Ability-to-repay requirements set by the Consumer Financial Protection Bureau could increase losses, liquidation timelines and loan modifications for non-agency MBS, according to Standard & Poor’s. The new requirements take effect Jan. 10 and include assignee liability for certain loans. Liability from the ATR requirements and qualified-mortgage standards are only a concern for non-agency MBS issuers and investors if a borrower defaults. Given the exceptionally strong performance of jumbo MBS issued since 2010, S&P said the threat of higher losses will generally be mild for jumbo MBS. However, performance could eventually decline...

Kroll Bond Rating Agency late this week released proposed criteria for rating non-QMs, making it the second rating service to formally seek comments on such criteria.

The strength of the non-agency jumbo market, at a time when securitization of these loans has slowed, suggests there is plenty of investor appetite for non-agency jumbos.

Bill King joined Carrington 18 months ago, but recently departed the firm, which is owned by a hedge fund.

The lift in jumbo mortgage production during the third quarter of 2013 came from the non-agency segment of the market, while new originations of “conforming jumbo” loans faltered, according to a new analysis and ranking by Inside Mortgage Finance. Fannie Mae, Freddie Mac and the FHA financed $25.48 billion in single-family loans that exceeded $417,000 during the third quarter, down 15.5 percent from the second quarter. Meanwhile, non-agency jumbo originations edged up 2.7 percent during the third quarter, hitting a six-year high. The strength of the non-agency jumbo market at a time when securitization of these loans has slowed...[Includes three data charts]

Originations of non-agency jumbo mortgages are stronger than the overall market, big banks are competing for wealthy borrowers and smaller firms are looking to enter the market. While jumbos originated in recent years have performed exceptionally well, Standard & Poor’s stresses that lenders should control their growth. “In our opinion, controlled growth is a key aspect to the comprehensiveness and ultimate success of an originator’s business strategy,” the rating service said in a recent overview of jumbo performance and best practices. “We believe that aggressive growth strategies could result in difficulties managing the quality of the origination process.” S&P noted...

A new type of subprime lending may be emerging and Ocwen Financial hopes to be a trailblazer.

The HUD NPL auction features 5,000 delinquent single-family loans totaling $1 billion in unpaid principal balances with representations and warranties.

In other subprime news, industry veteran Jon Daurio was recently in New York talking to potential investors about his new nonbank venture, Nikkael Capital Corp.

“Eminent domain may be a local matter, but in the context of seizing mortgages, its use would have national consequences,” the four senators write in their letter to Treasury Secretary Jack Lew.