Two Harbors Investment announced this week that it will discontinue its mortgage conduit and securitization operations. The real estate investment trust was the top issuer of jumbo mortgage-backed securities in the first half of 2016, with $628.8 million in volume, according to Inside Nonconforming Markets. Five Oaks Investment also announced that it will stop jumbo conduit activities on Aug. 1. Hatteras Financial, a third jumbo conduit related to a REIT, recently pulled ...

Pricing for new jumbo mortgage-backed securities has improved recently, prompting Redwood Trust to issue a new transaction relatively quickly. Redwood issued its first jumbo MBS of the year, a $344.89 million deal, in early June. While the company issued an average of one jumbo MBS per month in 2013, the real estate investment trust has largely shifted to whole-loan sales of jumbos in recent years due to better pricing for such transactions. At an investor conference ...

The second large prime non-agency mortgage-backed security from JPMorgan Chase will differ somewhat from the pioneering deal the bank priced in March. Among other changes, the Chase Mortgage Trust 2016-2 is larger than the previous MBS and includes a higher share of jumbos, according to presale reports. The MBS issued late this week totaled $2.65 billion, with mortgages eligible for sale to the government-sponsored enterprises accounting for 55.0 percent of ...

Other issuers are looking to follow Lone Star Funds in issuing rated nonprime mortgage-backed securities that include non-qualified mortgages, according to industry participants. The $161.71 million COLT 2016-1 Mortgage Loan Trust was the first post-crisis nonprime MBS backed by new originations to receive a rating. The deal received an A rating from DBRS and Fitch Ratings. “DBRS is currently evaluating similar pools from various originators,” according to the rating service ...

The outlook for mortgage and housing activity in 2016 is expected to stay positive, but prime jumbo issuance won’t necessarily benefit from those fundamentals, according to S&P Global Ratings. Overall, the positive housing market is not translating into an increase in issuance or securitization. In fact, S&P analysts on a webinar this week said that non-agency securitization has been relatively flat over the past few years. Prime jumbo issuance continues to experience a dry spell that will most likely continue into the second half of 2016, they said. “If you look at the loans being originated, they are being held...

JPMorgan Chase is preparing to issue its second large prime non-agency mortgage-backed security with loans eligible for sale to the government-sponsored enterprises, according to documents filed with the Securities and Exchange Commission this week. While there has been some speculation about the benefits big banks will see from such MBS, Marianne Lake, Chase’s CFO, said the Chase Mortgage Trust transactions are attractive to the bank. “We’re keeping the ...

Annaly Capital Management completed its acquisition of Hatteras Financial this week, prompting a hold on jumbo operations at Hatteras, according to a message reviewed by Inside Nonconforming Markets. Hatteras formed its jumbo conduit, Onslow Bay Financial, in 2013, with a focus on adjustable-rate mortgages. In a note sent to conduit sellers recently, an official at Onslow Bay Financial said Annaly notified the conduit that the real estate investment trust stopped ...

An aggregator review of Redwood Trust by Moody’s Investors Service included an affirmation of an “above average” assessment of the firm’s prime jumbo activities along with some criticism of Redwood’s quality control process, among other issues. Moody’s assessment of Redwood’s quality control and audit activities was lowered from average to below average “because Redwood eliminated its independent third-party review quality control process in lieu of due diligence results ...

Underwriting characteristics on the jumbo mortgage-backed securities issued in the second quarter of 2016 loosened slightly, according to a new analysis by Inside Nonconforming Markets. The average combined loan-to-value ratio increased somewhat compared with recent quarters and average credit scores declined. Small fluctuations in average debt-to-income ratios have also been seen in the past years. The underwriting characteristics for ... [Includes two data charts]

The costs and benefits of a deal agent will vary based on loan characteristics, according to a new analysis by Fitch Ratings. Costs for jumbo mortgage-backed securities will be relatively low, while costs for nonprime MBS will be higher, along with potentially greater benefits when assessing the representations and warranties on a deal. Non-agency MBS issuers continue to work toward including a deal agent in new transactions as some investors have called for the feature ...