While the word “subprime” often brings housing loans to mind, a new study by Equifax shows that subprime borrowers seeking access to credit cards and auto financing are having an easier time. Lending to subprime consumers for bank credit cards increased 41 percent on a year-over-year basis, with the bankcard limits at their highest since 2008, while retail credit card limits grew 6 percent. Subprime borrowers now comprise 46 percent of the auto finance market, with loan amounts up 14 percent since 2010. Total new auto loan originations hit a six-year high in December 2011...

Two fair lending groups say 2011 data collected under the Home Mortgage Disclosure Act reveal that Citigroup, JPMorgan Chase, Wells Fargo and others continued making subprime mortgages last year in a way that had a disparate impact on minority borrowers. Fair Finance Watch said the raw data show that African American borrowers last year were 3.38 times more likely to get a so-called rate-spread loan (1.5 percentage points over Treasury yields) from Citigroup than white borrowers, worse than its 2.25 times disparity rate in 2009. Hispanic borrowers were 2.42 times more likely than whites to get a rate...

Redwood Trust has packaged its fourth non-agency jumbo MBS of the past two years and achieved the lowest credit-enhancement requirement during that span thanks largely to a more appealing geographic mix of properties backing the loans. Sequoia Mortgage Trust 2012-2 looks a lot like the three previous jumbo deals Redwood has issued in its solo effort to re-ignite the non-agency MBS market. In some ways, the collateral is slightly less pristine than some of the earlier transactions, although all four have been backed by very high quality prime loans. Credit enhancement for the AAA-rated classes is 7.15...

After suggesting that it would consider selling jumbos to investors via whole loan sales, Redwood Trust this week issued a $327.94 million non-agency jumbo mortgage-backed security. While the real estate investment trust has not ruled out whole loan sales, the issuance reflects confidence in the non-agency market – from Redwood and investors. Redwood’s latest security, Sequoia Mortgage Trust 2012-2, is similar to other recent non-agency MBS issuance by the REIT. Redwood has now issued five non-agency MBS deals since April 2010, the only non-agency MBS issuance backed by new originations since 2008. At the end of February, Redwood officials revealed that the REIT was considering bulk sales ...

PennyMac Loan Services has some unique loss-mitigation strategies, but Moody’s Investors Service warned this week that some of the company’s approaches are risky. Among other issues, PLS can require borrowers that otherwise would not qualify for a loan modification to deed their property to the servicer if the mod does not succeed. “While this approach can improve loss mitigation performance or reduce timelines, Moody’s believes these programs could result in borrowers and regulators challenging this practice as well as headline risk to the company,” the rating service said. PLS has yet to employ the tactic. The warning from Moody’s ...

Ocwen Financial has made a number of adjustments in recent months to better compete with other nonbank servicers. Perhaps most significantly, the special servicer has started to shift to an “equity light” business model. The shift occurred at the end of February when Home Loan Servicing Solutions completed a $186.2 million initial public offering. HLSS said it will use the proceeds to purchase the rights to receive servicing and other related fees, associated servicing advances and other related assets from Ocwen. HLSS was founded by William Erbey, chairman of Ocwen ...

Fannie Mae, Freddie Mac and the FHA accounted for 41.8 percent of the $84.66 billion in lending over the $417,000 threshold in 2011, the lowest share they’ve had since emergency loan limits went into effect in 2008, according to an analysis by affiliated publication Inside Mortgage Finance. The agency share of jumbo production peaked in the second half of 2009 at 53.1 percent.The government-sponsored enterprises and Ginnie Mae financed 36.6 percent of the loans exceeding $417,000 that were originated in the fourth quarter of 2011. That was down from a 42.7 percent agency share of the jumbo market in the third quarter of 2011 ... [Includes three briefs]

Home-equity lending in 2011 fell to its lowest level in more than 20 years as crumbling house prices and rigid underwriting continued to hammer away at second mortgage lending. Banks, savings institutions and credit unions reported a total of $803.6 billion of home-equity loans in their portfolios at the end of the year, down 7.2 percent from the previous December. Depository institutions accounted for the lion’s share, 92.1 percent, of the $873.0 billion home-equity market. Finance companies were the only other significant player in the market, with $49.0 billion at the...(Includes two data charts)

The documents governing a proposed $25.0 billion settlement involving five major banks include greater incentives for principal reduction loan modifications on portfolio loans rather than loans in non-agency mortgage-backed securities. However, non-agency MBS investors remain concerned that they could take losses due to the settlement. The consent judgments against Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo were filed in federal court this week, a month after the settlement was announced by 49 state attorneys general and the federal government ...

Fannie Mae and Freddie Mac anticipate continued losses on their holdings of nonprime mortgages and mortgage-backed securities in 2012 and beyond. However, the government-sponsored enterprises will soon shift from run-off mode and consider selling some of the nonperforming assets. The GSEs held a combined $398.45 billion in nonprime purchased/guaranteed mortgages as well as nonprime MBS at the end of 2011, according to a new analysis by Inside Nonconforming Markets. That was down 16.3 percent from the end of 2010. Fannie accounted for 56.3 percent of the GSEs' total non-prime holdings, with purchased/ guaranteed loans accounting for 71.4 percent of the GSEs' total non-prime holdings ... [Includes one data chart]