FHA jumbo securitization continued to rise over the first six months of 2015 on the back of soaring FHA jumbo production in the second quarter. FHA jumbo originations in the second quarter more than doubled to $6.8 billion, according to the Inside Mortgage Finance database. FHA data showed that the jumbo share of originations was highest in conventional-to-FHA refinance (14.9 percent) and streamlined FHA refis (13.3 percent,) but just 9.0 percent for purchase loans. Delivery of FHA jumbos, including modified loans, into Ginnie Mae jumbo mortgage-backed securities rose 131.9 percent in the second quarter from the prior quarter and was up 115.8 percent compared to the first six months of 2014. Wells Fargo led the market in the first half with $1.4 billion in jumbos contributed to MBS, up 123 percent quarter over quarter. That was good enough for a 12.7 percent market share. PennyMac Corp. accounted for ... [ chart ]

A major player in the Home Equity Conversion Mortgage market has agreed to pay $29.6 million to resolve allegations of submitting false claims related to the servicing of FHA-insured reverse mortgages. According to the Department of Justice, Walter Investment Management Corp., through its mortgage subsidiaries, violated the False Claims Act by submitting false claims for debenture interest from the Department of Housing and Urban Development. A debenture is a type of debt instrument not secured by physical assets or collateral. It is backed only by the issuer’s general creditworthiness and reputation. HUD requires lenders to self-report curtailment of debenture interest if it misses any foreclosure deadlines. Under the HECM program, a loan becomes due and payable when the home is sold, remains vacant for more than 12 months or upon the ...

FHA lenders funded $7.8 billion in new Home Equity Conversion Mortgage loans during the first half of 2015, up 8.2 percent from the same period a year ago. HECM loan production was slower in the second quarter with originations down 1.1 percent from the prior quarter. Purchase loans accounted for 86.1 percent of all HECM transactions during the first six months. Interestingly, borrower bias against adjustable-rate loans appeared to have eased. Fixed-rate HECMs accounted for only 15.4 percent of originations during the first half of the year. Initial principal amount at loan origination totaled $4.6 billion over the same period. On a fiscal year-to-date basis, the FHA reported a total of 53,372 HECM endorsements, up from 47,662 HECM endorsements in fiscal YTD 2014. Meanwhile, HECM endorsed cases increased to 5,750 in August compared to ... [ chart ]

Originations of jumbo mortgages rose sharply during the second quarter of 2015, including loans in high-cost housing markets that are eligible for agency mortgage-backed securities, according to a new Inside Mortgage Finance ranking and analysis. During the second quarter, the market produced a whopping $127.6 billion of home mortgages that exceeded the $417,000 benchmark conforming loan limit, a 33.1 percent increase from the first three months of the year. Jumbo mortgages accounted for 28.7 percent of second-quarter originations, the highest ratio since “emergency” high-cost limits were set back in 2008. Most of the jumbo production was...[Includes three data tables]

Jumbo MBS issued since 2010 have better tail-risk protection than deals issued before the financial crisis, according to analysts at Moody’s Investors Service. Provisions addressing tail risk aren’t uniform, however, with some differentiation among issuers. Tail risk occurs when only a few loans remain in an MBS, with activity on the loans subjecting investors to potentially unexpected losses. The risk is particularly pronounced for jumbo MBS as the average loan amount on many deals tops $700,000, and many of the transactions include loans with balances above $1.5 million. In a report released late last week, Moody’s noted...

With MBS issuance volume falling sharply in August, the mortgage industry may have another profit-related concern on its hands: gain-on-sale margins are coming under pressure. For now, no one is panicking, but until the recent rate drop – courtesy of China devaluing its currency – loan volumes were beginning to slow, especially for refinancings, although there’s plenty of hope that the purchase business will stay robust through the remainder of the fall. As one jumbo securitization official told Inside MBS & ABS: “Gain-on-sale margins have been...

Home-equity lending jumped to its strongest level in seven years during the second quarter of 2015, but most depository institutions continued to see declining balances in their home-equity portfolios, according to a new Inside Mortgage Finance ranking and analysis. An estimated $24.0 billion of home-equity lines-of-credit and second mortgages were originated during the second quarter, up 23.1 percent from the first three months of the year. It was the highest production level since the second quarter of 2008. Although the Federal Reserve won’t release an official figure for home-equity loans outstanding at the end of June until next week, call-report data suggest...[Includes three data tables]

Concerns about litigation and various pricing issues have combined to suppress originations of non-qualified mortgages to borrowers who aren’t affluent, according to industry analysts. Since the Consumer Financial Protection Bureau’s ability-to-repay rule and QM standards took effect in early 2014, a certain portion of the non-QM market has held up fairly well: interest-only mortgages. However, the loans tend to be available solely for affluent borrowers, while non-QM originations for less-than-prime borrowers remain limited. Most non-QM lenders are targeting...

Angel Oak Mortgage Solutions in Atlanta hopes to price its first-ever nonprime MBS sometime next week – a $150 million bond issued through Nomura Securities, a top Angel Oak executive told Inside MBS & ABS. Mike Fierman, managing partner and CEO of Angel Oak Companies, an affiliate of the lender, said officials have been on an investor road show the past week or so, crisscrossing the country. “Investors love...

Bank and thrift holdings of first-lien mortgages continued to grow in the second quarter of 2015, according to an Inside Nonconforming Markets analysis of call reports. Most of the change occurred among the top three bank mortgage portfolios: Wells Fargo, Bank of America and JPMorgan Chase. Banks and thrifts held $1.81 trillion of first-lien mortgages as of the end of the second quarter of 2015. The holdings increased by 1.5 percent compared with ... [Includes one data chart]