The forlorn home-equity lending market remained at record lows in new production despite growing signs of improvement in the housing market, a new Inside Mortgage Finance analysis and ranking reveals.Mortgage lenders originated a record low of just $44.0 billion in home-equity loans last year, down 12.0 percent from 2011. Although total home-equity lending was down, credit unions reported a 5.4 percent increase in their annual originations compared to 2011. (Includes two data charts)
Improving loan quality is sparking a major shake-out in the due diligence sector. Can jumbo production and MBS save the day? Meanwhile, the supply of MBS expanded slightly in the fourth quarter.
The jumbo mortgage market enjoyed solid growth in new originations last year, but agency securitization programs regained some of the ground lost to the private sector back in 2011, according to a new Inside Mortgage Finance ranking and analysis. Fannie Mae, Freddie Mac and the FHA in 2012 financed a record $117.6 billion of home mortgages that exceed the traditional jumbo threshold of $417,000. That was up 38.9 percent from the combined agency total back in 2011, and it was roughly twice the growth rate in non-agency jumbo mortgage originations. The non-agency jumbo market rose...[Includes three data charts]
The available supply of residential MBS grew marginally during the fourth quarter of last year as the agency market grew enough to offset the ongoing decline in outstanding non-agency MBS, according to a new analysis by Inside MBS & ABS. The supply of single-family agency MBS increased by $48.1 billion during the fourth quarter, a 0.9 percent increase over the three-month period. The Federal Reserve gobbled up all the increase and then some; its total agency MBS holdings rose by $91.6 billion during the fourth quarter, an 11.0 percent increase from the previous period. Mutual funds appeared to hold...[Includes two data charts]
Redwood Trust recently came to market with a $287.5 million convertible debt offering which was snatched up by investors – a sign that not only is the real estate investment trust doing well with its jumbo securitization business, but other mortgage issuers might meet similar results if they need to borrow money in the capital markets. Mike McMahon, a managing director at the company, told Inside MBS & ABS that the jumbo issuer decided to tap the debt market as “a way to support our investment activity for 2013. If we securitize $7 billion and retain the subs, we will need capital.” Redwood hopes...
Prepayment rates on non-agency jumbo MBS issued beginning in 2010 have been high as interest rates have declined significantly since then. However, industry analysts suggest that refinance activity is likely to be much lower for recently issued non-agency jumbo MBS as interest rates have stabilized at low levels, if not started to increase. “Stable mortgage rates are making refinancing less attractive to the newest mortgage borrowers, which should keep prepayment rates on loans originated over the last several months slower than those originated between 2010 and 2012,” said Grant Bailey, a managing director at Fitch Ratings. Only 12.6 percent of the original balance on the $237.84 million non-agency jumbo MBS issued...
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