The proposal to end the qualified mortgage patch available to loans eligible for sale to the GSEs could boost non-agency mortgage activity, though the devil is in the details as the plan plays out leading to early 2021.
Participants in the non-agency market are looking forward to expiration of the QM patch. However, industry groups and consumer advocates want the patch to be kept intact.
More than half of the dollar volume of mortgages securitized by the GSEs in 2018 was backed by noncore loans, according to a new analysis by Inside Nonconforming Markets.
Banks are increasingly using asset dissipation underwriting tactics that aren’t supported by prudent risk management practices, according to the OCC. The regulator issued a bulletin with some suggestions for banks.
Citadel posted record origination volume for the company in the second quarter, with help from products beyond the typical non-qualified mortgage offerings. Citadel also stands out by servicing its originations and largely avoiding contributing to non-agency MBS.
Redwood’s margins from non-agency mortgage activity declined in the second quarter and aren’t expected to increase much for the rest of the year, according to officials at the REIT. Redwood also has changed its MBS issuance strategy, putting seasoned mortgages into deals.
The CFPB should allow compensating factors to be considered in lieu of a strict 43% DTI ratio limit for determining QM status, according to two separate proposals.
The Alternative Reference Rate Committee detailed how a modified SOFR could be used in place of LIBOR for new ARM originations. It also proposed fallback language to move new ARMs away from LIBOR.
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