Rating services are divided on whether the income documentation used by Caliber Home Loans qualifies as full documentation. The differences are apparent in a pending $342.6 million issuance from Lone Star Funds, which is stocked with mortgages from Caliber. According to Fitch Ratings, Lone Star is the only current issuer of nonprime MBS to keep mortgages with nontraditional income-documentation out of its deals. The rating service said 99.4 percent of the dollar volume of the loans ...

Nonprime mortgages are performing better than expected and prepayment rates remain elevated, according to industry analysts. Fitch Ratings noted that 60+ day delinquency rates on nonprime mortgages in post-crisis mortgage-backed securities rated by the firm were less than 4.00 percent as of August. “The performance of Fitch-rated nonprime transactions has outperformed initial projections,” the rating service said. The average conditional prepayment rate ... [Includes one data chart]

Ginnie Mae issuers produced $36.68 billion of new single-family mortgage-backed securities last month, a modest 5.0 percent gain from July, according to a new Inside FHA/VA Lending analysis and ranking. Through the first eight months of the year, Ginnie issuance was down 11.0 percent from the same period in 2017. The MBS figures do not include FHA home-equity conversion mortgages, and loan amounts are truncated to the lowest $1,000. Purchase mortgages accounted for 75.6 percent of new issuance in August, although volume was up just 1.9 percent from July’s level. On a year-to-date basis, the purchase-mortgage share rose from 65.7 percent in 2017 to 70.0 percent for the first eight months of this year. Total volume, however, was down 5.1 percent. The refinance market has been more wobbly. As of the end of August, refi volume totaled $65.87 billion, down 26.2 percent from the ... [Chart]

Home Equity Conversion Mortgage originations fell dramatically in the second quarter, raising the possibility of a long reverse-mortgage winter in 2018, according to an Inside FHA/VA Lending analysis of HECM data. HECM production fell a whopping 40.9 percent in the second quarter from the previous period. Total HECM originations stood at $8.6 billion by the six-month mark, down 8.3 percent from the prior year. Traditional HECMs, which exclude purchases and refinances, accounted for 80.5 percent of FHA-insured reverse mortgages originated during the first half of 2018. The amount of funds available at loan origination for the first six months totaled $4.7 billion. Analysts blame the low HECM originations on the new lower Principal Limit Factors (PLFs) for HECMs, which became effective in FY 2018. Under the HECM final rule issued last year by the Department of Housing and Urban Development, principal limits [Chart]

The Mortgage Bankers Association is seeking clarification from FHA on a number of issues in the agency’s Single Family Housing Policy Handbook following Brian Montgomery’s swear-in as FHA commissioner. The MBA identified seven priority issues which lenders say need further guidance. The issues include the following: Deferred Action for Childhood Arrivals and employment authorization documents; Third-party underwriting and vendor verification of borrower income, employment, and assets; Student loan debt calculation; Rent below fair market; Minimum decision credit scores; Contract for deed; and Community transfer fees. In September 2017, President Trump rescinded DACA, a special program created by the Obama administration to provide temporary legal status and work permits to underage persons who entered the U.S. illegally until the government decides ...

It has been more than three years since FHA introduced a new streamlined process of identifying loan defects and their severity to minimize or avoid enforcement action and hefty penalties under the False Claims Act. Despite calls by the mortgage industry to improve and clarify the process – the Single-Family Loan Quality Assessment methodology or “defect taxonomy” – the FHA has yet to make a move to meet industry demands for more detailed defect taxonomy. Contacted for an update on the defect taxonomy, a Housing and Urban Development spokesperson said simply, “Nothing to report on this.” An outgrowth of lender concern over the government’s indiscriminate use of the FCA to prosecute mortgage fraud and recover FHA losses, the defect taxonomy establishes nine categories of loan defects in loans it endorses. The nine defect categories replaced the 99 loan defect codes that were ...

Originations of jumbo mortgages were strong in the second quarter, with the sector gaining market share, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $80.0 billion of non-agency jumbos were originated in the second quarter, up 33.3 percent from the previous period. Total first-lien production increased by 17.1 percent in that span. Non-agency jumbos accounted for 18.0 percent of total originations in the second quarter ... [Includes one data chart]

Aggregators of jumbo mortgages have seen margins on their business decline as competition increases for the loans. Redwood Trust had $9.0 million in net income from its residential mortgage banking segment in the second quarter of 2018, down from $21.0 million in the previous period. Officials said the decline was due to lower margins during the second quarter. The real estate investment trust didn’t disclose specific figures other than to note that during the second quarter ...

The $395.8 million nonprime mortgage-backed security Angel Oak Capital Advisors closed this week was met with strong demand from investors, according to the firm. “We believe that, relative to other recent [non-qualified mortgage] transactions, the tight pricing of AOMT 2018-3 demonstrates that investors have the confidence in and demand for the Angel Oak securitization program,” said Lauren Hedvat, a managing director of capital markets at Angel Oak. Pricing spreads ...

Starwood Property Trust plans to be a regular issuer of mortgage-backed securities backed by non-qualified mortgages after successfully closing its first deal this week. Loans in the $374.1 million issuance were sourced from Impac Mortgage Holdings, which is working to increase non-QM production, delivering the loans to Starwood and potentially other outlets. Jeffrey DiModica, president of Starwood Property Trust, said the real estate investment trust expects to be a “frequent issuer” ...