December was a productive month for FHA as the percentage of endorsements, fueled by strong refinance activity, rose 6.3 percent from the previous month, according to Inside FHA Lending’s analysis of agency data. However, 2011 overall was not as generous. Refinance transactions totaled 30,515 for the month, up 15.1 percent from November, with borrowers’ FICO scores averaging in the 703-706 range. Streamline refis were up 20.2 percent and conventional-to-FHA refis also increased 11.5 percent over the same period. Total cash-out refis, likewise, bumped up 7.7 percent on a monthly basis. In the advent of President Obama’s latest refinancing proposal ...

Federal banking regulators this week reminded banks and thrifts to pay close attention to how they monitor risks and calculate loss reserves in their home-equity loan business. An interagency supervisory memo sent this week does not change the regulators’ policy on allowance for loan and lease losses for closed-end second mortgages and home-equity lines of credit, but it urges lenders to “monitor all credit quality indicators” relevant to junior liens. Although many observers have raised concerns about the risk of second mortgages, delinquency rates on loans held by banks, thrifts and credit unions have been lower...

The U.S. residential housing market used to provide the lion’s share of business for non-agency asset securitization, but experts at this week’s American Securitization Forum say it will take years for the sorely damaged housing market to recover and the nationalized mortgage finance system to be overhauled. Supply and demand fundamentals in the housing market are severely broken, said Laurie Goodman, senior managing director at Amherst Securities Group. There are some 2.9 million borrowers in foreclosure or more than 12 months delinquent, plus another 400,000 units of real estate-owned properties. With...

Securitization experts are expecting a rerun of last year in 2012, as the U.S. economy slowly rights itself and most segments of the asset-backed securities market generate reasonable new issuance and stable performance. While observers suggest the housing market may make only modest improvement this year, no one expects much non-agency mortgage activity. Growth in issuance of non-agency mortgage-backed securities is going to be very slow, said Ron Mass, co-head of structured products at Western Asset Management Co. Because the market is underwriting the mortgage borrower, and no longer relying...

If there was any question about what was driving the housing market in 2011, some year-end housing numbers have provided two clear answers: investors and distressed properties. The combination of investors buying up large amounts of distressed properties not only put downward pressure on home prices, but also cut into the home-purchase mortgage business by generating a significant number of cash sales. These are some of the major conclusions that can be drawn from a look at 2011 results from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Last year’s housing...(Includes one data chart)

The Federal Reserve’s recent suggestion that policymakers consider having the government-sponsored enterprises refinance underwater non-agency mortgages appears unlikely to happen, according to industry analysts and even the Fed. Still, the Fed claims such a program would stabilize the housing market and it would likely reduce losses on non-agency mortgage-backed securities. The Fed said the Home Affordable Refinance Program could be expanded beyond GSE loans – or Fannie Mae and Freddie Mac could implement new programs – to refinance non-agency borrowers that would otherwise meet HARP underwriting requirements. According to the Fed, 1.0 million to 2.5 million non-agency borrowers meet HARP refi standards ...

Insurance companies will likely increase their investment in non-agency residential MBS, with market and regulatory influences encouraging movement toward hybrid and floating-rate securities as opposed to fixed-rate bonds, according to some top securities industry analysts. The primary driver on the regulatory level is the anticipated slight rise in capital requirements expected to result from a recent action by the National Association of Insurance Commissioners, the association of state insurance regulators. On Dec. 27, 2011, the NAIC released updated pricing designations that...

Redwood Trust is set to issue a $415.73 million non-agency jumbo mortgage-backed security by the end of this month, continuing its run as the only issuer of new non-agency MBS. Unlike its three previous securities issued in 2010 and 2011, the real estate investment trust has faced little criticism from rating services regarding the characteristics of the new MBS. Fitch Ratings and, in a first, Kroll Bond Rating Agency are set to place AAA ratings on Sequoia Mortgage Trust 2012-1, which includes a pool of 30-year fixed-rate mortgages, ARMs and 15-year fixed-rate mortgages, 446 loans in all. Standard & Poor’s and Moody’s Investors Service were critical of Redwood’s previous deals and will not place ratings on the new issuance ...

Well-known jumbo originators contributed most of the collateral for Redwood Trust’s pending $415.73 million non-agency mortgage-backed security, but a handful of smaller lenders also benefitted from Redwood’s jumbo correspondent program. These lenders have little securitization experience but received strong endorsements from rating services and due-diligence firms. Redwood purchased most of the loans to be included in Sequoia Mortgage Trust 2012-1 on a flow basis, according to Kroll Bond Rating Agency. Flagstar Bank led the smaller originators, with $31.84 million of its loans included in the security ...

The Consumer Financial Protection Bureau will place an emphasis on nontraditional and subprime mortgages, according to origination exam procedures released last week for both banks and nonbanks. The new areas of emphasis largely fall under the CFPB’s recently gained authority to prohibit unfair, deceptive, or abusive acts or practices by lenders. The CFPB received the UDAP authority under the Dodd-Frank Act. In the CFPB’s originator exam procedures, the UDAP concerns are listed as ...