Warehouse lending executives say they are seeing their nonbank clients earn less money this summer, but noted that profits are still strong by historical levels.

Commercial banks are earning a ton of dough on residential servicing fees, but nonbanks are seeing an erosion in profits.

With improving loan quality and mortgage repurchase reviews declining, due diligence firms have been under stress the past year.

Some warehouse lenders are offering significant concessions and price breaks to keep their nonbank customers happy.

HUD eliminated the standard 30-year, fixed-rate HECM in April because the default rate on the loans was about four times that of a non-HECM regular mortgage.

Paul Rozo, CEO of Paramount Residential Mortgage Group, said his company’s application volume is down roughly 20 percent since rates jumped a few months back, but some of his competitors are seeing declines of up to 50 percent.

FHFA blames part of the GSEs’ significant losses on subprime MBS, which JPMorgan and 16 other financial institutions sold to Fannie and Freddie.

FHFA has been analyzing approaches for reducing Fannie Mae and Freddie Mac loan limits across the country, "and any such change would be announced with adequate advance notice for implementation on January 1, 2014" the regulator said.

Thomas Hoenig, vice chairman of the FDIC, said he is particularly interested in exploring the downpayment issue further. Securities investors are also likely to push for downpayment requirements for QRMs.

The collateral backing the new Redwood bond is exclusively 30-year fixed-rate loans without interest-only terms.