Redwood Trust is acquiring enough “expanded-prime” mortgages to put together a non-agency securitization, according to officials at the real estate investment trust. Redwood announced this week that it plans to issue a mortgage-backed security collateralized by loans from its “Choice” program as soon as September. The Choice program allows for somewhat looser underwriting standards than what’s typically seen in the jumbo MBS market, such as slightly higher debt-to-income ratios or ...

Participants in the post-crisis nonprime mortgage-backed securities market have resisted efforts to brand their deals as “subprime” and for good reason: the loans backing these transactions more closely resemble pre-crisis Alt A mortgages. In fact, some of the underwriting characteristics on new nonprime loans are even stronger than the credit quality on pre-crisis Alt A mortgages, according to an analysis by Inside Nonconforming Markets. Between ... [Includes one data chart]

JPMorgan Chase is preparing to issue another large prime non-agency mortgage-backed security, according to documents filed this week with the Securities and Exchange Commission. It will be the third prime non-agency MBS from the bank this year. Moody’s Investors Service this week affirmed its assessment of First Republic Bank as a “strong” originator of jumbo mortgages. “First Republic distinguishes itself from other originators in its consistency ... [Includes two briefs]

A property management contractor for the Department of Housing and Urban Development has agreed to pay $4.3 million to resolve allegations that it billed the agency for FHA-related work it did not perform in violation of the federal False Claims Act. Cityside Management Corp. of Manchester, NH, allegedly failed to inspect the work of third-party vendors that it hired to perform termite inspections, treatments and repairs on repossessed houses in HUD’s real estate-owned inventory, as required by its contract with HUD. HUD’s inspector general investigated the case and referred it to the Department of Justice. Following the financial crisis, HUD held title to a large number of foreclosed homes acquired by borrowers with FHA financing. HUD contracted with various field service managers, including Cityside, to prepare the REO properties for resale. According to the Office of the U.S. Attorney for the ...

For years, big banks have delivered nearly all of their conforming mortgage production to the government-sponsored enterprises and retained their jumbo mortgages in portfolio. But some big banks have changed tactics, exploring differing execution options for their originations. Paul Donofrio, CFO of Bank of America, said the bank retained about 90.0 percent of its mortgage production on balance sheet in the second quarter of 2017. BofA had $18.0 billion in originations during the quarter, including first mortgages and home-equity loans. The loans retained...

As the Consumer Financial Protection Bureau prepares to begin assessing its ability-to-repay/qualified mortgage rule, national representatives of the mortgage industry and other financial services participants this week urged the regulator to deal with what’s known as the “GSE patch.” The patch provides a temporary safe harbor for mortgages eligible to be sold to the government-sponsored enterprises that have debt-to-income ratios that exceed 43 percent, the maximum allowed under the ATR rule. The Housing Policy Council of the Financial Services Roundtable noted...

Best Odds of Success in Making Consumer Complaint Data Confidential Rest With a New Director at the CFPB. Industry observers and lobbyists are increasingly of the view that the most likely way the industry will see the kind of substantive regulatory reform and relief it needs is not through federal legislation, but rather from a new director at the CFPB... ICYMI: The Financial CHOICE Act Would Exclude AMCs from Points and Fees Calculations. One overlooked provision in H.R. 10, the Financial CHOICE Act, which was passed by the House of Representatives on June 13, deals with residential mortgage appraisals...

Flagstar Bank priced its first post-crisis jumbo MBS this week and other big banks could start issuing deals this year, according to industry analysts. Since 2010, the main issuers in the fledgling jumbo MBS market have been nonbanks, with banks content to hold jumbos in portfolio. In recent years, the only bank to issue prime non-agency MBS has been JPMorgan Chase, which has packaged jumbos with some mortgages eligible for sale to the government-sponsored enterprises in its deals. The $443.8 million Flagstar Mortgage Trust 2017-1 follows...

Pacific Investment Management Company published an opinion piece this week calling for changes in the non-agency market before policymakers enact reforms that affect the government-sponsored enterprises. PIMCO was also critical of other GSE reform proposals. “Without a functioning private mortgage market, it will be nearly impossible for the GSEs to shrink their footprint without significant disruption to the housing market and to the underlying homeownership rate,” PIMCO said. PIMCO was...

A few months back, Citadel Servicing Corp., Irvine, CA, was eyeing the May/June period as the target date for its first nonprime mortgage-backed security. Now that July is almost over, it’s eyeing the fall – if that. According to company founder and CEO Dan Perl, prices being paid in the whole loan market for its high-yielding loans are just too good to turn down. Perl indicated that for his company, at least, the economics of a whole loan transaction are just too favorable right now. Although he could not be too specific on pricing, the industry veteran indicated...