Opposition to lower loan limits for the government-sponsored enterprises appears to be increasing by the day as the Federal Housing Finance Agency considers the issue. Support from non-agency participants for a reduction – at least in the high-cost loan limits – has been proportional to the non-agency share of total mortgage originations: about one in 10. “My sense is that there will never be a good time to reduce the conforming loan limit,” said Mark Zandi, chief economist at Moody’s Analytics ...

The strength of the non-agency jumbo market is a major factor in efforts to reduce the government-sponsored enterprises’ market share, according to a former advisor for the Obama administration. “If the GSEs pull back too quickly, it will change the whole discussion,” said Jim Parrott, owner of Falling Creek Advisors and a senior advisor at the National Economic Council until earlier this year. “The political feedback will be very quick and ruthless. It would make GSE reform extremely difficult.” ...

The biggest originator of jumbo mortgages is redeveloping a platform to issue non-agency mortgage-backed securities, according to Larry Rubenstein, managing counsel at Wells Fargo. However, don’t expect jumbo MBS from Wells anytime soon as the bank has plenty of portfolio capacity. Wells hasn’t issued a non-agency jumbo MBS since 2008, when it was the top issuer of such securities, according to the Inside Mortgage Finance MBS Database. Speaking at the ABS East conference sponsored by Information Management Network ...

Underwriting standards for jumbo mortgages decreased slightly in September compared with the previous month, according to a Mortgage Bankers Association analysis of data from AllRegs... Joseph Smith, the monitor for the $25 billion national servicing settlement with five banks, released a report this week detailing for the first time how the servicer loss mitigation actions have been credited. While the banks reported $38.72 billion in gross relief via loss mitigation and refinances through the end of 2012 ...

The Department of Housing and Urban Development’s proposed “qualified mortgage” rule attaches certain conditions to QM treatment that may complicate matters for participating lenders, said attorneys with K&L Gates in Washington, DC. On Sept. 30, the Department of Housing and Urban Development published its own proposed QM rule for FHA loans. The CFPB rule takes effect on Jan. 14, 2014, and will apply to FHA loans until HUD issues a final rule. Under the CFPB rule, many FHA loans would not qualify for the rule’s safe harbor because the higher mortgage insurance premiums would make them “higher priced mortgage loans.” Thus, in order to ...

Two surviving spouses of deceased reverse mortgage borrowers won their case against the Department of Housing and Urban Development after a U.S. court found HUD in violation of federal law for failing to protect the spouses from foreclosure. The court’s decision marks a turning point for surviving spouses, such as Robert Bennett of Annapolis, MD, and Leila Joseph of Brooklyn, NY, and ensures that they will be protected against eviction and foreclosure, despite the loss of their husband or wife, said Jean Constantine-Davis, a senior attorney with the AARP Foundation Litigation. In March 2011, the AARP and the law firm of Mehri & Skalet of Washington, DC, filed ...

FHA loan originations declined by 10.5 percent in August from July, following a downward trend that seems to suggest that private mortgage insurance companies are gaining the upper hand against their biggest government-backed competitor. Volume dropped to $16.8 billion in August from $18.8 billion in July, and from $22.1 billion a year ago, according to Inside FHA Lending’s analysis of FHA data. Purchase-mortgage originations comprised 68.7 percent of FHA business for the month as rising interest rates slowed refinancing activity. Despite the increase in purchase lending, FHA lenders noted it was ... [1 chart]

Communication among investors in non-agency MBS as well as between issuers and investors has been inadequate, according to industry participants. Trustees and others are working to address the issues, both with new jumbo MBS and vintage non-agency MBS. Investors cite problems with data availability, consistency, timing and quality. Paul Burke, head of North American agency and trust sales at Citibank, said the communication system currently used for non-agency MBS leaves something to be desired. Communication regarding potential votes for action on non-agency MBS, due to a perceived breach of representations and warranties, for example, is generally funneled...

Residential mortgage delinquency rates have turned around nicely from their worst levels in the wake of the financial crisis, but mortgage servicer timelines continue to increase, according to recent findings by industry analysts. “The improvement in the broad U.S. economy in general, and the steady decline of the unemployment rate and the strong rebound of the housing market in particular, have significantly reduced the residential mortgage serious-delinquency rate across all credit spectrums,” Deutsche Bank analysts said in a report issued last week. Delinquency rates have declined...

Seven different issuers generated a relatively strong $3.94 billion in jumbo non-agency MBS during the third quarter, but the sector’s resurgence in 2013 seemed to be losing steam and faces an uncertain future. Jumbo MBS issuance declined 9.1 percent from the second quarter and one transaction – Shellpoint’s second of the year – was pulled back as September came to a close. Redwood Trust managed $1.18 billion in new issuance, a 34.1 percent drop from the second quarter, while the two other jumbo veterans, Credit Suisse and JPMorgan Chase, saw reduced production as well. Industry participants are divided...[Includes three data charts]