The amount of subprime mortgages outstanding continues to decline, with servicers in the sector focusing on loan modifications. An estimated $380 billion of subprime mortgages were outstanding as of the end of the first quarter of 2014, according to a new ranking by Inside Nonconforming Markets. With few subprime originations in recent years, the amount of subprime mortgages outstanding fell by 17.2 percent compared with the first quarter of 2013 ... [Includes one data chart]

More than two out of three non-agency loan modifications started under the Home Affordable Modification Program eligible for principal reduction have received principal reduction in recent years, according to the Treasury Department. Principal reduction for non-agency mortgages under HAMP is not required, but loan owners receive incentives for allowing principal reduction. HAMP servicers handling non-agency mortgages are required to evaluate ... [Includes one data chart]

After years of losses from holdings of nonprime mortgages, Fannie Mae and Freddie Mac reported significant income relating to subprime mortgages and Alt A loans in the first quarter of 2014. The income was largely tied to settlements of lawsuits filed by the Federal Housing Finance Agency against non-agency mortgage-backed security issuers, and losses from nonprime mortgages were also minimal during the quarter ... [Includes one data chart]

Nonprime lender Citadel Loan Servicing increased its maximum loan size this week to $1.5 million from $1.0 million. Dan Perl, Citadel’s CEO, said the lender is on track to close $14 million in originations in May and $15 million in June. He added that Citadel is close to entering the non-agency mortgage-backed security market. Walter Investment Management revived Ditech Mortgage and the lender will offer jumbos, among other products ... [Includes four briefs]

In a few months, mortgage insurance giant Radian Group will close on its $305 million cash purchase of Clayton Holdings, ending the “independent” status of one of the nation’s largest MBS due-diligence firms. Almost all the larger due-diligence companies have been gobbled up by larger players over the past 18 months. Most of the acquirers have other interests in the residential finance industry and are betting on the eventual return of the non-agency MBS market. That could be...

Now that the mortgage lending industry has a few months of experience dealing with the qualified mortgage standard under the CFPB’s ability-to-repay rule, some lenders are getting more confident about lending outside the parameters of the QM. Last week, during a webinar sponsored by Inside Mortgage Finance, an affiliated newsletter, industry experts highlighted some key considerations as to how to do so while minimizing the legal risk and otherwise overcoming certain compliance challenges. “A couple of points that I would make is that you want to document every step along the way – because what you’re really managing to is not necessarily the CFPB, not even necessarily a judge. You’re probably managing to the lawyer who is looking to take the...

Bayview Asset Management announced late last week that it will delay the issuance of a non-agency MBS backed by re-performing subprime mortgages with an unpaid principal balance of $215 million. The delay was prompted by concerns about property valuations and loss severity. Standard & Poor’s issued a presale report on Bayview Opportunity Master Fund Trust 2014-9RPL on April 28, and the deal was scheduled to close May 12. The MBS was set to receive a AAA rating from S&P, but the rating service said it withdrew its preliminary rating due to Bayview’s extension of the planned closing date. The delay in closing was prompted...

The sphere of mortgage lending that will exist outside the parameters of the qualified-mortgage standard established by the Consumer Financial Protection Bureau represents an attractive opportunity for both lenders and bond buyers, but skittish investors need to be won back before they return and participate to any significant degree. That was one of the key take-aways from a webinar sponsored this week by Inside Mortgage Finance, an affiliated publication. Non-QM mortgages will exist...

Issuers of jumbo mortgage-backed securities could increase their activity in the second quarter of 2014 after two consecutive quarters of suppressed issuance. Pricing for new jumbo MBS has improved, according to industry participants, though many expect issuance to remain constrained. In April, Redwood Trust issued a $346.30 million jumbo MBS that priced at the end of the first quarter. At the end of April, Credit Suisse issued a $271.73 million jumbo MBS, according to rating reports ...

In the fourth quarter of 2013, Redwood Trust launched its program to acquire mortgages to be sold to the government-sponsored enterprises. The real estate investment trust’s GSE conduit activity is now poised to overtake the jumbo activity that Redwood has been known for in recent years. Redwood acquired $1.09 billion in residential mortgages in the first quarter of 2014, with jumbos accounting for 72.6 percent of the activity. Officials said the real estate investment trust’s goal is to ...