Two Harbors Investment and Five Oaks Investment separately announced plans to end their jumbo mortgage conduit operations due to profitability issues. “We believe that current and expected mortgage market conditions and competitive pressures will prevent us from growing this business to a scale that meets our long-term goals and financial expectations,” said Thomas Siering, Two Harbors’ president and CEO. The Two Harbors announcement came...

The Sixth U.S. Circuit Court of Appeals overturned a lower court decision that had cleared Freddie Mac of charges that it misled investors about its involvement in the subprime mortgage market. The lawsuit was filed in 2008 by the Ohio Public Employees Retirement System, which claimed Freddie made false public financial statements that hid its exposure to risky loans. The fund alleged that it lost more than $27.2 million as the value of Freddie stock plummeted. OPERS said...

Marketplace lender Social Finance is preparing to issue a $480.55 million ABS backed by unsecured consumer loans, its second such deal to date. So far, 10 of its 12 securitizations have used student loans as collateral. According to a report by DBRS, SCLP 2016-2 consists of $425.88 million of class A notes and $54.67 million of B notes. The package is expected to price early next week, but at press time no information was available regarding the coupons. The class A notes received...

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 ...

The securitization rate for adjustable-rate mortgages has declined significantly in the past year, according to an analysis by Inside Nonconforming Markets. Some 11.4 percent of ARMs originated in the first quarter of 2016 were included in mortgage-backed securities, down from 20.1 percent in the first quarter of 2015. When ARMs make it into MBS, it’s generally in securities from Fannie Mae, Freddie Mac and Ginnie Mae. The vast majority of non-agency ... [Includes two data charts]

Originations of non-agency nonprime mortgages have been limited in the years since the financial crisis, with many borrowers with low credit scores receiving FHA loans instead. Officials at a number of nonprime lenders have noted that loan originator compensation requirements have limited incentives for loan officers to work on nonprime mortgages. A loan originator might be able to complete two FHA mortgages in the time it takes to close one nonprime mortgage, and there’s always a ...

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 ...

Ocwen Financial reported a net loss of $87.20 million for the second quarter of 2016, with most of the loss related to so-called legacy issues. A planned settlement with the Department of Justice of two lawsuits involving the Home Affordable Modification Program and FHA mortgages caused $40.10 million in pre-tax losses for the nonbank lender-servicer. The company also paid $28.10 million during the quarter to cover the cost of monitoring settlements involving federal regulators ...