Ginnie Mae this week warned nine VA lenders suspected of engaging in loan churning to each develop a plan to slow the rapid pace of prepayments they have triggered in the agency’s securitized loan pools. According to Ginnie, the issuers were directed individually to deliver correction action plans containing measures that could be deployed immediately to bring prepayment speeds in line with market peers. The agency told issuers they would be barred from multi-issuer pools if they do not come up with a plan. Participation would be allowed only in the agency’s custom pools. The latest action builds off the Ginnie Mae/VA Loan Churn Task Force, which has been working since September to resolve the churning problem. “We have an obligation to take necessary measures to prevent the lending practices of a few from impairing the performance of our multi-issuer securities, and thus raising the ... [ Chart ]
The Department of Veterans Affairs will require lenders to provide early disclosures to veterans seeking to refinance into a VA Interest Rate Reduction Refinance Loan. The new policy aims to ensure that the VA streamline refi loan they sought would actually lower their monthly mortgage payments and is not just a scam for lenders to charge higher fees. Loan churning, or serial refinancing, is at the root of the VA policy change. Churning refers to multiple refinancing of an unseasoned mortgage loan within a very short time, often within six months of origination. Serial refinancing may add more payments and interest to the new loan, prolonging debt repayment, and can strip equity. It also potentially raises the risk of default by the borrower. In addition, the risk of prepayment could affect pricing of Ginnie Mae securities, which could cause lenders to charge higher rates on VA loans to make up for the ...
FHA delinquencies rose sharply in Puerto Rico following the devastation brought by hurricanes Maria and Irma last year. At the end of 2017, 28.8 percent of FHA mortgages on the island were at some stage of delinquency, including 15.8 percent that have fallen 90 days behind on their mortgage payments. Deutsche Bank Securities analysts believe the spike in delinquency rates overall is “a short-term phenomenon.” They noted that FHA, Fannie Mae and Freddie Mac have declared temporary moratoria on evictions and foreclosures in Puerto Rico and other hurricane-ravaged regions. Issuer exposures in devastated areas remain unclear and Ginnie Mae has not updated its MBS hurricane exposure data since October last year. In the initial disclosure, the agency reported 9.7 percent (1,066,028 loans) of its total MBS portfolio were impacted by Harvey, Irma and Maria. The affected loans’ unpaid principal ...
The jumbo mortgage-backed security market received a boost this week as a new issuer stepped into the ring. Teachers Insurance and Annuity Association of America is preparing to issue a deal this month, according to presale reports. TIAA, a multi-faceted enterprise with more than $1 trillion in managed assets, acquired EverBank in 2017 and rebranded the operations as TIAA, FSB. The bank is set to issue a $381.54 million jumbo MBS using EverBank’s MBS shelf registration ...
The delinquency rate on non-qualified mortgages in mortgage-backed securities remains low, as issuers are largely avoiding risk-layering. As of the end of 2017, the average current-to-delinquent roll rate for non-QMs in MBS seasoned for one year was 0.4 percent, according to Bank of America Merrill Lynch. Only three non-QM loans tracked by CoreLogic have liquidated so far, and none realized a loss. Non-QM MBS have thicker credit enhancement than ... [Includes one data chart]
A new expanded-prime mortgage-backed security from Redwood Trust is nearly 40.0 percent larger than the prior deal from the real estate investment trust. Redwood is set to issue the $444.29 million Sequoia Mortgage Trust 2018-CH-1, following a similar $320.30 million deal in November and a $307.64 million deal in September, the first from Redwood to focus on loans from the firm’s Choice program. Choice mortgages have slightly wider underwriting standards than ...
Flagstar Bank is set to issue its third jumbo mortgage-backed security in as many quarters, according to presale reports published this week. The bank plans to issue a $487.66 million deal, which follows a $576.44 million deal from October and a $443.79 million issuance in July. Underwriting characteristics across the three MBS are largely similar. The new issuance includes mortgages with an average credit score of 761, an average combined loan-to-value ratio of 67.4 percent and ...
A bill introduced in the Senate last week with some bipartisan support would allow real estate investment trusts to regain access to funding from Federal Home Loan Banks. The bill would overturn a 2016 rule from the Federal Housing Finance Agency that restricted captive insurance companies from being FHLBank members. Before the FHFA rule took effect, a number of REITs established captive insurers to gain access to FHLBank advances, which come with better terms than ...
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