The implementation date for lower GSE loan limits is being shifted to the end of the first quarter, or so we hear. Meanwhile, Citadel enters the market for stand-alone seconds.

A reduction in agency loan limits would make a small portion of today’s mortgage market ineligible for the government-sponsored enterprises, according to a new analysis by Inside Nonconforming Markets. However, industry participants suggest that lower loan limits will help increase participation in the non-agency market and test whether the sector can take even more share from Fannie Mae and Freddie Mac. Mortgages with loan balances greater than $417,000 accounted for ... [Includes one data chart]

PennyMac Corp. wanted to test the market for non-agency jumbo mortgage-backed securities but it wasn’t generating enough collateral through its conduit program and turned to a bulk purchase to get a critical mass. The $550.46 million PMT Loan Trust 2013-J1 is set to receive AAA ratings with credit enhancement of 7.75 percent for the top-rated tranche. Some 70.7 percent of the mortgages to be included in the deal were acquired in bulk from Bank of America, which aggregated the loans from ...

Shellpoint Partners is preparing to issue a $308.64 million non-agency jumbo mortgage-backed security and officials at the firm are hoping that interest rates stay calm at least until the issuance is completed. Interest rates spiked after Shellpoint offered its first jumbo MBS in June, a $261.58 million deal, prompting the company to voluntarily provide credit enhancement of 20.0 percent on the security – double what was required by the rating services – in an effort to attract investors. The latest deal features ...

A number of companies are preparing to enter the non-agency jumbo mortgage-backed security market, bolstered by expected decreases to agency loan limits and eventual resolution of the conservatorships of the government-sponsored enterprises. David Akre, a managing director at Five Oaks Investment, said licensing for the real estate investment trust’s jumbo operations is nearly complete and the establishment of warehouse funding is 90 percent complete. David Carroll, CEO of Five Oaks, said increased competition ...

Lenders have started to loosen their underwriting standards for jumbo mortgages in an effort to increase originations for borrowers who have performed exceptionally well in recent years. Loan-to-value ratio requirements in particular have loosened, allowing for lower downpayments or increased use of second liens. After the non-agency mortgage-backed security market collapsed in 2008, combined LTV ratios of 70 percent were common for jumbos as lenders looked to prevent pricey foreclosures on ...

An official at the Office of the Comptroller of the Currency warned that non-agency jumbos with interest rates lower than comparable agency mortgages are a sign that banks are chasing yield. Darrin Benhart, deputy comptroller for credit and market risk, said banks are taking on more interest rate risk and credit risk to maximize returns. “We are beginning to see signs of the classic cyclicality in banking where traditional lagging indicators are improving so bankers start to layer risk back into ...

Higher-priced mortgages accounted for 3.0 percent of the number of mortgages originated in 2012, according to a Federal Reserve analysis of Home Mortgage Disclosure Act Data released this week. The loans had a 3.7 percent share of HMDA originations last year and a 26.0 percent share in 2006. The Consumer Financial Protection Bureau last week finalized a number of tweaks to pending mortgage rules. Adjustments were made to the servicing rule, loan originator compensation rule, definitions for ... [Includes three briefs]

The Office of Management and Budget has cleared a proposed rule setting qualified mortgage standards for FHA-insured single-family mortgages for issuance in the coming weeks. The OMB signed off on the proposed standards on Sept. 12 and the Department of Housing and Urban Development has a few more refinements to perform before publishing the proposal for public comment. HUD declined to discuss the contents of the proposed standards or indicate a timetable for a final QM rule. Industry participants, on the other hand, said they would be surprised if ...

The end of the fiscal year is drawing near, which means in a couple of weeks the FHA again will be in the hot seat as Congress, mortgage industry participants and consumer groups pore over the results of the latest fiscal year audit of the FHA’s Mutual Mortgage Insurance Fund. This time, stakeholders might find some encouraging data, observers say. The findings of the FY 2012 actuarial review conducted by Integrated Financial Engineering, Inc. brought a lot of heat on the FHA and the Department of Housing and Urban Development, reigniting calls for FHA reforms in the House and the Senate. Reform bills are currently ...