Issuance of securities backed by servicer advance receivables has increased significantly recently and is expected to continue to grow, fueled by nonbank servicers and demand from investors. However, analysts at Standard & Poor’s warn that servicers are increasing their use of unconventional features and product types, which could increase risks for investors. S&P rated $7.8 billion in servicer advance securities from the second quarter of 2012 through the end of the first quarter of 2013, up from $7.7 billion from the two-year period ending in the first quarter of 2012. S&P said issuance is expected to increase as more and more servicing assets trade hands and servicers use securitization to fund their collateral acquisitions. Recent issuance has been driven...

While originations included in non-agency jumbo mortgage-backed securities in recent years have been of high-quality, significant differences exist among originators, according to a new analysis by Inside Nonconforming Markets. The average credit score on mortgages included in Redwood Trust’s non-agency jumbo MBS from 2011 through the first quarter of this year was 771.2, largely driven by First Republic Bank, which accounted for 47.0 percent of originations securitized by Redwood ... [Includes two data charts]

“It’s not a money problem, there’s plenty of money out there,” Martin Hughes, president and CEO of Redwood Trust, said last week at a hearing by the House Financial Services Committee. “The difficulty now is the uncertainty of investors that need to be waved back into the water.” Hughes said non-agency mortgage-backed security issuers need to make adjustments for investors. “I believe we need to first address investors’ demands for better risk mitigation, transparency, and alignment of interests ...

The Department of Housing and Urban Development this week issued more detailed guidance to changes in the FHA Lender Insurance Program based on a final rule published in the Federal Register in January 2012. Under the LI program, high-performing direct endorsement lenders have the authority to conduct pre-endorsement reviews and endorse loans. Mortgagee Letter 2013-12 supersedes guidance HUD issued last month and provides additional details on initial and continuing eligibility for Lender Insurance. It also talks about HUD monitoring of program participants as well indemnification procedures, which were discussed in ...

Wall Street has unveiled policy proposals calling for premium and guaranty fee adjustments and reduced loan limits for FHA and the government-sponsored enterprises to jump start the return of private capital to the U.S. housing market. The American Securitization Forum said the current level of government activity in the mortgage market is neither sustainable nor advisable. The government, through FHA, Fannie Mae and Freddie Mac, directly or indirectly guarantees 90 to 95 percent of new mortgage originations in the country, the trade association said. While everyone agrees the government’s role in housing should be reduced over the long term, there is ...

The Department of Housing and Urban Development has announced plans to consolidate multifamily hubs nationwide and close a number of its smaller field offices. The plan would result in an estimated $61.9 million in annual costs savings for HUD after completion and affect approximately 900 of the department’s 9,300 employees. No employee will be laid off as a result of the restructuring, according to HUD Secretary Shaun Donovan. Donovan said the changes are part of a broader, long-term effort that will allow HUD to continue to deliver high-quality services by adapting modern best practices. The decision to ...

Nonbank mortgage servicers continued surging into the top ranks of servicers during early 2013, more than doubling the size of their stake in the market compared to a year ago, according to a new market analysis and ranking by Inside Mortgage Finance. The seven largest nonbank servicers accounted for $1.40 trillion in mortgage servicing at the end of the first quarter, an increase of 68.9 percent in just three months. Compared to a year ago, the combined portfolio of these companies was up 144.3 percent. Ocwen Financial rose...[Includes one data chart]

Although a number of major correspondent lenders pulled back from that market in 2013, a hefty 29.1 percent of home mortgages were funded by one company and then sold, servicing released, to a larger aggregator and, typically, securitized by Fannie Mae, Freddie Mac or Ginnie Mae. That means total production figures that include correspondent lending significantly overstate the concentration in the mortgage origination sphere. Including its correspondent production, for example, Wells Fargo put its fingerprint on 27.7 percent of new mortgages originated in 2012. But the company’s direct originations – loans generated through its retail channel and funded through mortgage brokers – represented...

“The private-label market is showing new signs of life,” according to Standard & Poor’s, which predicted that banks are likely to increase their securitization of jumbo mortgages. In a report released late last week, S&P projected $14 billion in non-agency jumbo MBS in 2013. Redwood alone set a goal of issuing $7 billion in non-agency MBS this year and is on pace to exceed that volume, helped by a pending $425 million deal, its sixth of the year. PennyMac Mortgage Investment Trust is also aiming to issue a non-agency jumbo MBS in the Redwood mold in the third quarter of 2013. JPMorgan Chase and EverBank Financial issued...[Includes one data chart]

Securitization of income-property mortgages jumped 23.0 percent from already strong levels during the first three months of 2013, according to a new Inside MBS & ABS market analysis. A total of $47.61 billion of commercial MBS were issued during the first quarter, including a variety of non-agency deals as well as multifamily MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae. That was the strongest level since structured finance markets tanked in 2008. The previous post-crash high was...[Includes one data chart]