Just three jumbo mortgage-backed securities were issued in the fourth quarter of 2013, according to a new ranking and analysis by Inside Nonconforming Markets. During the second quarter of the year, one deal was issued every week, on average. Investor demand for jumbo MBS plummeted after interest rates started to increase in May. A number of the deals that were completed in the second half of the year received minimal attention from investors, with at least one planned issuance scrapped ... [Includes one data chart]

The Federal Housing Finance Agency said in December that it would wait until at least October before setting new “purchase limits” for Fannie Mae and Freddie Mac. The regulator of the two government-sponsored enterprises is considering establishing purchase limits below the statutory conforming loan limits. In the highest-cost markets, the biggest loan the GSEs could buy would be $600,000, instead of $625,500. The national purchase limit would be $400,000, roughly 4 percent below the $417,000 conforming ...

Originations held in bank portfolios couldn't outpace portfolio runoff, according to a new ranking and analysis by Inside Nonconforming Markets. The dollar volume of first liens in bank and thrift portfolios declined by 0.6 percent in the third quarter of 2013 compared with the previous quarter. Total residential mortgages outstanding increased by a scant 0.1 percent during that time, the first quarterly increase in total mortgages outstanding since early 2008. While banks ... [Includes one data chart]

Non-agency mortgage originations are expected to remain relatively strong in 2014, led by bank jumbo production and an expected resumption of issuance of non-agency mortgage-backed securities. Through three quarters in 2013, an estimated 22.4 percent of the $1.59 trillion in mortgages originated (including second liens) had non-agency execution, according to affiliated publication Inside MBS & ABS, with most of the non-agency activity concentrated in bank portfolios. Total mortgage originations ...

The Federal Reserve’s asset purchases will continue to dominate execution of jumbo mortgage-backed security issuance until the significant purchases of agency MBS are stopped, according to analysts at Bank of America Merrill Lynch. The tapering of the Fed’s quantitative easing beginning this month will do little to end the advantages agency MBS have over new jumbo MBS. “We believe that the Fed’s ‘non-economic’ bid for agency MBS contributes to the distorted price advantage for agency MBS ...

The qualified mortgage requirements set to be implemented next week present jumbo lenders with opportunities as well as compliance challenges, according to industry participants. “We are particularly bullish about the jumbo mortgage business because we believe that multiple regulatory and competitive factors provide strong tailwinds to our business,” Greg Garrabrants, president and CEO of BofI Holdings, said during a recent investor presentation. He said the debt-to-income ratio requirements ...

Fitch Ratings recently released new loan-loss model criteria for jumbo mortgage-backed securities. The rating service said the new loss criteria could result in higher credit enhancement requirements for new jumbo MBS. The new criteria assign a penalty to loans sourced through non-retail channels. The rating service will now include a borrower’s liquid reserves as a variable in its loss modeling. Fitch will apply a 25 percent haircut to the reported reserve amount based on the volatility ... [Includes five briefs]

The Department of Housing and Urban Development has delayed the implementation of a new requirement to assess the financial condition of borrowers seeking a Home Equity Conversion Mortgage loan, which was to take effect on Jan. 13. HUD’s decision to delay responds to an industry concern that the initial effective date does not give lenders sufficient time to customize appropriate software, hire and train new underwriters and complete other critical implementation tasks. It would take at least three months to do all these things, lenders said.

While the jumbo MBS market has all but ground to a halt in recent months, industry analysts expect that issuance will resume at some point early next year, but the 2014 forecast is dicey. Some $12.23 billion in jumbo MBS was issued through three quarters in 2013. The market hasn’t seen much activity in the final months of the year due to a lack of demand from investors and continued appetite from bank portfolios. A number of industry analysts expect...

Non-agency MBS investors showed strong appetite for $5.1 billion in vintage securities that were auctioned last week as part of the Dutch government’s efforts to unwind a bailout of ING. Industry analysts said the successful sale shows that demand for high-yielding, low-priced bonds remains strong. The MBS sold by the Dutch State Treasury Agency were largely backed by option adjustable-rate mortgages, according to Interactive Data, a firm that tracks fixed-income products. ING and the DSTA didn’t provide pricing information on the sale. According to talk among traders before the auction, Interactive Data said...