Redwood Trust’s mortgage banking income in the fourth quarter was essentially level compared to the previous quarter even with lower origination volume and strong competition in the non-agency market.
Originations of non-agency jumbo mortgages declined in the fourth quarter as well as full year 2018, according to an Inside Nonconforming Markets analysis. The sector also lost market share with lenders noting weak demand. [Includes one data chart]
Activity in the non-agency mortgage market is likely to get a boost from any reforms of the government-sponsored enterprises undertaken by the Trump administration.
An affiliate of Annaly Capital Management this week issued a non-agency mortgage-backed security stocked with investment-property mortgages eligible for sale to the government-sponsored enterprises.
Lone Star Funds, an affiliate of Caliber Home Loans, is set to issue a nonprime mortgage-backed security with some of the least seasoned loans seen in a post-crisis deal.
Redwood Trust announced last week that it plans to acquire 5 Arches, an originator and asset manager of business-purpose real estate loans. Redwood acquired a 20 percent stake in the lender last year with an option to fully ac-quire the Irvine, CA-based company.
The ability-to-repay rule helped improve loan performance for non-qualified mortgages but a robust secondary market for the loans hasn’t developed, according to an analysis by the Consumer Financial Protection Bureau.
The loans included in expanded-credit mortgage-backed securities in the fourth quarter of 2018 had on average tighter underwriting than previous issuance. [Includes one data chart.]
Two prominent players in the jumbo market reported mixed trends in originations for the fourth quarter. First Republic Bank’s single-family mortgage originations increased slightly on a sequential basis, while Flagstar Bank saw a sharp drop in jumbo lending.
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