Five years after the subprime mortgage industry imploded, there are signs of a revival as new players are entering the nonprime space. What’s developing is “old style” home-equity lending, where loan-to-value ratios are rarely larger than 75 percent and the actual funder of the loan keeps the paper in portfolio and services it. In the past two weeks, two subprime residential firms opened their doors for business: Citadel Loan Servicing and Deephaven Mortgage. Deephaven is the brainchild of ...

Credit Suisse issued a $422.2 million non-agency jumbo mortgage-backed security last week with some of the loans in the private placement sourced from Two Harbors Investment. Two Harbors – a real estate investment trust that has been working to issue its own non-agency MBS for more than a year – is also expected to be the initial investor in the subordinate tranche of the MBS. CSMC Trust 2013-TH1 received AAA ratings from DBRS, Fitch Ratings and Standard & Poor’s, with 7.05 percent credit enhancement ...

Ocwen Financial has focused somewhat on performing prime mortgages as it has expanded its servicing portfolio recently, but officials at the special servicer said nonprime mortgages account for the majority of Ocwen’s planned acquisitions. Ocwen handled a $122.19 billion portfolio (excluding subservicing) at the end of 2012, according to affiliated publication Inside Mortgage Finance, including $87.23 billion in subprime mortgages. The servicer acquired $57.42 billion in agency mortgage servicing ...

The reverse mortgage lending industry has asked Senate lawmakers to expand the Department of Housing and Urban Development’s authority to strengthen its oversight of the Home Equity Conversion Mortgage program. Testifying before the Senate Committee on Banking, Housing and Urban Affairs recently, Peter Bell, president of the National Reverse Mortgage Lenders Association, said it is crucial for HUD to be able to act swiftly to reduce the risk the program poses to the FHA insurance fund. Bell said HUD needs to implement changes “in a matter of months, not years” and for that to happen, it would need authority from Congress to ...

Warehouse banks that extend credit to nonbank residential lenders ended the fourth quarter with almost $40 billion in commitments on their books, their best quarter of the year, according to exclusive survey figures compiled by Inside Mortgage Finance. The top five warehouse banks – which control about half of the estimated total market – had $19.9 billion of commitments on their books, a 4 percent improvement from the third quarter. Compared to the end of March, commitments were up 37 percent. Wells Fargo, the largest buyer from correspondents, ranked...[Includes one data chart]

Credit Suisse has adjusted the representations and warranties included in each of its recent non-agency MBS deals, reacting to criticism from investors that the reps and warrants do not meet models set by the American Securitization Forum. While the new jumbo MBS issued by Credit Suisse last week made some improvements on reps and warrants compared with its previous deals, the issuer continues to experiment with somewhat looser standards. “Credit Suisse has introduced several new elements to the rep and warrant structure in recent securitizations which has caused some diverging opinions in the securitization community,” according to analysts at Bank of America Merrill Lynch. “While the ASF has provided a starting point with their model reps, it will likely take the market some time to find the right balance between investors and originators.” Issuance from Redwood Trust has been seen...

An investor in Alt A MBS originally issued by Residential Capital Corp. filed suit this week to block Nationstar Mortgage from auctioning nonperforming loans from the MBS pools. Nationstar in mid February began auctioning NPLs on auction.com, according to the complaint filed in the Supreme Court of New York State this week. There are currently two additional auctions totaling some $750 million of NPLs listed on the internet auction site, both believed to be related to Nationstar. The company is...

Conventional conforming mortgage originations – mostly financed by Fannie Mae and Freddie Mac – accounted for a record 66.8 percent of total single-family lending last year, according to a new market analysis and ranking by Inside Mortgage Finance. Mortgage lenders originated a whopping $1.273 trillion in conventional conforming mortgages in 2012, the highest level since the all-time record of $2.460 trillion was set back in 2003. Volume in the sector started strong and kept building throughout the year, including a 19.1 percent jump from the third to the fourth quarter. For the year, conventional conforming originations were...[Includes two data charts]

Sellers of jumbo whole loans into the secondary market are getting prices of up to 103 – and in some cases more – which on paper might throw a monkey wrench into the economics of trying to create a new MBS, but it’s not turning out that way. According to loan traders and industry consultants, MBS spreads to Treasuries have tightened over the past several weeks, making the economics of issuing a security better, even though the price for the underlying product might look a bit rich for potential issuers. “The cost of funds are going down,” said one trader. According to Craig Cole, a principal in Emerald Consulting LLC, the price paid...

Redwood Trust plans to more than triple the dollar amount of non-agency jumbo mortgage-backed securities it issues this year compared with its issuance from 2012, according to comments this week from officials at the real estate investment trust. Redwood also plans to securitize conforming jumbos and even aggregate conforming loans to sell to Fannie Mae and Freddie Mac. The REIT’s goal for 2013 is to issue about $7.0 billion in non-agency MBS. While potential competitors struggled to ...