Thanks to a heavy supply of scratch-and-dent deals and a rebound in jumbo mortgage securitizations, new issuance in the non-agency MBS market jumped by 57.4 percent in the third quarter of 2014, according to a new Inside MBS & ABS analysis and ranking. A total of $8.99 billion of non-agency MBS were issued during the third quarter, a major increase from the $5.71 billion issued in the previous three-month period. Year-to-date issuance was still off 27.3 percent from the first nine months of 2013, and it is doubtful that annual volume this year will top 2013’s total when the year is over. Issuance of prime non-agency MBS in the third quarter was...[Includes three data charts]

A federal judge in New York has cleared the way for investors to proceed with a $10 billion class-action suit against JPMorgan in relation to the 2007 sale of non-agency MBS. Judge Paul Oetken of the U.S. District Court for the Southern District of New York, however, limited the scope of the class-action suit to JPMorgan’s liability but did not certify as to damage. Explaining his decision to narrow the scope of the suit, Oetken said...

Some $3.05 billion in jumbo mortgage-backed securities were priced in the third quarter of 2014, nearly triple the volume seen in the previous quarter, according to a new ranking and analysis by Inside Nonconforming Markets. Issuance through three quarters is still below the level of jumbo MBS activity in 2013 but industry analysts suggest that the jumbo MBS market looks strong heading into the fourth quarter and beyond. Credit Suisse was the top issuer of jumbo MBS ... [Includes one data chart]

A shift from refinances to purchase mortgages has helped push combined loan-to-value ratios on jumbo mortgage-backed securities to the highest levels since the financial crisis. The higher LTV ratios are prompting an increase in credit enhancement requirements. JPMorgan Chase this week issued a $355.64 million jumbo MBS with an average combined LTV ratio of 74.0 percent. And WinWater Home Mortgage is preparing a $276.91 million jumbo MBS with an average combined LTV ratio of ...

Only one nonbank claimed more than a 1.0 percent share of originations of non-agency jumbo mortgages in 2013, according to a new Inside Nonconforming Markets analysis of Home Mortgage Disclosure Act data. Quicken Loans, the 10th-ranked jumbo lender in 2013, accounted for 1.26 percent of jumbos originated during the year, even after growing its originations at more than double the industry average compared with 2012. Banks were the top nine jumbo lenders in 2013 ... [Includes one data chart]

A number of participants in the non-agency market are working to address the risks posed by second liens taken out by borrowers after the origination of the first mortgage. Some potential investors in non-agency mortgage-backed securities have balked at buying into new issuance due to concerns about borrower leverage and equity positions. “That’s a big problem for insurance companies and institutional investors, that debt can morph over time,” Fred Matera, a managing director at Redwood Trust ...

Issuers of non-agency mortgage-backed securities appear likely to continue working in the private 144A market as opposed to issuing deals in the public market, according to industry participants. Redwood Trust was issuing jumbo MBS in the public market, but it switched to the 144A market even before new requirements from the Securities and Exchange Commission made private issuance more attractive. Most other jumbo MBS issuers in recent years have also stuck with offering their deals in ...

Social Finance, a nonbank that has focused on refinancing student loans, launched a jumbo mortgage lending program this week. The lender is offering loans with downpayments as low as 10 percent and balances as high as $3.0 million with no requirement for private mortgage insurance. SoFi is offering 30-year fixed-rate mortgages and adjustable-rate mortgages, including a 5/5/20 ARM with a 10-year interest-only period. SoFi said it is looking to originate ... [Includes one brief]

FHA reverse mortgage volume fell in the second quarter as well as during the first six months of 2014 as regulatory changes reduced profitability and increased the cost of originating the government-backed product, according to Inside FHA Lending’s analysis of agency data. Home equity conversion mortgage volume declined 19.9 percent quarter-over-quarter and dropped 9.0 percent during the first half of the year compared to the same period last year. HECM lenders reported $7.2 billion in total originations in the first half, with purchase loans accounting for 93.6 percent. Fixed-rate HECMs comprised only 22.2 percent of total volume as most borrowers turned to adjustable-rate HECMs for their reverse-mortgage needs. The top five HECM lenders – American Advisors Group, Reverse Mortgage Solutions, One Reverse Mortgage, Liberty Home Equity Solutions and Proficio Mortgage Ventures – accounted for ... [1 chart ]

An internal audit found as many as 136 borrowers not living in the properties for which they have obtained FHA-insured reverse mortgages because they were also receiving federal housing assistance under a different address. The Department of Housing and Urban Development’s Office of the Inspector General discovered the anomaly during a follow-up review of HUD’s oversight of the home-equity conversion mortgage program to ensure HECM borrowers comply with residency requirements. A previous audit had red-flagged potential residency violations. In the latest review, auditors analyzed HUD’s data warehouse for single-family mortgages and its public housing information system from April 2011 through March 2014 and identified 159 potential violators of the residency rule. Of those potential violators, 136 were found to be not occupying the properties associated with their HECM loans but, instead, ...