A number of underwriting characteristics for jumbo mortgages included in non-agency mortgage-backed securities shifted in the first quarter of 2014, according to an analysis by Inside Nonconforming Markets. And the decline in jumbo MBS activity during the quarter has prompted industry analysts to significantly reduce projections for issuance the rest of this year. Average credit scores declined, debt-to-income ratios increased and ... [Includes one data chart]

Issuers of jumbo mortgage-backed securities have been cagey about identifying the smaller lenders that have contributed mortgages to jumbo MBS. However, Inside Nonconforming Markets has uncovered 93 lenders that participated in deals issued in the first quarter of 2014. The lenders whose loans were included in jumbo MBS in the first quarter were largely small firms that don’t attract much attention. Most of the lenders participating in jumbo MBS ... [Includes two data charts]

A number of lenders have loosened their underwriting standards on non-agency products in recent months in an effort to boost originations as demand for refinances plummets. One of the boldest moves was taken by TD Bank, which this week announced a portfolio loan that has a downpayment requirement as low as 3 percent. The loan is part of the lender’s Right Step mortgage program which features low downpayment loans without private mortgage insurance ...

Officials at Hatteras Financial revealed this week that the real estate investment trust plans to purchase jumbo adjustable-rate mortgages from lenders, branching out from a focus on investing in agency mortgage-backed securities. Hatteras recently established a flow program to purchase agency ARMs from 10 lenders. Michael Hough, the REIT’s CEO, said the program offers lenders an alternative to selling ARMs to the government-sponsored enterprises and ...

Kroll Bond Rating Agency, one of the most commonly used rating services for jumbo mortgage-backed securities in recent years, released its criteria this week for jumbo MBS that include mortgages subject to the Consumer Financial Protection Bureau’s ability to repay rule. The criteria from KBRA is similar to criteria from the other rating services, with higher credit enhancement requirements for certain loans that don’t meet the CFPB’s standards for qualified mortgages ...

Industry participants are divided on whether legislation under consideration in Congress to reform the government-sponsored enterprises will help encourage an increase in private capital in the mortgage market. In a speech this week, Shaun Donovan, the secretary of the Department of Housing and Urban Development, was adamant that the GSE reform bill from Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, will encourage non-agency investors to return to the mortgage market ...

It’s now or never for Congress to pass legislation to reform the government-sponsored enterprises, according to Shaun Donovan, secretary of the Department of Housing and Urban Development. Industry analysts predict that Congress is highly unlikely to finish work on GSE reform this year, extending uncertainty in the mortgage market. The Senate Committee on Banking, Housing, and Urban Affairs is scheduled to markup GSE reform legislation next week ...

United Wholesale Mortgage is now offering jumbos on a wholesale basis with debt-to-income ratios as high as 49 percent allowed. The loans won’t receive protections for qualified mortgages as the DTI ratio limit for jumbo QMs is 43 percent. Loan amounts on United Wholesale’s Big & Easy Plus loan go up to $1.5 million. The lender said it will allow loan-to-value ratios on the mortgage of up to 75 percent while a borrower will need ... [Includes four briefs]

Better performance on newer vintage FHA loans helped drive down the agency’s overall portfolio delinquency rate and fueled the decline in 30-, 60- and 90-day delinquencies during the first quarter of 2014, according to Inside FHA Lending’s analysis of FHA servicing data. Total delinquencies during the first quarter improved to 12.88 percent as of March 31 from 15.23 percent as of Dec. 31, 2013. The 30-60 day delinquency rate also fell to 5.41 percent from 7.14 percent, while the serious delinquencies (90 days or more past due) dropped modestly to 7.46 percent from 8.08 percent over the same period. The overall foreclosure rate, however, increased slightly to 2.36 percent during the first three months of 2014 from 2.30 percent at the end of 2013. FHA servicers ended the first quarter with ... [1 chart]

FHA originations dropped a hefty 28.3 percent in February from January and 59.1 percent from the same period a year ago, according to Inside FHA Lending’s analysis of agency data. FHA lenders reported $8.2 billion in new forward mortgages for February, down from $11.4 billion for January and $19.5 billion from a year ago. Approximately 73.9 percent of the loans were purchase mortgages. Industry observers attributed the continuing decline in FHA production to multiple and costly insurance premium hikes, revocation of the borrower’s right to cancel premium payments during the term of the loan and rising interest rates. For the week ending April 18, the interest rate for a 30-year fixed-rate mortgage with FHA insurance increased to 4.20 percent from 4.14 percent, according to the Mortgage Bankers Association weekly application survey. FHA officials said the policy changes were necessary to ... [1 chart]