FHFA Director Mel Watt may have something to say soon on the topic of Fannie Mae/Freddie Mac loan level price adjustments, commonly known as LLPAs. As for the GSE 'Scorecard'...

The jumbo mortgage-backed security market has yet to recover from the spike in interest rates seen nearly a year ago. Investor demand for the securities remains weak, even with the pristine performance of jumbo MBS issued since 2010. Four deals were priced in the first quarter of 2014 for a total of $1.29 billion in issuance, according to Inside Nonconforming Markets. While that was a 56.0 percent increase in issuance compared with ... [Includes two data charts]

Demand from borrowers for loans that aren’t “qualified mortgages” has prompted many banks to continue to offer non-QMs such as interest-only mortgages or non-agency mortgages with debt-to-income ratios above 43 percent. “We’ve pretty much made the decision that the risk of there being any kind of a kickback from an individual – if we underwrite that thing and document ourselves and do the things we need to do – is a risk worth taking,” said Derek Williams ...

Ethos Lending was looking for an investment from Fenway Summer and ended up merging with Fenway Summer’s mortgage unit. The combined operation plans to start originating agency mortgages in the second quarter of this year and offer prime non-qualified mortgages via the wholesale channel by the end of 2014. Raj Date, the founder of Fenway Summer and the former deputy director of the Consumer Financial Protection Bureau, will serve as chairman of ...

A number of lenders increased their originations of interest-only mortgages in 2013, according to a new ranking and analysis by Inside Nonconforming Markets. IOs with loan applications of Jan. 10 and beyond will subject lenders to greater liabilities due to the Consumer Financial Protection Bureau’s ability-to-repay rule, but many lenders note that they will continue to offer IOs to well-qualified borrowers. Lenders reported ... [Includes one data chart]

Undisclosed third parties rejected a small portion of Ocwen Financial’s planned acquisition of mortgage servicing rights from OneWest Bank, according to a report this week from Fitch Ratings. The lack of approval on Ocwen’s MSR purchase was just the latest hurdle faced by nonbank servicers with plans to grow. Last year, Ocwen announced it planned to acquire a significant portion of MSRs from IndyMac Mortgage Services, a division of OneWest. Fitch said the acquisition ...

A number of real estate investment trusts and other nonbanks plan to invest in nonprime assets other than vintage non-agency mortgage-backed securities as part of an effort to take credit risk as opposed to interest rate risk. The plans include investments in credit-sensitive loans, seller financing for lenders that work with nonprime borrowers and, potentially, even direct nonprime lending. A year ago, Two Harbors Investment saw an opportunity in what it calls credit-sensitive loans ...

Variations on the treatment of extraordinary expenses in jumbo mortgage-backed securities have prompted the rating services to alert investors. A warning on this issue last week by Fitch Ratings follows similar concerns raised by other rating services. Extraordinary expenses in non-agency MBS can be caused by legal claims against the trust, costs associated with a third-party reviews to identify representation-and-warranty breaches, and costs related arbitration, among other issues ...

CORRECTION: A March 14, 2014, story in Inside Nonconforming Markets with the headline “Credit Suisse Taps New Penn for Another Jumbo MBS” stated that according to Standard & Poor’s, due-diligence firms found that New Penn Financial allowed exceptions to its underwriting guidelines for some mortgages included in CSMC Trust 2014-SAF1. In fact, the underwriting exceptions were allowed by Credit Suisse on mortgages from lenders not identified by S&P ... [Includes three briefs]

FHA Commissioner Carol Galante quashed any industry hope of seeing mortgage insurance premiums lowered at this time, saying that while the Mutual Mortgage Insurance Fund has shown some improvement, full recovery is still far off. In remarks during the Mortgage Bankers Association’s National Advocacy Conference this week, Galante also defended a provision in the president’s FY 2015 budget proposal seeking statutory authority for the FHA to collect an administrative fee from lenders to help fund quality control improvements. Both issues are high up on the MBA’s lobbying priorities as members gathered in Washington, DC, this week to meet with lawmakers and their staff to discuss FHA and other key industry concerns. Galante said the Department of Housing and Urban Development is currently focused on strengthening the MMI Fund and expanding access to credit for all qualified borrowers. The FHA raised pricing five times from ...