed by Raj Date, the former deputy director at the CFPB ...
A significant number of lenders report that the liability posed by loans that don’t meet qualified-mortgage standards is so large that they won’t offer non-QMs. Others would like to offer non-QMs but can’t at the moment because they don’t have portfolios and a secondary market for non-QMs has yet to develop, due at least partly to liability concerns. “The risks of liability and protracted litigation are greatest for these loans where there is no presumption of compliance and there is a strong ...
The Home Affordable Modification Program’s second-lien loss-mitigation program has seen increased activity in recent months and is poised for further growth as agency mortgages were recently added to the program. About $2.5 billion in outstanding second-lien balances have been forgiven via the program. Some 123,714 HAMP Second-Lien Modification Program mods were active as of the end of November, according to the Treasury Department. Through 11 months in 2013, 21,000 2MP mods had been started ...
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