Redwood looks to build on the success it had including non-QMs in a jumbo MBS.

Officials at Ocwen Financial announced late last week that the company plans to use its clean-up call option on loans backing vintage non-agency MBS that it services. Officials see strong profits in paying off non-agency MBS investors at par and then liquidating real estate owned properties whose loans were included in non-agency MBS. “The opportunity results from the arbitrage of the underlying loans in REO being worth more than the securities,” William Erbey, Ocwen’s executive chairman, said during the servicer’s earnings call for the second quarter of 2014. “In other words, the whole is worth less than the sum of the parts.” He said...

Morgan Stanley is set to issue its first jumbo mortgage-backed security since the financial crisis.

The Structured Finance Industry Group issued the first of its proposed standards for non-agency mortgage-backed securities.

RPM Mortgage is offering non-QMs for self-employed borrowers and recent retirees.

The New York Department of Financial Services’ exam of Ocwen Financial has expanded into a force-placed insurance deal with Altisource Portfolio Solutions.

Efforts to reform the non-agency market may be gathering momentum as the Structured Finance Industry Group is set to reveal its preliminary recommendations for changes to non-agency mortgage-backed securities and comments on the sector’s reform are due to the Treasury Department shortly. Industry participants have plenty of suggestions for how to fix the market, but any revival looks to be years away. On Aug. 4, the SFIG will release “green papers” as part of its Project RMBS 3.0 initiative ...

Two Harbors Investment is preparing to issue a $267.67 million jumbo mortgage-backed security, according to a preliminary term sheet obtained by Inside Nonconforming Markets. The deal is scheduled to close Aug. 5, nearly a year after the only other jumbo MBS issued by Two Harbors. Agate Bay Mortgage Trust 2014-1 is backed by 30-year fixed-rate mortgages from a variety of lenders, led by RPM Mortgage with a 12.8 percent share, New York Community Bank ...

While banks have plenty of capacity to retain jumbo mortgages in portfolio, the top two contributors to jumbo mortgage-backed securities issued in the second quarter of 2014 were actually banks, according to a new ranking and analysis by Inside Nonconforming Markets. First Republic Bank and JPMorgan Chase were the top two contributors to the scant four jumbo MBS during the quarter. And since the start of 2013, three of the top five ... [Includes one data chart]

Flagstar Bank has $802 million in interest-only mortgages that are scheduled for principal payments to kick in over the coming years, and in some cases the borrower’s monthly mortgage payment will double. Officials at the bank said Flagstar is working with borrowers that have IOs and delinquencies have been low thus far. “We’ve put a dedicated team together to get ahead of these resets,” Lee Smith, Flagstar’s COO, said last week during the bank’s earnings presentation ...