In late December, issuers of new non-agency MBS will become subject to new risk-retention requirements. It’s not clear whether anyone will notice. The vast majority of loans securitized in jumbo MBS over the past few years meet the qualified-mortgage standard. And because federal regulators opted to synchronize the QM standard with the separate qualified residential-mortgage standard, jumbo MBS backed entirely by QMs will be exempt from the 5 percent risk-retention requirement. When the final rule came out, Redwood Trust backed...
Beach Point Capital Management early next week will issue a roughly $75 million MBS collateralized by nonprime mortgages that were originated over the past year by Citadel Loan Servicing, Irvine, CA, according to officials briefed on the transaction. As Inside MBS & ABS went to press this week, certain details on the security were beginning to leak out, including the fact that Nomura Securities “is running the book” on the deal, said one source. Wells Fargo will be the custodian and backup servicer. The privately held Citadel will continue to service the underlying loans. The yield on the private-place bond is...
Banks and nonbanks, in general, are doing a better job of servicing “challenged” mortgages and MBS these days, according to a new report from Fitch Ratings. However, concerns remain. Fitch noted that residential servicing costs “continue to rise in concert with increased compliance focus and enhanced regulatory scrutiny.” Moreover, “Higher regulatory capital requirements may become a factor too, especially for smaller servicers.” Over the past two years, Fannie Mae, Freddie Mac and Ginnie Mae have all ushered...
A new research paper aims to settle the debate about whether loose underwriting or the downturn in home prices was the biggest factor in the poor performance of subprime mortgages originated before the financial crisis. There was a sharp divergence in the performance of subprime mortgages originated in 2003 and those originated in 2006 and 2007. Some have suggested that the subprime mortgages originated just before the crash defaulted at higher rates largely because underwriting standards on the loans deteriorated, while others claim the main issue was that house price declines left the borrowers with negative equity. A paper by Christopher Palmer, a professor of real estate at the University of California at Berkeley’s Haas School of Business, claims...
Citadel Loan Servicing, Irvine, CA, one of the most active nonprime residential lenders in the market, is on track to fund a company-record $400 million worth of mortgages this year, more than double what it produced last year. In a brief interview with Inside Nonconforming Markets this week, company founder and CEO Dan Perl said his goal for next year is $1 billion – all in loans that do not meet the qualified-mortgage standard. If the privately held Citadel – Perl is the chief shareholder – can hit...
The market is there – in nonprime and non-QM lending – the question is figuring out how to do it successfully, according to experts on a panel at the recent annual convention of the Mortgage Bankers Association. Most of the lending that’s fallen outside the qualified-mortgage standard has been to high net-worth individuals, said Matthew Nichols, CEO at Deephaven Mortgage. Most of them have millions in the bank and they’re being served by their bankers, he said, but there are a lot more potential non-QM borrowers who don’t have millions in the bank. Nichols said...
The overall delinquency rates for VA and FHA mortgage loans rose in the third quarter of 2015 due to increases in both 30-60 and 60-90 day delinquencies, according to agency data. Approximately 96.5 percent of VA loans in Ginnie Mae mortgage-backed securities remained current in the third quarter, down slightly from the second quarter, suggesting more borrowers have become past due during the period. VA 30-day and 60-day delinquencies rose to 2.44 percent and 0.23 percent, respectively, while the percentage of VA loans 90 days or more past due fell to 0.84 percent. The remaining principal balance of securitized VA loans was $426.8 billion, up 5.1 percent from the prior quarter. Meanwhile, the share of FHA loans in Ginnie Mae pools that were current dropped to 93.8 percent in the third quarter from 94.2 percent in the prior quarter. FHA 30-day delinquencies increased to ... [ 1 chart ]
The unpaid principal balance on VA loans securitized in 3Q15 Ginnie Mae mortgage-backed securities totaled $426.9 billion, up 5.1 percent from the previous quarter and 17.3 percent more year-over-year. Wells Fargo serviced $114.4 billion of VA collateral at Sept. 30, 2.0 percent up from the prior quarter. It was good enough for a commanding 26.8 percent of the market. The only other megabank among the top five servicers in this segment was fifth-place Chase Home Finance, which closed the quarter with $16.8 billion and a 3.9 percent market share. It saw portfolio declines on both quarterly and year-over-year bases. USAA Federal Savings Bank, in third place, accounted for $24.1 billion, or 5.6 percent of the VA-backed MBS servicing market. Nonbanks PennyMac, in second place, and fourth-ranked Freedom Mortgage combined for 11.0 percent of the ... [ 1 chart ]
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