CitiMortgage is preparing to issue its first jumbo mortgage-backed security of the year, a $217.99 million deal largely backed by mortgages originated by brokers. The top contributors to Citigroup Mortgage Loan Trust 2014-J1 are Stearns Lending (33.5 percent), Nationstar Mortgage (30.3 percent) and Freedom Mortgage (11.3 percent). The deal is set to receive AAA ratings from DBRS and Fitch Ratings with credit enhancement of 9.525 percent on the super-senior tranche ...

Redwood Trust could boost its jumbo acquisitions by $5.0 billion a year, according to industry analysts, due to a new partnership with the Federal Home Loan Bank of Chicago. The real estate investment trust announced last week that it has an exclusive three-year deal to purchase “high balance” mortgages from FHLBank members participating in a new product under the Mortgage Partnership Finance Program. Under the new MPF Direct, members of an ...

Two firms plan to issue jumbo mortgage-backed securities next week, breaking a seven-week lull in issuance. However, jumbo MBS activity is expected to remain suppressed due to a number of factors, including dominance by the government-sponsored enterprises. “The idea that reform of the GSEs could pave the way for the private market’s return seems to have faded,” according to analysts at Standard & Poor’s. The rating service pointed to moves by ...

Delinquencies on the $347 million jumbo mortgage-backed security Redwood Trust issued in April spiked recently to 3.37 percent. That’s the highest delinquency rate seen on any jumbo MBS issued since 2010. However, Fitch Ratings said the spike was an aberration, caused by a servicing transfer, not sudden poor performance by pristine jumbo borrowers. “Early delinquency related to servicing transfers in recent residential MBS is typically due to ...

Two federal agencies have announced separate actions to protect reverse mortgage borrowers and rural home purchasers from deceptive advertising and marketing. This week, the FHA warned lenders participating in the Home Equity Conversion Mortgage program not to use misleading or deceptive language in marketing FHA-insured reverse mortgages to consumers. The FHA said the guidance is intended to protect HECM borrowers from advertising and presentations that appear to limit their options rather than informing them of the full range of available HECM products. Underscoring senior borrowers’ “freedom of choice,” FHA Commissioner Carol Galante said the agency wants lenders to know their marketing and advertising practices are under constant surveillance to prevent customers from being steered to unsuitable reverse mortgage products. Galante noted the ...

Barring any unpleasant news, Julian Castro, President Obama’s nominee for secretary of the Department of Housing and Urban Development, apparently has passed his job interview with the Senate Banking, Housing and Urban Affairs Committee. This week, Castro, a three-term mayor of San Antonio, TX, laid out his priorities as HUD secretary before committee members if he is confirmed for the job. Castro underscored the importance of “partnership and pragmatism” as the key drivers in running a city. As HUD secretary, Castro said he would enhance “cross-agency collaboration” and emphasize the value of “measuring results” by setting precise goals, consulting with the public on major issues, developing a public report card and annual updates – tools he employed in his municipal housing education and affordable housing initiatives in San Antonio. As mayor, Castro worked to ...

FHA jumbo loan originations fell significantly in the first quarter of 2014 due primarily to higher mortgage insurance premiums and a decrease in the mortgage loan limits, particularly in high-cost areas of the country, according to Inside FHA Lending’s analysis of agency data. FHA lenders reported a meager $2.4 billion in jumbo originations during the first three months of the year, a decrease of 21.2 percent from the previous quarter and down a whopping 55.7 percent from the same period a year ago. Purchase loans accounted for 81.0 percent of new originations while fixed-rate loans comprised 86.8 percent. FHA jumbo loans are those over $417,000 and they comprise a very small slice of the FHA’s overall loan portfolio. Citing FHA data, Brian Chappelle, a mortgage industry consultant, said that of the FHA loans originated in the last 12 months, roughly 11,000 loans were above $500,000, down from ... [ 2 charts]

BNY Mellon will launch a new business later this year that would enable it to purchase, securitize and service reverse mortgages and provide advisory services to lenders that offer such loans. The new business segment, Home Equity Retirement Solutions, is aimed primarily at retirees experiencing significant financial shortfalls. “We view the funds generated by suitable reverse mortgages as an additional fixed-income component of retirement portfolios, an important part of retirement planning that complements other aspects of the plan,” explained Michael Gordon, managing director for BNY Mellon Investment Management. Gordon noted BNY’s long record of accomplishment working with retirees, including managing assets for 401(k) and defined benefit investments. He said reverse mortgages may now be more prudent based on ...

NY Passes Bill to Reduce Number of FHA Loans that Would Fall Under Subprime. The New York Assembly recently passed legislation that would result in fewer FHA loans being classified as “subprime” under state banking law, according to the law firm Ballard Spahr. Already passed by the Senate, the bill would make permanent prior emergency rules issued by the Department of Financial Services, which raised the subprime threshold 75 basis points for those loans subject to the revised FHA mortgage-insurance premium cancellation policy. Although the emergency rules were set to expire on Dec. 31, 2013, the DFS granted an extension to allow the state legislature additional time to find a permanent solution, said Ballard Spahr attorneys. The bill passed with overwhelming bipartisan support and strong industry backing, and is expected to ...

Home-equity lending fell off sharply during the first quarter of 2014, but the sector may be poised for a rebound in the months ahead. Home-equity originations totaled an estimated $13 billion during the first three months of this year, down 18.8 percent from the previous quarter. That was up 8.3 percent from the first quarter of 2013, and a handful of lenders reported increased home-equity activity in early 2014. Most closed-end seconds and home-equity lines of credit are retained...[Includes three data charts]