Ocwen Financial, the largest servicer of nonprime mortgages, continues to face regulatory and legal pressure as investors voted to terminate the company as servicer of subprime mortgage-backed securities they own. The company said its servicing of two MBS with a combined unpaid principal balance of $260 million is being transferred. The termination vote was allowed due to downgrades to Ocwen’s servicer ratings. Some 119 non-agency MBS ... [Includes one data chart]

Originations of interest-only mortgages remained fairly steady through the end of 2014, suggesting that the new qualified-mortgage standard had limited impact on production. A group of 15 lenders originated $27.72 billion in IOs in 2014, according to Inside Nonconforming Markets, down 25.9 percent from 2013. The QM standards took effect for loans with application dates beginning Jan. 10, 2014. Interest-only loans are not eligible for QM status ... [Includes one data chart]

Issuers of jumbo mortgage-backed securities offered investors variety in two deals that closed last week and an MBS planned for next week. Separate jumbo MBS from WinWater Home Mortgage and FirstKey Mortgage were issued on Feb. 27. The $372.36 million WinWater Mortgage Loan Trust 2015-2 included two non-qualified-mortgages. Debt-to-income ratios above 43 percent caused the two loans to be deemed non-QMs, according to Standard & Poor’s ...

Strong investor demand continues to make whole-loan sales more profitable than securitization, according to Redwood Trust officials. “Throughout 2014, whole-loan buyers provided better pricing and execution for our jumbo home loan sales versus securitization,” said Brett Nicholas, president of the real estate investment trust, during the company’s fourth-quarter earnings call. He said Redwood expects strong demand for jumbo loans in the first part of ...

Moody’s Investors Service started using new criteria to rate prime non-agency mortgage-backed securities at the end of February. As part of the new criteria, the rating service is allowing non-agency MBS issuers to have access to the tool used to estimate Moody’s initial calculation of triple-A stress loss for a potential security. Moody’s Individual Loan Analysis model, known as MILAN, will be the main quantitative tool for collateral analysis by ...

CORRECTION: The jumbo share of total originations in 2014 hit the highest level seen since 2002, not since 2003, as reported in the Feb. 20, 2015, issue of Inside Nonconforming Markets. A New York appeals court approved a long-disputed $8.5 billion settlement this week involving Bank of America and non-agency mortgage-backed securities issued by Countrywide Financial. If no further appeals are brought, investors in the deals ... [Includes seven briefs]

Morgan Stanley has agreed in principle with the Department of Justice to pay $2.6 billion to resolve MBS claims the agency’s civil division indicated it would bring against the company, according to a new disclosure from the Wall Street firm. Morgan Stanley’s disclosure about a potential MBS lawsuit by the U.S. Attorney for the Northern District of California contained no other details. However, the firm increased its legal reserves by $2.8 billion to cover any potential settlement and other pending legacy-related MBS disputes. The adjustment increased...

CashCall recently started offering loans that do not meet qualified mortgage standards. The lender’s “NQM” program targets borrowers who cannot qualify for agency financing. The minimum credit score is 680 and CashCall is flexible in determining ability to repay, including the use of cash flow from investment accounts. Home Loan Servicing Solutions announced this week that no non-agency mortgage-backed security investors have ... [Includes two briefs]

Fueled by demand from banks, jumbo mortgages accounted for 19.0 percent of total mortgage originations in 2014, according to Inside Mortgage Finance, the highest it has been since 2002. But last year’s jumbo production volume, estimated at $235.0 billion, was down 13.6 percent from 2013. However, total originations declined by 34.4 percent in that time. An estimated $67.0 billion in jumbos were originated in the fourth quarter of 2014 ... [Includes one data chart]

Separate efforts by the Treasury Department and the Structured Finance Industry Group aimed at attracting investors to new non-agency mortgage-backed securities continue to progress, according to industry analysts. The Treasury is working to facilitate a benchmark non-agency MBS while SFIG continues to develop standards as part of Project RMBS 3.0. Eric Kaplan, a managing director at Shellpoint Partners and leader of Project RMBS 3.0, said ...