Demand in the secondary market for credit risk could help increase issuance of prime non-agency mortgage-backed securities, according to industry analysts. A significant number of investors at the ABS East conference last week said deals across the MBS and ABS markets have been oversubscribed, with the supply of new issuance in recent months seen as insufficient. The conference was produced by Information Management Network in Miami Beach. Peter Sack, a managing director at Credit Suisse, said...

Nonprime lenders defended mortgages underwritten with borrowers’ bank statements after criticism of the loans by Fitch Ratings. Steven Schwalb, CEO of Angel Oak Home Loans, a nonprime lender that offers bank-statement mortgages, noted that the loans measure borrowers’ cash flow more precisely than the tax returns used for traditional income verification. “We’re comfortable with the risk of that borrower,” he added, during a panel discussion at the ABS East conference produced by Information Management Network last week in Miami Beach. Bank-statement mortgages account...

Redwood Trust made a couple of adjustments to its new jumbo mortgage-backed security between when presale reports were issued and when the deal closed. Among other changes, the size was reduced slightly due to uncertainty about the impact of damage from Hurricane Irma on certain properties. Redwood removed 12 mortgages from the loan pool, dropping the unpaid principal balance of the MBS from $316.49 million to $307.64 million, according to Moody’s Investors Service. Seven loans were dropped...

Originations of nonprime mortgages in 2017 are the strongest they have been since the financial crisis but remain well below levels seen before then. Lenders are looking to lean on loan originators and borrowers in an effort to increase volume. Angel Oak Companies is on track to originate more than $1.1 billion of non-qualified mortgages this year, according to the firm. The nonbank has three lending units that largely focus on nonprime mortgages and the $1.1 billion in production will be a company record. “Clearly, investors, brokers and consumers are...

Mortgage lenders sold $49.74 billion of high-cost home loans to a variety of secondary market investors last year, according to a new Inside Nonconforming Markets analysis of Home Mortgage Disclosure Act data released late this week. Sales of high-cost mortgages rose 19.1 percent from 2015 to 2016, and accounted for 3.3 percent of total loans sold last year. HMDA reports are required to flag loans with interest rates that exceed the benchmark prime offered rate – basically the rates for Freddie Mac mortgages – as well as loans that are subject to special consumer protections under the Home Owner Equity Protection Act. Sales of HOEPA loans totaled...[Includes one data table]

Wells Fargo recaptured its crown as the leading VA jumbo securitizer, pushing Penny Mac back to second place even as the market dropped further in the second quarter. The volume of VA jumbo loans securitized during the second quarter declined by 5.2 percent from the prior quarter and by 11.8 percent during the first half of 2017 compared to the same period last year. VA jumbo mortgage originations were off by 4.3 percent from the first quarter, according to an analysis by Inside FHA/VA Lending affiliate Inside Mortgage Finance. Agency-jumbo production sagged in the second quarter but the results were not uniform. Fannie Mae production was up 6.5 percent from the prior quarter, while FHA jumbo securitization gained 7.2 percent during the period. At the same time, VA jumbo securitization was down 5.2 percent to $7.4 billion from $7.8 billion, while Freddie Mac saw a hefty 27.8 percent drop in ... [Charts]

The supply of home-equity loan debt outstanding has been in such a steady decline since 2007 that even the mild revival in new lending has been unable to stop. At the end of June, there was $585.09 billion of HEL debt outstanding, including home-equity lines of credit and closed-end second mortgages. That was down 0.7 percent from March. The vast majority of those loans, some $556.94 billion, were held in portfolio by banks, savings institutions and credit unions. There was...[Includes three data tables]

Drawing to a close, the third quarter of 2017 is turning out to be modestly better than some lenders expected with both profits and production volumes getting a second wind recently thanks to falling interest rates. “We’re having a great quarter,” said Mat Ishbia, president and CEO of United Wholesale Mortgage, Troy, MI. According to Ishbia, not only will UWM post record originations of $8.6 billion in the third quarter, but volume at the privately held nonbank will be about 20.0 percent higher than ever before. According to figures compiled by Inside Mortgage Finance, UWM is...

Anecdotal and empirical evidence confirm that mortgage lenders are continuing to lighten up on their underwriting criteria. The loosening may not be as pronounced as it was in the run-up to the financial crisis, but there are concerns that it will intensify as the Federal Reserve raises interest rates. Fannie Mae’s latest mortgage lender sentiment survey found that more lenders said they have eased credit standards than tightened them, something the government-sponsored enterprise attributed to limited demand for residential finance and a negative outlook on profit margins. “The net share of lenders reporting easing of credit standards over the prior three months has continued...

Issuance of non-agency MBS backed by newly originated home loans remains well below levels seen before the financial crisis. While new regulations have stopped some pre-crisis loan types from being originated, industry participants suggest that other major factors are also limiting the supply of loans available for MBS. Chris Helwig, a managing director at Amherst Pierpont, noted that banks are competing for prime jumbos and holding them in portfolio, and many borrowers who previously might have received subprime mortgages opt for FHA loans. “All that is left for non-agency MBS is...