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 ...

Policymakers continue to provide plenty of doubt about whether anything will happen to shrink the footprint of the government-sponsored enterprises. At a hearing last week before the House Financial Services Committee, Mel Watt, director of the Federal Housing Finance Agency, said he hasn’t made a decision about future adjustments to the guaranty fees charged by Fannie Mae and Freddie Mac. The g-fee issue has been under review by the FHFA for ...

One year after the Consumer Financial Protection Bureau’s standards for qualified mortgages took effect, lenders remain cautious about originating non-QMs. “Even though DBRS has seen a few lenders implementing non-QM programs that allow for back-end debt-to-income ratios as high as 50 percent and FICO scores as low as 600, DBRS expects that larger lenders, who are still recovering from the massive fines they had to pay for making subprime loans, will ...

A larger share of small portfolio lenders would qualify for exemptions from standards for qualified mortgages under a proposal issued last week by the Consumer Financial Protection Bureau. Among other issues, the CFPB proposed expanding the definition of “small creditor” from the current limit of 500 first-lien mortgages originated in a year to 2,000 mortgages. The new definition would exclude loans held in portfolio by the lender and its affiliates ...