A boom in ABS backed by unsecured consumer loans requires closer scrutiny, according to analysts at Fitch Ratings. Marketplace lenders have boosted the issuance of such ABS in recent years, though the rating service warned that deal performance is difficult to predict. “Many firms in this space have legitimate value propositions and apparent technological advantages,” Fitch said. “However, they have yet to prove their underwriting merit.” Since September 2013, at least 31 ABS totaling $4.60 billion backed by consumer loans from marketplace lenders have been issued...
Fitch Ratings was the most active rating service in the sluggish non-agency MBS market through the first half of 2016, according to a new Inside MBS & ABS ranking. Standard & Poor’s was the top rating agency in the more active non-mortgage ABS market. Fitch rated just seven non-agency MBS issued during the first six months of the year, which totaled $4.74 billion in volume. While that equaled 30.9 percent of total non-agency MBS issuance for the period, many deals were private placements without ratings. Fitch’s share of rated issuance was 55.4 percent. DBRS ranked...[Includes two data tables]
The scratch-and-dent market for residential loans that have TRID-related errors is still alive and (mostly) well, even though originators have had almost a year to adjust to the new disclosure regime introduced by the Consumer Financial Protection Bureau. “This market will never be exhausted,” said Jeff Bode, chairman and CEO of Mid America Mortgage, Addison, TX, one of the most active buyers of mortgages that have errors related to consumer disclosures tied to the Truth in Lending Act and the Real Estate Settlement Procedures Act. Of course, it’s...
Ginnie Mae issuers that use subservicers need to have a proper subservicing oversight plan that encompasses all aspects of their Ginnie servicing portfolio to avoid servicing mishaps and liability. Participants in a recent Ginnie Mae summit in Washington, DC, pooled their collective experiences with subservicers to come up with a general oversight plan touching on every servicing function. These functions include escrow, collections, customer service, notifications, loss mitigation, loan modification, payoff, claims and maintenance. The decision to use a subservicer is...
Ginnie Mae has allowed hundreds of uninsured single-family loans to remain in its MBS pools for a year or longer because it does not have a process for lenders to remove such loans, according to an audit by the Department of Housing and Urban Development inspector general. The audit report said Ginnie allowed at least 345 uninsured single-family loans worth approximately $50 million to remain in its pools for more than one year. The IG reviewed a statistical sample of 85 of 363 pooled loans that had no insurance endorsement date and found 83 of them were uninsured more than one year after they were issued. Ginnie requires...
The Department of Veterans Affairs is drafting a new policy to address ongoing confusion about its Interest Rate Reduction Refinance Loan program and ease investor anxiety. The uncertainty among VA lenders stems from the treatment of IRRRLs under the VA’s interim final rule defining what constitutes a “qualified mortgage.” That rule took...
In general, it hasn’t been a pretty picture this year when it comes to the sale of “bulk” mortgage servicing rights, especially Ginnie Mae receivables. According to figures compiled by affiliate publication Inside Mortgage Trends, bulk MSR transfers (one barometer of sales) increased 20.6 percent in the second quarter compared to the first with roughly $42.9 billion of Fannie Mae, Freddie Mac and Ginnie product changing hands. The third quarter is expected...
Atlantic Bay Mortgage Group recently started offering its loan originators a unique option in terms of compensation: a share of the servicing fee. More than 90 percent of loan originator compensation plans are based on an LO’s volume, according to surveys conducted by Stratmor Group. Atlantic Bay’s Progressive Earnings Plan allows LOs to earn an annuity stream of income from mortgages when the lender retains the servicing. Rebecca Chaney, a senior executive vice president of legal affairs at Atlantic Bay, likened...
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