In late December, issuers of new non-agency MBS will become subject to new risk-retention requirements. It’s not clear whether anyone will notice. The vast majority of loans securitized in jumbo MBS over the past few years meet the qualified-mortgage standard. And because federal regulators opted to synchronize the QM standard with the separate qualified residential-mortgage standard, jumbo MBS backed entirely by QMs will be exempt from the 5 percent risk-retention requirement. When the final rule came out, Redwood Trust backed...

Beach Point Capital Management early next week will issue a roughly $75 million MBS collateralized by nonprime mortgages that were originated over the past year by Citadel Loan Servicing, Irvine, CA, according to officials briefed on the transaction. As Inside MBS & ABS went to press this week, certain details on the security were beginning to leak out, including the fact that Nomura Securities “is running the book” on the deal, said one source. Wells Fargo will be the custodian and backup servicer. The privately held Citadel will continue to service the underlying loans. The yield on the private-place bond is...

It makes sense that Fannie Mae/Freddie Mac g-fees should be used to pay for highway repairs. After all, people drive on highways to reach their homes which were bought with mortgages likely guaranteed by the two.

JPMorgan Chase was set to issue its latest jumbo mortgage-backed security as Inside Nonconforming Markets went to press. The bank’s sixth jumbo MBS of the year was slated to be a $344.87 million deal, according to presale reports. Chase continued to stock its jumbo MBS with loans that have seasoned a while longer than other issuers. Loans in JPMorgan Mortgage Trust 2015-6 had seasoned for an average of nine months, according to DBRS. Nearly 20 percent of the mortgages appear to have application dates from before Jan. 10, 2014. All of the loans subject to standards for qualified mortgages were deemed...

While a number of jumbo lenders reduced their reliance on mortgage brokers in the years after the financial crisis, Primary Capital Mortgage has sourced a large share of its production from brokers. And the lender has earned strong assessments from rating services in the process. Moody’s Investors Service said 71 percent of the jumbo mortgages PCM originated between the second quarter of 2014 and the first quarter of 2015 were through brokers. The lender originated $114 million in jumbos in that span. The majority of PCM’s originations are agency mortgages. The rating service said...

Questions from Inside Nonconforming Markets prompted the Consumer Financial Protection Bureau to acknowledge last week that its director misspoke during a speech at the Mortgage Bankers Association’s annual convention. In arguing that the CFPB’s ability-to-repay rule hasn’t caused a significant reduction in mortgage originations, Richard Cordray said last week that “most” jumbo loans are non-qualified mortgages. While comprehensive data on the non-QM share of jumbo mortgages is not available, a number of data sources suggest that most jumbos are in fact QMs, not non-QMs. Three of the five largest jumbo lenders told...

A typical jumbo mortgage-backed security is stronger in many ways than the non-agency MBS-like transaction Freddie Mac issued at the end of July, according to a recent analysis by Andrew Davidson & Co. However, the Freddie deal benefitted from a wrap provided by the government-sponsored enterprise. Freddie Mac Whole Loan Securities Trust Series 2015 SC01 was backed by mortgages with an unpaid principal balance of $302.96 million. The risk-sharing transaction was structured as a cash securitization with $278 million in senior certificates guaranteed by Freddie and approximately $23 million in unguaranteed subordinate certificates. Andrew Davidson compared...

A new research paper aims to settle the debate about whether loose underwriting or the downturn in home prices was the biggest factor in the poor performance of subprime mortgages originated before the financial crisis. There was a sharp divergence in the performance of subprime mortgages originated in 2003 and those originated in 2006 and 2007. Some have suggested that the subprime mortgages originated just before the crash defaulted at higher rates largely because underwriting standards on the loans deteriorated, while others claim the main issue was that house price declines left the borrowers with negative equity. A paper by Christopher Palmer, a professor of real estate at the University of California at Berkeley’s Haas School of Business, claims...

Citadel Loan Servicing, Irvine, CA, one of the most active nonprime residential lenders in the market, is on track to fund a company-record $400 million worth of mortgages this year, more than double what it produced last year. In a brief interview with Inside Nonconforming Markets this week, company founder and CEO Dan Perl said his goal for next year is $1 billion – all in loans that do not meet the qualified-mortgage standard. If the privately held Citadel – Perl is the chief shareholder – can hit...

The market is there – in nonprime and non-QM lending – the question is figuring out how to do it successfully, according to experts on a panel at the recent annual convention of the Mortgage Bankers Association. Most of the lending that’s fallen outside the qualified-mortgage standard has been to high net-worth individuals, said Matthew Nichols, CEO at Deephaven Mortgage. Most of them have millions in the bank and they’re being served by their bankers, he said, but there are a lot more potential non-QM borrowers who don’t have millions in the bank. Nichols said...