The jumbo mortgage business has been a growth market for the past few years but the sector lost a little ground in the third quarter, according to a new Inside Mortgage Finance ranking and analysis. An estimated $117.1 billion of mortgages exceeding the baseline conforming loan limit of $417,000 were originated during the third quarter. That included $85.0 billion of loans that were too big to be securitized by Fannie Mae, Freddie Mac or Ginnie Mae, plus another $32.1 billion of agency-eligible jumbo mortgages in high-cost markets. Total jumbo volume was...[Includes three data tables]

Some market analysts see an investment opportunity brewing in subprime auto ABS in the coming year, despite increasing regulatory attention. But certain rating analysts are emphasizing the rising losses the sector has been seeing for the last few months, and a few contrarians think the market is either poised to enter bubble territory or is already there. Consumer ABS analysts at Wells Fargo Securities are recommending subprime auto subordinated bonds rated BBB, convinced they offer good value on a risk-adjusted basis. With spreads set to finish 2015 at historically wide levels (excluding the financial crisis), the analysts expect...

American Homes 4 Rent, the largest publicly traded player in the single-family rental market, late this week agreed to buy American Residential Properties in a deal valued at $1.5 billion. It was the second transaction involving real estate investment trusts in the SFR sector within three months, and has sparked talk of further consolidation, including perhaps mortgage REITs. A research note from Keefe, Bruyette & Woods, penned right before the AH4R-ARP combination was unveiled, noted that mergers in the space are possible “given current valuation discounts ….” In other words, the share prices of single-family rental REITs have been...

For a sector that originates, at best, $5 billion a year, the fledgling subprime mortgage industry is garnering a bit of attention these days, though most investors do not publicize their interest. One nonprime executive who has received funding and spoke under the condition his name not be used described his suitors as hedge funds, private-equity firms and real estate investment trusts. He also mentioned “rich” individuals looking to put money to work. To date, the largest investment in a subprime/non-agency lender appears...

Wells Fargo is reportedly under investigation for a practice that banks across the industry have relied on for years: cross-selling financial products to their customers. Big banks have been particularly upfront about how they see jumbo mortgages originated for portfolio as a way to cross-sell other products. Cross-selling financial products occurred without much regulatory scrutiny until a lawsuit by the Los Angeles City Attorney in May. LA City Attorney Mike Feuer alleged that Wells’ cross-selling activities violated California’s unfair competition law. The Office of the Comptroller of the Currency and the Federal Reserve Bank of San Francisco are also reportedly investigating Wells’ cross-selling. Feuer alleged...

Combining the Home Equity Conversion Mortgage program and the traditional forward mortgage program in assessing the soundness of the FHA Mutual Mortgage Insurance Fund could produce inaccurate results and ill-advised policy changes, warned the Urban Institute. Analysts at the institute said the FHA’s basis for assessing the MMI Fund’s solvency creates a distorted picture of the value of the fund and that the agency should separately assess its forward and reverse mortgage businesses to get an accurate picture of their performance and impact on the fund. The FY 2015 actuarial report drew...

A handful of publicly traded real estate investment trusts have been quietly making inquiries about buying residential loans that do not meet the qualified mortgage standard, including subprime credits and even unsecured consumer loans, according to players on both sides of the equation. One executive who manages a REIT that plays in the jumbo market admitted as much in an interview with Inside MBS & ABS, but pointed to one major deterrent: the Consumer Financial Protection Bureau. “We’ve tried to get clarifications from them on such things as the ability-to-pay rule, but they haven’t been very helpful,” he said. The source noted that his REIT has so far avoided buying any nonprime, non-QM loans, saying he fears the regulator will ...

Residential mortgages serviced by banks in top foreclosure states are getting hit with higher loss severities than those serviced by nonbanks, largely because banks have so far dealt with more repercussions from regulatory settlements, according to Moody’s Investors Services. Moody’s compared major servicers’ subprime loss severities for loans in the top three foreclo-sure states of Florida, New York and New Jersey, which collectively make up about 42 percent of all subprime mortgages in foreclosure in non-agency RMBS. The rating service found that loss severities on bank-serviced mortgages in Florida averaged 95 percent, versus 81 percent for nonbank-serviced mortgages. Drilling down in the data a bit to review the extremes, on one end of the continuum for banks was CitiMortgage, which ...

Fannie Mae has announced the winning bids for its third nonperforming loan sale while Freddie Mac has begun accepting bids for its eighth NPL transaction for 2015. Up for sale in the Fannie Mae deal were approximately 7,000 NPLs totaling $1.24 billion in unpaid principal balance, divided among three pools. The winning bidders in the transaction are Fortress, through its New Residential Investment Corp., for the first and third pools and Goldman Sachs for the second pool. The government-sponsored enterprise announced the sale in October to lighten its inventory of NPLs and manage credit losses on its delinquent loan portfolio. The GSE gave up on the severely delinquent loans after attempts to cure them through loss mitigation failed. Investors and ...

Originations of jumbo mortgages declined in the third quarter of 2015 compared with the previous quarter, according to a new ranking and analysis by Inside Nonconforming Markets. A number of lenders continue to loosen underwriting standards and offer favorable pricing in an effort to originate jumbos. An estimated $85.0 billion in jumbo mortgages were originated in the third quarter. While production fell 8.6 percent on a quarterly basis, originations through ... [Includes one data chart]