The interest rate environment is ripe for jumbo borrowers, but industry participants warn that underwriting standards for these loans are at least as stringent as standards for agency loans and much different than five years ago when many jumbo borrowers might have last bought a home or refinanced. “Be prepared to expose everything to examination,” said Bill Reiter, a senior loan officer at PNC Mortgage, speaking at a webinar last week hosted by Realtor Magazine. He noted that income, assets, tax returns and ...

Federal regulators this week proposed requiring a physical inspection of a property’s interior by a qualified appraiser for originations of “higher-risk mortgages,” the latest proxy for subprime loans. The requirement was included in the Dodd-Frank Act and could prompt more than 50,000 new appraisals per year. The Consumer Financial Protection Bureau estimated that full-interior appraisals are conducted as part of current practice in higher-risk mortgage originations on 95.0 percent of purchase-money transactions ...

Chimera Investment announced last week that it needs to restate quarterly earnings and other reports beginning with the third quarter of 2008 due to accounting on its portfolio of non-agency mortgage-backed securities. The real estate investment trust has been grappling with the issue for a year and has not issued earnings since the third quarter of 2011. While still completing an evaluation of the restatement, Chimera said the change will result in lower income along with a more than doubling of ...

Wells Fargo recently determined that it will refinance up to 40,000 borrowers as part of the recent $25.0 billion national servicing settlement. The bank had previously estimated that it would refi 20,000 loans under the settlement, which targets portfolio loans with negative equity. “The expectations ... exceed the amounts that would result from just meeting our minimum commitments under the refinance program due to the significantly higher than expected response we have received from our customers in ...

Home Affordable Modification Program servicers are increasingly offering principal reduction loan modifications to non-agency borrowers, according to the Treasury Department. The increase comes after the Treasury tripled the incentives that can be paid to investors beginning in March, though principal reduction mods have yet to increase significantly due to the change. In recent months, about 70.0 percent of eligible non-agency HAMP borrowers received some form of principal reduction ... [Includes one chart]

It has been another busy week in the turbulent world of litigation over non-agency mortgage-backed securities. The Federal Deposit Insurance Corp. filed lawsuits regarding non-agency MBS, Wells Fargo agreed to settle non-agency MBS-related charges with the Securities and Exchange Commission and the Department of Justice and the SEC dropped its non-agency investigation into actions by Goldman Sachs. The FDIC lawsuits against 15 issuers and underwriters relate to $1.46 billion in AAA tranches of non-agency MBS ...

Standard & Poor’s last week updated its criteria for ratings on non-agency mortgage-backed securities with collateral originated before 2009. The standards update criteria for credit, cash flows and rating stability and apply immediately. The rating service said the changes will result in more downgrades than upgrades. This week, S&P placed 16,872 ratings from 3,364 securities with a par amount of $253.95 billion on CreditWatch. About 70.0 percent of the ratings are on watch for potential downgrades ... [Includes three briefs]

Ginnie Mae is reportedly considering increasing its minimum net worth requirement in response to an onslaught of requests by smaller banks for new issuer approvals. Quoting agency officials, reports indicate that Ginnie Mae is being swamped with applications from smaller mortgage lenders seeking authority to issue agency-backed mortgage backed securities. With large aggregators like Bank of America, MetLife and Ally Financial opting out of the correspondent and reverse mortgage businesses, many smaller lenders lost access to the Ginnie Mae program. However, many of these lenders are stepping into the breach on their own or with partners to ...

Chase Home Finance knocked Bank of America off its second-place perch and joined top-ranked Wells Fargo as the dominant Ginnie Mae mortgage-backed securities issuers in 2012, according to the Inside Mortgage Finance Database. Together, Wells Fargo and Chase accounted for 53.3 percent of the $100.6 billion Ginnie Mae MBS market in the second quarter of 2012, which grew 24.4 percent from the first quarter and a whopping 42.2 percent from the same period a year ago. Wells led with $42.6 billion and a commanding 42.2 percent piece of the Ginnie Mae MBS market, thanks to ... ( 2 charts)

The Department of Housing and Urban Development is looking into SunTrust Bank’s FHA-related lending practices, the bank reported in its latest regulatory filing. SunTrust, Atlanta’s largest bank, disclosed the investigation in its second-quarter filing with the Securities and Exchange Commission but provided no additional details. HUD notified the bank of the probe on April 25. SunTrust said it is “cooperating with the investigation,” which is being conducted by HUD’s Office of the Inspector General. The bank did not respond to a request for comment and the IG office neither ...