Rising interest rates may help boost the fortunes of real estate investment trusts that focus on investing in residential MBS by increasing the value of their portfolios. Mortgage REITs had a rough year in 2013, as their stock prices declined an average 10 percent while the Standard & Poor’s Index rose 29 percent. It was thought that “tapering” by the Federal Reserve would cause rates to rise – which they did for a short while – but now the reverse has happened, thanks in large part to recent weak employment numbers. Late this week, the yield on the 10-year Treasury was...

Freddie Mac last week announced a $1 billion offering of its Structured Agency Credit Risk debt notes, the government-sponsored enterprise’s first risk-sharing transaction of 2014 and its third such deal since the company rolled out the STACR series last year. The deal is backed by a pool of $32.4 billion 30-year fixed-rate mortgages acquired by Freddie in the second quarter of 2013. More than 65 investors participated in Freddie’s latest STACR deal, and more than 20 of those investors were newcomers, according to Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie. “We’ve introduced...

The nonprofit Wall Street advocacy group Better Markets filed a lawsuit against the Justice Department this week challenging DOJ’s authority to “unilaterally enter into the unprecedented and historic” $13 billion deal with JPMorgan Chase last fall. In November, DOJ announced the largest legal settlement on record with JPMorgan, which acknowledged making misrepresentations about billions of dollars in MBS sold to investors prior to Jan. 1, 2009. The settlement does not release bank employees from civil charges, nor does it release JPMorgan or any other individuals from criminal prosecution. However, in its complaint filed in the U.S. District Court for the District of Columbia, Better Markets claimed...

For an industry that’s looking at a 30 percent decline in originations, we’re seeing a great deal of SEC 13-d filings by investment funds that are upping their stakes in such players as MGIC, Radian, Ocwen, Walter, EverBank and the like.

The jumbo mortgage-backed security market was dormant for over two months, but within the past 14 days, Credit Suisse issued a $287.42 million deal and JPMorgan Chase started shopping a $356.39 million issuance. That’s not to say the jumbo MBS market is back to full strength. The two deals have some unique characteristics, and banks still maintain their dominance over nonbank aggregators of jumbos. Officials at American Capital Mortgage Investment said jumbo MBS issuance has plenty of potential ...

Certain nonbank servicers are getting “too big, too fast,” Ben Lawsky, superintendent of the New York Department of Financial Services, said in a speech this week. The remarks came after the NYDFS halted the transfer of mortgage servicing rights with an unpaid principal balance from Wells Fargo to Ocwen Financial. Lawsky said state regulators and servicers need to make sure that transfers of servicing to nonbanks don’t put borrowers at risk. He raised particular concerns about staffing levels at nonbanks, with ...

Ocwen Financial announced last week that its purchase of mortgage servicing rights from Wells Fargo is on “indefinite hold” due to a request from the New York Department of Financial Services. While some have suggested that the deal for servicing on mortgages with an unpaid principal balance of $39.2 billion won’t be completed, officials at nonbanks note that delays on servicing transfers due to third parties are common. In recent years, the time required to fulfill contractual conditions from initial closing ...

One of the biggest challenges for nonbanks that want to originate jumbos is finding capital to fund the operations. Two Harbors Investment appears to have found a unique source of capital for non-agency originations: a government-sponsored enterprise. In December, TH Insurance Holdings, a wholly owned subsidiary of Two Harbors, was granted membership in the Federal Home Loan Bank of Des Moines. Officials at Two Harbors said the company appears to be the first real estate investment trust to receive ...

Two real estate investment trusts with jumbo mortgage correspondent and conduit operations have scaled back their activity due to strong competition from banks. “The majority of today’s jumbo mortgage activity is being driven by banks originating or acquiring loans for their balance sheet,” said Stanford Kurland, chairman and CEO of PennyMac Mortgage Investment Trust. PennyMac had ramped up its jumbo activity in the second quarter of 2013 with $107 million in fundings. In the third quarter of 2013 ...

FHA-approved lenders should make sure they leave no stones unturned to ensure that loans submitted for endorsement meet FHA’s strict underwriting criteria. It is the responsibility of direct endorsement lenders to scrutinize every loan for compliance with FHA lending guidelines, including income verification, credit analysis and property appraisals. JPMorgan Chase admitted it failed to do all of the above. Last week, the bank acknowledged it violated the False Claims Act and agreed to pay $614 million in cash to settle government charges it improperly certified poorly underwritten loans for FHA and VA guarantees. The defective loans later ...