The subprime servicing sector is a shell of its former self, with the dollar volume of loans outstanding declining by 75.8 percent in the past nine years, according to a new ranking and analysis by Inside Nonconforming Markets. Loans originated during the subprime boom continue to pay off or go through foreclosure while new originations have been few and far between. An estimated $300.0 billion in subprime servicing was ... [Includes one data chart]

Many issuers of jumbo mortgage-backed securities appear to have pulled back from the market due to weak demand from investors. Thus far in 2016, only two jumbo MBS have been issued. At the same point in 2015, eight jumbo deals had been issued. Hatteras Financial issued its first jumbo MBS in December. Last week, officials said the real estate investment trust will reduce its capital allocation to jumbo securitization business this year. “Until the yield curve steepens and ...

Ellington Financial is increasing its investments in non-qualified mortgages as officials at the nonbank expect strong profits from the loans. Ellington held $9.2 million in non-QMs at the end of 2015, up from $3.5 million at the end of the third quarter. The nonbank started financing purchases of non-QMs under a facility with an unidentified “large investment bank” in January. “While it took a little longer than I had hoped to get here, the non-QM pipeline will have a meaningful ...

Determining a borrower’s ability to repay a bank-statement mortgage is more complicated than evaluating a borrower underwritten with full income documentation, according to a recent report by Moody’s Investors Service. The rating service noted that originations of bank-statement loans tend to be non-qualified mortgages for self-employed borrowers. “The quality of loans originated through bank-statement income documentation programs depends heavily on ...

Major servicers participating in the non-agency portion of the Home Affordable Modification Program have improperly ended mods for a number of borrowers, according to data from the Treasury Department. The Special Inspector General for the Troubled Asset Relief Program is urging the Treasury to take actions to prevent servicers from terminating mods that meet HAMP guidelines. “Treasury’s findings in its on-site visits to the largest seven mortgage servicers in HAMP over ...

Holdings of subprime and Alt A mortgages by Fannie Mae and Freddie Mac continue to decline, though there’s a sharp divergence in terms of the government-sponsored enterprises’ guarantees of nonprime loans and mortgage-backed securities. The GSEs were exposed to a combined $147.34 billion in purchased/guaranteed nonprime mortgages as of the end of 2015, according to an analysis by Inside Nonconforming Markets ... [Includes one data chart]

An appeals court in Massachusetts recently ruled in favor of a borrower in a case involving the determination of the borrower’s ability to repay a balloon mortgage, setting a concerning precedent, according to industry lawyers. Moronta v. Nationstar Mortgage involves a refinance originated by Fremont Investment & Loan in January 2007 for a borrower in Quincy, MA. The refi included a first-lien 3/1 adjustable-rate mortgage that amortized over 50 years with a ...

The Consumer Financial Protection Bureau last week published its policy for issuing no-action letters for certain innovative financial products. Lenders had called for the policy but industry analysts caution that no-action letters from the CFPB won’t necessarily be helpful. Under the policy, lenders can apply for a no-action letter from the CFPB. The regulator said it will review applications for such letters and in certain circumstances indicate that ... [Includes three briefs]

FHA lenders are anticipating long-awaited guidance from the Department of Housing and Urban Development implementing sweeping changes related to reverse-mortgage borrowers in default for not paying their taxes and insurance. But don’t be surprised if HUD issues additional guidance before the implementation date, said James Wright, an attorney with Bradley Arant Boult Cummings’ Birmingham office. First announced in April 2015, the guidance sets...

Carol Galante, former head of the FHA, has been named to Ocwen Financial’s board of directors. Galante left the FHA in August 2014 to take on the position of faculty director with the Terner Center for Housing Innovation at the University of California, Berkeley. Current director Phyllis Caldwell was elevated...