Originations that don’t meet standards for qualified mortgages have largely been held in bank portfolios in the months since the Consumer Financial Protection Bureau’s ability-to-repay rule took effect. However, nonbanks are also eyeing the products, and industry participants suggest that non-QMs will eventually be included in non-agency mortgage-backed securities. Laurence Platt, a partner at the law firm of K&L Gates, said a number of hedge funds and investment banks are ...

Legislation to reform the government-sponsored enterprises moved forward in the Senate last week, but industry analysts suggest that complete action by Congress to reform the housing finance system is unlikely until 2017 at the earliest. The Senate Committee on Banking, Housing and Urban Affairs approved S. 1217, the Housing Finance Reform and Taxpayer Protection Act, on a 13-9 vote. The bill pushed by the committee’s leaders, Sens. Tim Johnson, D-SD, and ...

The amount of subprime mortgages outstanding continues to decline, with servicers in the sector focusing on loan modifications. An estimated $380 billion of subprime mortgages were outstanding as of the end of the first quarter of 2014, according to a new ranking by Inside Nonconforming Markets. With few subprime originations in recent years, the amount of subprime mortgages outstanding fell by 17.2 percent compared with the first quarter of 2013 ... [Includes one data chart]

Rating services and due-diligence firms have plenty of time to analyze originators of jumbo mortgages headed to the securitization market, according to industry experts speaking this week at the Mortgage Bankers Association’s annual Secondary Market Conference in New York. All the rating services are putting greater emphasis on understanding originator business practices as part of evaluating jumbo mortgage-backed securities deals, said Sharif Mahdavian, an analyst at Standard & Poor’s ...

Among the largest servicers, Ocwen Financial Corp. and RoundPoint Mortgage had the highest overall delinquency rates during the first quarter. However, both firms specialize in “high touch” product.

Marc Savitt, who runs The Mortgage Center in West Virginia, said he recently worked on a mortgage that had 4.5 points of LLPAs. “It was a cash-out refi,” he noted.

Melvin Watt, director of the Federal Housing Finance Agency, revealed a new strategic plan for the government-sponsored enterprises last week that shifts away from the contraction goal set by previous FHFA Acting Director Ed DeMarco. “I don’t think it’s FHFA’s role to contract the footprint of Fannie Mae and Freddie Mac,” Watt said in remarks at the Brookings Institution. “Our role is to maintain an efficient credit market, and as private capital demonstrates that it will come into this market ...

Fannie Mae this week priced its second credit risk-sharing deal of 2014. The $1.6 billion note is the government-sponsored enterprise’s third and largest transaction under its Connecticut Avenue Securities series since the Federal Housing Finance Agency ordered both Fannie and Freddie Mac to shrink the GSEs’ role in the U.S. housing market last year. In its latest offering – Series 2014-C02 – Fannie said it included reference loans with original loan-to-value ratios of up to 97 percent. Previous C-deal offerings included reference loans with up to 80 percent original LTV ratios. “As the market moves from a refinance market to a purchase-money market, it is...

A New York state appeals court last week shut down Morgan Stanley’s attempt to undo a lower court finding that Allstate Insurance Co.’s lawsuit over $100 million in allegedly overrated MBS had been timely filed. A five-judge panel of the New York Supreme Court Appellate Division, First Department, was not swayed by Morgan Stanley’s argument that the trial judge had erred in holding that Allstate must have had actual notice of its claims of misrepresentation by the investment bank in order for the suit to be time-barred. Allstate sued...

ResCap Liquidating Trust filed lawsuits last week against a number of Residential Funding’s correspondent lenders regarding alleged breaches of representations and warranties on mortgages included in non-agency MBS. The lawsuits relate to business completed before RFC’s parent company Residential Capital entered bankruptcy. RLT, which was established to liquidate and distribute the assets of the debtors in the ResCap bankruptcy case, filed 12 similar lawsuits last week seeking buybacks from Bank of America and First Republic Bank (as successors of Old First Republic), PHH Mortgage, RBC Mortgage and a number of smaller lenders. The correspondent lenders sold more than $1.52 billion in mortgages to RFC, according to the lawsuits. RLT claims...