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 ...

Potential investors in jumbo mortgage-backed securities continue to push issuers to make significant changes to the way the market operates. “How is this ever going to be a $300 billion market if everybody has to look at reps and warrants on a deal-by-deal basis?” said Allan Berliant, a portfolio manager at Grantham Mayo Van Otterloo. “There needs to be a streamlined industry standard.” Berliant and many others called for changes at the ABS Vegas conference ...

A planned jumbo mortgage-backed security from Credit Suisse received some criticism from Fitch Ratings due to concerns about the origination practices of some of the lenders that contributed mortgages to the deal. The rating service increased its default assumptions for the $405.27 million CSMC 2015-1. “Fitch applied a conservative treatment – higher probability of default – due to its limited visibility to the individual lender origination practices ...

Legal settlements that involve loss mitigation are one of many factors keeping investors away from new jumbo mortgage-backed securities. “Until that stops, it’s going to be hard to rebuild trust,” said James Grady, a managing director and head of the structured finance sector team at Deutsche Asset Management, at the recent ABS Vegas conference. A number of settlements between banks and the Residential MBS Working Group have mandated ...

If issuers were to include agency-eligible mortgages with slightly less than pristine underwriting standards in new non-agency mortgage-backed securities, the deals could receive ratings with credit enhancement levels similar to the levels on recent jumbo MBS, according to the results of an exercise released this week by the Treasury Department. Treasury asked six rating services to assign ratings to hypothetical non-agency MBS comprised of $19.75 billion of mortgages ...

JPMorgan Chase this week issued the largest jumbo mortgage-backed security seen since the market started to return in 2010. The $940.06 million deal was backed by adjustable-rate mortgages originated by First Republic Bank. Previously, the largest post-crash deal was a $666.13 million jumbo MBS from Redwood Trust in February 2013. Prior to the financial crisis, many non-agency MBS had balances that topped $1.0 billion, while most jumbo MBS ...

First Republic Bank was the top contributor to jumbo MBS issued in 2014, according to a new ranking and analysis by Inside Nonconforming Markets. Officials at First Republic note that the bank tends to sell its originations of fixed-rate mortgages while adjustable-rate mortgages make for better portfolio holdings. However, the secondary market bid was strong enough for First Republic to sell some jumbo ARMs during the year, including a ... [Includes one data chart]

Two Harbors Investment is using Federal Home Loan Bank advances to significantly increase its activity in the jumbo market. The real estate investment trust issued three jumbo MBS in 2014 totaling $1.0 billion. Officials revealed this week that Two Harbors’ jumbo conduit origination activities have a current average run rate of $300 million per month. “That’s putting us on track to have substantially more volume and complete more securitizations this year ...