Banks large and small varied their portfolio lending tactics in 2012, with some increasing first-lien originations for portfolio and others allowing runoff and even selling some of their holdings. Overall, bank and thrift first-lien portfolio holdings increased in 2012 compared with the previous year, with originations outpacing prepayments and sales. Banks and thrifts held $1.80 trillion in first-lien mortgages in portfolio at the end of 2012, up 2.3 percent from the end of 2011, according to ... [Includes one data chart]

Interest-only mortgage lending increased significantly in 2012, led by originators willing to portfolio the loans. Lenders expect the originations to remain strong even though the products were singled out in the Dodd-Frank Act and subsequent ability-to-repay rule from the Consumer Financial Protection Bureau. Some $22.94 billion in IOs were originated in 2012 by 15 lenders tracked by Inside Nonconforming Markets. The lenders’ IO production increased by 19.9 percent compared with 2011 ... [Includes one data chart]

Redwood Trust continues to pump out strong non-agency jumbo mortgage-backed securities with originations from a number of lenders. The real estate investment trust’s latest MBS features lower credit enhancement levels and low loan-to-value ratios. The $576.4 million Sequoia Mortgage Trust 2013-4 issued this week received AAA ratings from Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service, with credit enhancement of 6.25 percent on the top-rated tranche. The first non-agency jumbo MBS Redwood ...

Officials at EverBank Financial said demand for non-agency jumbo mortgages is strong from borrowers and investors. The bank has increased its jumbo originations and is in the process of issuing its first non-agency mortgage-backed security. “We see strong demand for the high-quality preferred jumbo product we originate,” Rob Clements, chairman and CEO of EverBank, said this month during an investor presentation. The bank originated $397.5 million in non-agency jumbos during the fourth quarter of 2012 ...

Members of Congress remain divided on the ability of the non-agency market to sufficiently take over some or all of the housing finance functions currently supported by the government-sponsored enterprises. While Republicans are in favor of a significant expansion of the non-agency market, Democrats are calling for some sort of government guaranty for the mortgage market. “Simply put, much of the private market has not been able to re-enter the market and compete with the federal government,” said ...

Nonprime industry veteran Jon Daurio said he has lined up “soft” commitments of roughly $100 million to start a new non-agency mortgage banking firm. Daurio told Inside Nonconforming Markets that the “softness” or “hardness” of the commitments “is dependent on the final terms that I eventually negotiate with a lead investor.” He said the funding will come from private-equity sources. Daurio, who left Kondaur Capital about two years ago, said he could not comment further at this time. He has been ...

Chimera Investment made progress toward resolving its non-agency mortgage-backed security-related accounting problems last week by filing its annual report – for 2011. The real estate investment trust had plans to issue non-agency MBS but those efforts have stalled as Chimera deals with its accounting issues. The annual report for 2011 included a restatement of Chimera’s financial condition as of the end of 2010 as well as restatements for consolidated statements of cash flows for 2009 and 2010 ...

Nationstar Mortgage and Walter Investment Management have focused most of their recent efforts on acquiring agency mortgages and increasing originations of such loans. The shift is due to increased competition for nonperforming mortgages along with the small amount of non-agency mortgages originated since 2008. In January, Walter acquired Fannie Mae mortgage servicing rights with an unpaid principal balance of $128.0 billion from Bank of America and Residential Capital. The servicer said it is handling ...

A federal judge this week tentatively dismissed most of the claims the National Credit Union Administration filed against Goldman Sachs regarding non-agency mortgage-backed securities. U.S. District Judge George Wu determined that the NCUA’s complaint was untimely unless the federal regulator could prove otherwise, according to an analysis by the Credit Union National Association. The Consumer Financial Protection Bureau published a preliminary list of counties exempt – in certain circumstances ... [Includes two briefs]

Two differing notions have emerged during a recent hearing in the House Financial Services Subcommittee on Housing and Insurance regarding the rapidly changing relationship between private mortgage insurance and the FHA single-family mortgage insurance program. One view is that FHA’s existing policies either ignore or violate basic regulatory principles and continue to crowd out private capital. Compared to state-regulated private MIs, the FHA has far less stringent standards and enforcement from a regulatory perspective has been disappointing. Proponents of this view say that ...