With the jumbo MBS market slow to rebound, Redwood Trust has put an increased emphasis on agency mortgages, its commercial mortgage business and risk-sharing transactions with the government-sponsored enterprises. On the residential side, Redwood has continued to work on issuing jumbo MBS, but the real estate investment trust usually finds better execution in whole-loan sales. Redwood obtained approval as a seller to the GSEs at the end of 2013 and completed $4.0 billion in conforming mortgage correspondent business last year. During the fourth quarter, Redwood delivered...

Morgan Stanley has agreed in principle with the Department of Justice to pay $2.6 billion to resolve MBS claims the agency’s civil division indicated it would bring against the company, according to a new disclosure from the Wall Street firm. Morgan Stanley’s disclosure about a potential MBS lawsuit by the U.S. Attorney for the Northern District of California contained no other details. However, the firm increased its legal reserves by $2.8 billion to cover any potential settlement and other pending legacy-related MBS disputes. The adjustment increased...

Fannie Mae and Freddie Mac reduced their combined mortgage investment portfolio by 13.7 percent last year by focusing on less-liquid assets. The two government-sponsored enterprises still had $821.7 billion of mortgages and MBS on their books at the end of the year. Freddie reported that it sold $16.5 billion of less-liquid assets such as unsecuritized mortgages, multifamily assets and non-agency MBS. At the end of the year, some 59 percent of its portfolio was designated as less liquid, down from 62 percent at the end of 2013. The Federal Housing Finance Agency in 2013 directed...[Includes one data chart]

Only one lender accounted for more than 10 percent of the single-family mortgage volume completed by Fannie Mae and Freddie Mac in 2014: Wells Fargo. The bank also dominates deliveries to Ginnie Mae and originations of jumbo mortgages. Wells had $180.89 billion in mortgage originations in 2014, accounting for 14.6 percent of total mortgage originations, according to Inside Mortgage Finance. The bank’s share of mortgage originations declined from 18.9 percent in 2013 as refinance activity slowed and nonbanks made efforts to compete for production and servicing. Officials at Wells said...

Ocwen Financial – once deemed the fastest-growing residential servicer in the nation – is now facing huge shrinkage and is undergoing what some analysts and investment bankers are now calling a managed or “controlled” liquidation. The questions facing investors and business partners of the company is how fast can Ocwen shrink and what will be left for shareholders other than a pile of cash. “This could be...

Fueled by demand from banks, jumbo mortgages accounted for 19.0 percent of total mortgage originations in 2014, according to Inside Mortgage Finance, the highest it has been since 2002. But last year’s jumbo production volume, estimated at $235.0 billion, was down 13.6 percent from 2013. However, total originations declined by 34.4 percent in that time. An estimated $67.0 billion in jumbos were originated in the fourth quarter of 2014 ... [Includes one data chart]

Securitization was still the dominant method to fund new home mortgage production in 2014, but Wall Street got a run for its money from portfolio lenders. A new Inside MBS & ABS analysis reveals that 70.5 percent of residential mortgages originated last year were funneled into mortgage securities. That was down from 78.5 percent in 2013 and represented the lowest mortgage securitization rate since 2006. Delivering eligible loans into new Fannie Mae, Freddie Mac and Ginnie Mae securities is...[Includes one data chart]

Potential investors in jumbo mortgage-backed securities continue to push issuers to make significant changes to the way the market operates. “How is this ever going to be a $300 billion market if everybody has to look at reps and warrants on a deal-by-deal basis?” said Allan Berliant, a portfolio manager at Grantham Mayo Van Otterloo. “There needs to be a streamlined industry standard.” Berliant and many others called for changes at the ABS Vegas conference ...

With new consumer disclosures from the Consumer Financial Protection Bureau set to take effect in August and lenders still grappling with the ability-to-repay rule, due diligence is likely to continue to be a high priority for loans included in jumbo mortgage-backed securities, according to industry participants. Only a handful of jumbo MBS issued in recent years have included third-party due diligence for fewer than 100 percent of the loans. Issuers have been ...

A planned jumbo mortgage-backed security from Credit Suisse received some criticism from Fitch Ratings due to concerns about the origination practices of some of the lenders that contributed mortgages to the deal. The rating service increased its default assumptions for the $405.27 million CSMC 2015-1. “Fitch applied a conservative treatment – higher probability of default – due to its limited visibility to the individual lender origination practices ...