Potential issuers of non-agency mortgage-backed securities looking to loosen underwriting standards on loans to be included in MBS are getting tough feedback from rating services. Fitch Ratings said last week that non-qualified mortgages with weak income documentation would likely face a “double penalty” compared with a similar non-QM that meet the documentation standards set for QMs. Non-QMs with “alternative documentation” included in non-agency MBS would ...

Issuance of jumbo mortgage-backed securities has slowed somewhat this summer, with a lack of consensus from industry participants on whether it’s worth participating in the market. Barclays Capital, which helps fund jumbo MBS activity, said the deals offer about 50 basis points of option-adjusted spread compared with agency MBS. Analysts at Barclays said newly-issued jumbo MBS are attractive for investors less concerned about liquidity. Officials at Anworth Mortgage Asset Corp ...

Five Oaks Investment issued its first jumbo mortgage-backed security in April and has plans to significantly increase its activity in the market. “Five Oaks sees a large growth opportunity within the prime jumbo space for institutions with the ability to aggregate, finance, securitize and retain residential mortgage credit risk,” company officials said during a recent presentation to investors. With the $267.2 million Oaks Mortgage Trust 2015-1, Five Oaks aggregated the mortgages in the deal and ...

The serious delinquency rate on subprime mortgages continued to improve in the second quarter of 2015 while the amount of subprime mortgages outstanding also dwindled. An estimated $330.0 billion in subprime mortgages were outstanding as of the end of the second quarter of 2015, according to Inside Nonconforming Markets. The volume was down by 14.5 percent compared with the second quarter of 2014. In that time, the serious delinquency rate ... [Includes one data chart]

A handful of firms service the majority of loans included in jumbo mortgage-backed securities issued since 2010. Analysts at Wells Fargo Securities noted that prepayment rates vary somewhat among the servicers, offering pockets of value for jumbo MBS investors. Wells Fargo analysts said $25.26 billion in mortgages included in jumbo MBS issued in 2010 and beyond remain outstanding. The top five servicers handle 83.3 percent of the loans, with Cenlar alone claiming ...

Delinquencies are declining in the government-sponsored enterprises’ holdings of Alt A mortgages but outsized losses from the loans remain an issue. Purchased and guaranteed Alt A mortgages account for the largest portion of the GSEs’ remaining involvement in the nonprime market, according to an analysis by Inside Nonconforming Markets. Fannie Mae held $109.70 billion in purchased/guaranteed Alt A mortgages as of the end of the second quarter of 2015 ... [Includes one data chart]

FHA Begins Registration of Lenders to Prepare their Transition to the EAD Portal. Lender registration for the transition phase of the new Electronic Appraisal Delivery portal began on Aug. 18. Lenders may select any of the seven onboarding phases, which FHA has established to ensure that lenders have more time to work within the EAD portal to ensure that their systems, data flow and operational process meet portal requirements before the June 27, 2016, mandatory-use date. Although lenders may enter at any phase they choose, the FHA strongly encourages lenders to register for the earliest onboarding phase, and to do it as soon as possible. That would give them more time to get ready for the full transition, the agency said. The first phase begins on Oct. 15, 2015, with additional phases beginning each month and running through the first half of 2016. Information on the onboarding phases as well as ...

loanDepot, LLC, made a big splash in the market this week, becoming the first nonbank lender to begin making ‘A’ paper second liens since the housing bust. The Irvine, CA-based lender fully expects it may soon have competition, but believes by being the first in, it will have a leg up on whichever players enter the fold. However, a quick call to a handful of nonbanks turned up...

Although PHH Corp. refuses to answer questions regarding a key private-label services contract to originate mortgage loans for Merrill Lynch, most analysts that follow the company believe the Wall Street giant will renew the agreement. To date, PHH will not say either way, but observers of the situation believe it’s more a technical matter than anything else. The general consensus is that Merrill has verbally agreed to renew, but hasn’t signed on the dotted line. On its recent earnings call, PHH management said...

Piggyback mortgage financing structures appear to be creeping back into the market, a trend that some observers say could destabilize the industry. Before the financial crisis, many borrowers combined a first-lien mortgage for 80 percent of home value with a second lien of 10 percent or more in order to avoid paying private mortgage insurance. While many first-lien mortgages are still originated with a simultaneous second in recent years, the combined loan-to-value ratio of the two has been capped at 80 percent or less. “From what we’ve seen from lenders who are interested in expanding their customer base, there appears...