Hopes for a resurgence of issuance of non-agency mortgage-backed securities backed by new mortgages appear to be tied more to banks than to steps Congress might take to reduce the government-sponsored enterprises’ footprint, according to industry analysts. Since the financial crisis, banks have largely opted to hold non-agency originations in portfolio instead of issuing MBS. According to an analysis by Bank of America Merrill Lynch, capital requirements have given banks ...

Officials at Bayview Loan Servicing note that the loans available to correspondents and brokers in the lender’s portfolio lending program allow borrowers shut out from agency mortgages to qualify. “All of the agency and qualified mortgage products that are out there look the same,” Ski Swiatkowski, vice president of portfolio product marketing at Bayview, said last week during a webinar hosted by the lender. Bayview, whose owners include affiliates of The Blackstone Group, offers five ...

The public mortgage-backed security shelf recently filed by Redwood Trust was drafted with significant input from the Securities and Exchange Commission, according to a review of correspondence between the jumbo MBS issuer and the SEC. After Redwood’s new Form SF-3, which allows for $4.83 billion in MBS issuance, was published in mid-May, the SEC released four letters sent to Redwood during the drafting stage for the shelf. Redwood’s responses to the SEC’s inquiries were also ...

Determining a self-employed borrower’s ability to repay can be one of the more challenging underwriting tasks for non-agency lenders. Shelley Callaghan, a senior marketing program manager at MGIC, said one of the main issues to consider when underwriting borrowers with income from partnerships or S corporations is the pattern of cash distributions from the business to the potential borrower. A number of nonbanks have launched non-agency programs for self-employed ...

The upcoming batch of non-agency interest-only mortgages that will hit a 10-year recast is larger than the IO recast volume seen last year, according to Moody’s Investors Service. However, the rating service predicts that a spike in default rates prompted by the recasts will be less severe than that of 2015. “Default rates will likely stay below those of Alt A IO loans in non-agency mortgage-backed securities which re-cast to full payment in 2015 because of a slightly smaller expected ...

Comparing 2005 with 2015, the share of loan applications from borrowers with low credit scores has declined at a greater pace than originations of mortgages to borrowers with lower credit scores, according to CoreLogic. “The decline in originations could be a result of potential applicants being either too cautious or discouraged from applying, more so than tight underwriting as the culprit in lower mortgage activity,” said Archana Pradhan, an economist at ... [Includes seven briefs]

FHA originations rose significantly in the first quarter of 2016 from the same period last year even as VA loan production decreased slightly, according to an analysis of Ginnie Mae data. Lenders delivered $54.4 billion of FHA-insured loans to Ginnie Mae for securitization during the first three months, up 36.2 percent from the previous year. In contrast, the volume of VA loans securitized over the same period, $35.0 billion, fell 1.5 percent compared to the same period a year ago. A strong purchase-mortgage market drove FHA activity from January to March. The reduction in FHA’s annual insurance premium in January 2015 continued to have an impact on FHA’s purchase-loan market share. In 2015, FHA purchase originations accounted for $151.0 billion of the estimated $881.0 billion in total purchase originations (conventional and government single-family forward originations), according to ... [ 2 charts ]

The share of new home mortgage originations packaged into MBS drifted slightly lower in the first quarter of 2016, a new Inside MBS & ABS analysis reveals. Some $255.7 billion of newly originated mortgages were pooled in MBS in the first three months of the year, representing a paltry 67.3 percent of the estimated $380 billion of first-lien originations in the primary market. For the purposes of calculating securitization rates, loans aged more than three months and modified loans are excluded from agency MBS issuance figures. Fannie Mae and Freddie Mac securitized...[Includes one data table]

It was thought that with the Consumer Financial Protection Bureau working on a new regulation to clarify key portions of the TRID integrated-disclosure rule and assignee liability that the scratch-and-dent market in TRID-defective loans would grind to a halt. But that’s not how it’s turned out. According to investors in “S&D” TRID mortgages and traders who play in the space, auctions of mortgages with errors (of all sorts) have continued...

Jumbo mortgages accounted for 20.3 percent of total first-lien originations in the first quarter of 2016, according to estimates by Inside Nonconforming Markets. While jumbo production declined slightly in the first quarter compared with the previous period, overall originations posted a steeper drop. An estimated $77.0 billion in jumbos were originated in the first quarter of 2016, down 1.3 percent from the previous quarter and up by 6.9 percent compared with ... [Includes one data chart]