The rating services will put an emphasis on documentation of compliance with requirements for qualified mortgages and new ability-to-repay provisions. Credit-enhancement requirements appear as though they will be unchanged for the majority of jumbo MBS issued beginning in 2014, though issuers might have to make adjustments to prove to the rating services that they are compliant with new requirements from the Consumer Financial Protection Bureau. Since most of what is being originated today already meets the standards of the rules, DBRS believes that the real challenge lies in unequivocally demonstrating QM and ATR compliance to the market and establishing confidence in the soundness of the systems and procedures that will be used to determine and ensure compliance, DBRS said. The rating service recently released...
Higher guaranty fees at the government-sponsored enterprises and lower loan limits for FHA mortgages in 2014 arent expected to prompt an increase in the issuance of non-agency mortgage-backed securities because the economics for securitization remain unattractive. Industry analysts are also concerned that the Senates confirmation of Rep. Mel Watt, D-NC, as director of the Federal Housing Finance Agency could slow efforts to shift business from Fannie Mae and Freddie Mac to the non-agency market. The FHFA announced ...
The rating services are slowly rolling out their criteria for non-agency mortgage-backed securities issued after the Consumer Financial Protection Bureaus qualified-mortgage requirements take effect. The consensus among the rating services appears to be that jumbo issuers will initially stick to QMs that receive safe-harbor protections. To meet QM requirements, lenders must document eight underwriting characteristics, including income, employment and debt-to-income ratio. QMs also cannot include ...
After years of servicing loans for distressed subprime borrowers but avoiding mortgage originations, Ocwen Financial is planning to offer nonprime mortgages. Nonprime lending is sort of like crabgrass, William Erbey, Ocwens executive chairman, said last week at an investor conference hosted by the firm. Ive been around long enough to see it get hit by Roundup and come back through the cracks. Ocwen jumped into the agency origination market last year with its acquisition of Homeward Residential ...
While Fannie Mae and Freddie Mac stress their avoidance of new subprime and Alt A mortgages, nonprime mortgages continue to account for a small portion of the government-sponsored enterprises new business. According to an analysis by Inside Nonconforming Markets, Fannies portfolio of guaranteed subprime mortgages is declining much more rapidly than Freddies. Fannie guaranteed $4.30 billion in subprime mortgages as of the end of the third quarter of 2013, down 17.3 percent ... [Includes one data chart]
Fraud among jumbo borrowers is increasing, particularly regarding employment and income, according to industry analysts who say lenders should pay particular attention to fraud on loan characteristics that factor into qualified mortgage requirements and new ability-to-repay standards. In high-cost markets, people tend to be willing to fudge a little bit on their income, said Ann Fulmer, a vice president of industry affairs at Interthinx, during a webinar hosted this week by the provider of fraud-mitigation services ...
The end-of-draw period for home-equity lines-of-credit originated 10 years ago isnt the only concern for banks, according to federal regulators. Fair-lending violations are also a risk in cases where lenders reduced credit limits on HELOCs or suspended the loans due to declines in home prices. Many lenders suspended borrowers HELOCs in recent years or reduced credit limits due to significant declines in home prices, according to the Federal Reserve. The manner in which HELOC accounts ... [Includes one data chart]
Nationstar Mortgage issued a $158 million non-agency mortgage-backed security this week with prime Alt A mortgages that have seasoned for an average of 11 years, according to a rating report from Standard & Poors. The AAA tranche had credit enhancement of 8.60 percent. Mortgages in the MBS had low or no documentation and 43.7 percent were cash-out refinances. S&P said 82.8 percent of the mortgages havent been delinquent in the last 24 months and the current ... [Includes one brief]
The Department of Housing and Urban Development has released a final rule defining a qualified mortgage that is insured by the FHA. The final rule will be effective on Jan. 10, 2014. The HUD rule builds off the QM/Ability-to-Repay rule, which the Consumer Financial Protection Bureau finalized earlier this year. The Dodd-Frank Act requires HUD to propose a QM definition that is aligned with the ability-to-repay criteria set out in the Truth in Lending Act and with the agencys mission to ...
In the third quarter of 2013, the level of home-mortgage debt outstanding grew for the first time since early 2008 as the housing industry continued to climb out of the crater. The Federal Reserve this week announced there was $9.864 trillion of single-family mortgages outstanding at the end of September, a tiny 0.1 percent increase from the previous quarter. But after four and half years of decline, the gain seemed monumental. The central bank noted that all the increase was in first mortgages, while the supply of home-equity loans outstanding continued to shrink. Servicing attached to Ginnie Mae, Fannie Mae and Freddie Mac programs continued...[Includes one data chart]