Lenders continue to originate non-agency jumbo mortgages, but few are likely to be securitized in the coming months due to more favorable economics for banks retaining the loans in portfolio. Longer term, many investors suggest they won’t return to the non-agency mortgage-backed security market until issuers standardize their offerings. The ABS East conference sponsored by Information Management Network last week in Miami presented a tale of two markets: jumbo MBS and everything else ...

The jumbo mortgage-backed security market showed some signs of life this week as Shellpoint Partners offered its second deal of the year, a restructured and downsized version of the transaction targeted for late September. The $250.85 million deal is set to receive a triple-A rating with credit enhancement of 7.10 percent on the top-rated tranche, according to Kroll Bond Rating Agency. The $308.64 million deal Shellpoint was preparing in September was set to have credit enhancement of 7.90 percent ...

First Republic Bank was the top contributor to jumbo mortgage-backed securities through the first three quarters in 2013, according to a new ranking and analysis by Inside Nonconforming Markets. Meanwhile, underwriting trends for the sector were mixed. Some $2.10 billion in originations by First Republic were included in jumbo MBS this year, as of the end of September. The loans accounted for 17.2 percent of all non-agency jumbos securitized, more than double the next closest lender ... [Includes two data charts]

Fannie Mae priced its first capital markets risk-sharing transaction this week, attracting even more investors than those that initially bought into a similar transaction from Freddie Mac. While non-agency mortgage-backed security investors haven’t shown significant interest in jumbo MBS recently, many are looking toward the government-sponsored enterprises’ risk-sharing deals. “There is voracious investor demand for risk-sharing,” said Randal Johnson, a director in the structured credit group at Deutsche Bank ...

The qualified residential mortgage requirements recently proposed by federal regulators could force banks to retain mortgages in portfolio instead of issuing non-agency mortgage-backed securities, according to industry participants. The Dodd-Frank Act requires that non-QRMs be subject to required risk retention of at least 5 percent. In August, federal regulators proposed aligning the definition for QRMs with the definition for qualified mortgages established by the Consumer Financial Protection Bureau ...

Underwriting standards for jumbo mortgages decreased slightly in September compared with the previous month, according to a Mortgage Bankers Association analysis of data from AllRegs... Joseph Smith, the monitor for the $25 billion national servicing settlement with five banks, released a report this week detailing for the first time how the servicer loss mitigation actions have been credited. While the banks reported $38.72 billion in gross relief via loss mitigation and refinances through the end of 2012 ...

The Department of Housing and Urban Development’s proposed “qualified mortgage” rule attaches certain conditions to QM treatment that may complicate matters for participating lenders, said attorneys with K&L Gates in Washington, DC. On Sept. 30, the Department of Housing and Urban Development published its own proposed QM rule for FHA loans. The CFPB rule takes effect on Jan. 14, 2014, and will apply to FHA loans until HUD issues a final rule. Under the CFPB rule, many FHA loans would not qualify for the rule’s safe harbor because the higher mortgage insurance premiums would make them “higher priced mortgage loans.” Thus, in order to ...

The U.S. Court of Appeals for the First Circuit has affirmed a district court’s dismissal of a putative class action alleging that a lender improperly required FHA borrowers to buy and maintain higher flood insurance coverage than that indicated in their mortgage contracts. According to an analysis by the Washington law firm BuckleySandler, the ruling from an equally divided en banc court allows mortgage lenders to require borrowers to maintain flood insurance equal to the replacement value of their homes. In Kolbe v. BAC Home Loans Servicing, LP, No. 11-2030, 2013 WL 5394192 (1st Cir. Sept. 27, 2013), plaintiff Stanley Kolbe contends ...

Two surviving spouses of deceased reverse mortgage borrowers won their case against the Department of Housing and Urban Development after a U.S. court found HUD in violation of federal law for failing to protect the spouses from foreclosure. The court’s decision marks a turning point for surviving spouses, such as Robert Bennett of Annapolis, MD, and Leila Joseph of Brooklyn, NY, and ensures that they will be protected against eviction and foreclosure, despite the loss of their husband or wife, said Jean Constantine-Davis, a senior attorney with the AARP Foundation Litigation. In March 2011, the AARP and the law firm of Mehri & Skalet of Washington, DC, filed ...

The MGIC Investment Corp. reported its second straight profitable quarter in 2013 and another increase in new insurance written. While the numbers may not yet indicate a trend, it certainly appears that the Milwaukee-based mortgage insurer is slowly but consistently showing improvement in its performance since posting a net loss of $246.9 million for the same quarter a year ago. MGIC reported net income of $12.1 million in the third quarter and $12.4 million in the second quarter, compared with a net loss of ...