Carrington Mortgage made a big splash this week, unveiling a plan to offer to fund FHA loans for borrowers with credit scores as low as 550, but already some skeptics are openly questioning just how many such loans Carrington – or any company – can produce. Carrington Executive Vice President Ray Brousseau declined to estimate production. The company’s minimum FICO score for FHA loans had been 580. The expanded FHA program will be...[Includes one data chart]

The securitized mortgage market appears to be destined to be dominated by mortgages that meet the Consumer Financial Protection Bureau’s qualified-mortgage standards. Criteria from the rating services gives favorable treatment to QMs, while Fannie Mae and Freddie Mac are avoiding non-QMs altogether. Fitch Ratings released criteria this week for how it will rate non-agency mortgages in light of the CFPB’s ability-to-repay rule and QM standards, rounding out a number of updates from the rating services about how they will handle the issue. The ATR rule took effect for loans with an application date of Jan. 10 or later. So far, no loans subject to the ATR rule have appeared in a jumbo MBS. Issuers have...

Bank and thrift holdings of adjustable-rate mortgages have increased significantly in recent years, according to an analysis by Inside Mortgage Finance, driven in part by originations of jumbo mortgages. Banks and thrifts held $647.42 billion in ARMs in portfolio as of the end of 2013, according to call-report data. The total ARM portfolio increased by 0.7 percent last year, the third annual increase in a row, while the aggregate bank and thrift retained portfolio of first-lien mortgages fell 3.0 percent. ARMs accounted for 37.1 percent of the bank/thrift mortgage portfolio at the end of 2013, compared to just 31.9 percent at the end of 2011. Lenders have to keep generating...[Includes two data charts]

Two months after the Consumer Financial Protection Bureau’s ability-to-repay requirements took effect, non-agency lenders seem to have adjusted to the rule. The debt-to-income ratio requirements for qualified mortgages do not appear to have prevented many borrowers from obtaining a mortgage and lenders have adjusted their documentation requirements. “To my knowledge we haven’t lost any sales because people didn’t qualify under the QM banner,” said ...

Credit Suisse teamed with New Penn Financial to issue another jumbo mortgage-backed security at the end of February, the latest in a unique partnership. The $297.36 million issuance received a AAA rating with credit enhancement of 8.85 percent for the top-rated tranche. Some 13 lenders contributed to the deal, with 74.2 percent of the mortgages originated or acquired by New Penn, according to a final rating report by DBRS (no presale reports were issued). Standard & Poor’s ...

A Morgan Stanley managing director, Brian Wornow, recently departed as head of the firm’s trading desk, but he is hardly alone among Wall Street traders who are weighing their options amid rapidly declining MBS production. According to Wall Street executives and lenders that feed their trading desks, there are other concerns about lower-than-expected bonuses this spring and an unwillingness on the part of some established firms to take risks in the mortgage market, particularly when it comes to new jumbo mortgages and other non-agency vehicles. Sources contend...

The residential MBS issued in 2013 equaled 78.5 percent of primary market originations, the highest securitization rate since 2010, according to a new Inside MBS & ABS analysis. The mortgage securitization rate typically moves higher when primary-market originations are declining because of the time lag between loan closing and MBS issuance. Last year started with a bang – $560 billion in new originations – and ended with a whimper, $305 billion. In the conventional conforming market, Fannie Mae and Freddie Mac MBS issuance – even after excluding loans that were more than three months old when they were securitized – represented...[Includes one data chart]

Originations of jumbo mortgages significantly outpaced originations of other first-lien mortgage types in 2013, according to a new ranking and analysis by Inside Nonconforming Markets. Banks continue to dominate the market for jumbos, both with their own originations and via acquisitions of production from lenders that might otherwise have delivered their production to jumbo mortgage-backed security issuers. An estimated $272.0 billion in non-agency jumbos ... [Includes one data chart]

Investors would be more willing to buy AAA tranches of jumbo mortgage-backed securities if issuers would standardize their offerings, according to Michael Stegman, counselor to the Treasury Department on housing finance policy. While the Treasury and industry participants both currently have initiatives aimed at standardization, issuers haven’t been too willing to seek uniformity. In a speech last week, Stegman said that based on recent meetings with jumbo MBS participants ...

Fannie Mae and Freddie Mac sold some nonprime mortgage-backed securities during 2013 even though the government-sponsored enterprises have seen strong returns on these holdings in recent quarters. The GSEs held a total of $84.61 billion in nonprime MBS as of the end of 2013, according to a new analysis by Inside Nonconforming Markets. The holdings declined by 18.2 percent compared with the end of 2012 due to a combination of ... [Includes one data chart]