Fannie Mae last week replaced its MyCommunityMortgage affordable lending program with a new product called HomeReady that allows borrowers to get housing counseling online and integrated with Fannie’s Desktop Underwriter system. Both programs are targeted to lower- and middle-income borrowers in select communities. Barry Zigas, president of Zigas and Associates, a consulting firm focused on housing, said HomeReady is a “game changing announcement” in his blog post this week, especially pointing to the product’s adoption of a standardized consumer education requirement and the incorporation of the product into Fannie’s Desktop Underwriter. Zigas formerly headed Fannie’s affordable housing unit. Its new functionality through DU will allow...

Federal regulators and fair housing advocates are calling for continued vigilance in fair lending with the reappearance of mortgage redlining and loan steering. The return of pre-crisis predatory lending practices, like steering and redlining, pose new challenges to the mortgage industry and to minority communities, which have seen their home equity disappear with the collapse of the housing market, said participants in a fair-lending conference hosted by the Department of Housing and Urban Development. Credit scores raise...

First-time homebuyers make up a significant part of the purchase-mortgage market, but Fannie Mae and Freddie Mac have a hard time competing with Ginnie Mae, according to a new Inside The GSEs analysis of loan-level data.The three agencies securitized $118.90 billion of first-time buyer mortgages during the first six months of 2015, but Ginnie accounted for over half (52.4 percent) of the business. Ginnie’s big advantage is that it gets all the FHA and VA loans, while the GSEs so far have not gotten much traction in their reduced-downpayment programs. First-time buyers typically have less savings for a downpayment and often have less-stellar credit profiles. In the first half of this year, the average loan-to-value ratio for...(charts)

Commercial banks and savings institutions continued to grow their investments in agency MBS during the second quarter of 2015, according to a new Inside MBS & ABS ranking and analysis. Banks and thrifts held $1.583 trillion of agency and non-agency MBS on their balance sheets at the end of June. That was up just 0.3 percent from the first quarter, but it was the highest level since the first nine months of 2012, when bank and thrift MBS holdings topped $1.60 trillion. All the gain came...[Includes two data tables]

Issuers of non-agency MBS injected some variety into the market in recent weeks with a deal backed solely by non-qualified mortgages and improvements to the representations and warranties on a jumbo MBS. Lone Star Funds issued a $72 million non-agency MBS backed mostly by non-QMs originated by Caliber Home Loans, a lender owned by the private-equity firm. Bloomberg first reported on the deal, which was priced on Aug. 7. Details on COLT 2015-A have been...

Two more long-running legacy MBS lawsuits were resolved last week after defendants Goldman Sachs and Deutsche Bank separately agreed to settle with plaintiffs. The NECA-IBEW Health & Welfare Fund, a union pension fund in Decatur, IL, is seeking preliminary court approval of a $272 million settlement with Goldman Sachs on behalf of entities that purchased MBS issued by defendant GS Mortgage Securities and which Goldman underwrote. If approved, the settlement would put...

Investors have a lot more to worry about these days than the collateral damage stemming from problems in Greece and China and a bumpy U.S. stock market. Ratings analysts indicate some new energy-related risks – most notably earthquakes near “fracking” sites and a plunge in the price of oil – have emerged as potentially significant challenges to investors in real estate and to mortgage lenders. Analysts at Standard & Poor’s said in a recent client note that earthquakes in proximity to fracking sites introduce a unique risk factor into the investment equation for those with a stake in real estate located in affected regions. “In particular, determining whether or not earthquake coverage is...

Potential issuers of non-agency mortgage-backed securities looking to loosen underwriting standards on loans to be included in MBS are getting tough feedback from rating services. Fitch Ratings said last week that non-qualified mortgages with weak income documentation would likely face a “double penalty” compared with a similar non-QM that meet the documentation standards set for QMs. Non-QMs with “alternative documentation” included in non-agency MBS would ...

Issuance of jumbo mortgage-backed securities has slowed somewhat this summer, with a lack of consensus from industry participants on whether it’s worth participating in the market. Barclays Capital, which helps fund jumbo MBS activity, said the deals offer about 50 basis points of option-adjusted spread compared with agency MBS. Analysts at Barclays said newly-issued jumbo MBS are attractive for investors less concerned about liquidity. Officials at Anworth Mortgage Asset Corp ...

The monitor of a $2.0 billion settlement involving Ocwen Financial revealed last week that the nonbank was found to have failed another metric under the settlement. However, the monitor noted that Ocwen has worked to address many of the issues that have dogged the company over the past year. The monitor re-tested Ocwen on a number of metrics under the settlement due to concerns that were raised about the integrity of the servicer’s internal review group ...