The FHA is seeking comment on a proposal to change the period for reviewing loans for direct endorsement from pre- to post-closing in order to increase the number of acceptable loans and, therefore, reduce any potential risk to the Mutual Mortgage Insurance Fund. Under the proposal, a lender applying for unconditional direct endorsement authority would be required to submit the necessary loan files only after closing. After determining that the mortgage is acceptable and meets all FHA requirements, the agency would notify the lender that the loan has been endorsed. Current regulations provide for ...

The FHA may allow a borrower’s 401(k) retirement fund to be included in the calculation of debt-to-income (DTI) ratio, according to the agency. Normally, up to 60 percent of the fund’s value may be included in the DTI ratio, the agency said. Fund assets, such as Individual Retirement Accounts, thrift savings plans, 401(k) retirement plan and Keogh Accounts, may be counted in the underwriting, it added. The rule remains applicable unless the borrower presents proof that a higher percentage may be withdrawn after subtracting any federal income tax and withdrawal penalties. In such cases, the lender would ...

Moody’s Investors Service issued a “special comment” this week to warn that the new non-agency jumbo MBS issued by JPMorgan Chase would not have received a AAA rating from Moody’s, had the firm been asked to rate the deal. The rating service raised concerns about representations and warranties and a lack of risk retention on the deal.

It hasn’t been an easy time for due diligence firms that make their living off the mortgage business, at least not this year. Firms like Allonhill LLC, which bulked up on staff to handle the rush of work on investor buyback demands, have been cutting back in recent months as those contracts run their natural course.

With several new jumbo MBS deals in the works – from Redwood Trust, JPMorgan Chase and EverBank Financial – it would seem likely that a robust market might develop for the subordinate tranches of these transactions. But so far it’s been a case of plenty of interest in the instrument, but little in the way of available product.

JPMorgan Chase and EverBank Financial are separately working on non-agency jumbo mortgage-backed security deals, according to presale reports released this week. Issuance by the two banks will double the number of post-crisis non-agency jumbo MBS issuers, and they are doing things a little differently than standard-setter Redwood Trust. After the pending deals close, $3.59 billion in non-agency jumbo MBS will have been issued in 2013, according to the Inside Mortgage Finance MBS Database, more than the ...

Banks large and small varied their portfolio lending tactics in 2012, with some increasing first-lien originations for portfolio and others allowing runoff and even selling some of their holdings. Overall, bank and thrift first-lien portfolio holdings increased in 2012 compared with the previous year, with originations outpacing prepayments and sales. Banks and thrifts held $1.80 trillion in first-lien mortgages in portfolio at the end of 2012, up 2.3 percent from the end of 2011, according to ... [Includes one data chart]

Interest-only mortgage lending increased significantly in 2012, led by originators willing to portfolio the loans. Lenders expect the originations to remain strong even though the products were singled out in the Dodd-Frank Act and subsequent ability-to-repay rule from the Consumer Financial Protection Bureau. Some $22.94 billion in IOs were originated in 2012 by 15 lenders tracked by Inside Nonconforming Markets. The lenders’ IO production increased by 19.9 percent compared with 2011 ... [Includes one data chart]

Redwood Trust continues to pump out strong non-agency jumbo mortgage-backed securities with originations from a number of lenders. The real estate investment trust’s latest MBS features lower credit enhancement levels and low loan-to-value ratios. The $576.4 million Sequoia Mortgage Trust 2013-4 issued this week received AAA ratings from Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service, with credit enhancement of 6.25 percent on the top-rated tranche. The first non-agency jumbo MBS Redwood ...

Officials at EverBank Financial said demand for non-agency jumbo mortgages is strong from borrowers and investors. The bank has increased its jumbo originations and is in the process of issuing its first non-agency mortgage-backed security. “We see strong demand for the high-quality preferred jumbo product we originate,” Rob Clements, chairman and CEO of EverBank, said this month during an investor presentation. The bank originated $397.5 million in non-agency jumbos during the fourth quarter of 2012 ...