Banks with the capacity to hold jumbo mortgages in portfolio were major contributors to jumbo mortgage-backed securities issued in 2013, according to a new ranking and analysis by Inside Nonconforming Markets. Fixed-rate mortgages also dominated the population of loans bundled into jumbo MBS last year. First Republic Bank was the biggest originator of securitized jumbos in 2013, with a market share more than double the next closest lender. Some $2.16 billion in originations from [Includes two data charts]

Issuance of jumbo mortgage-backed securities has ground to a halt recently but that hasn’t stopped lenders that were participating in the jumbo MBS market from originating loans. Instead, some have shifted their output of jumbos to whole-loan sales. PrimeLending, W.J. Bradley Mortgage and other jumbo lenders whose loans helped fuel the surge in jumbo MBS issuance in the first half of 2013 have shifted to selling whole loans directly to investors, often banks. Scott Eggen, director of capital markets at PrimeLending ...

While many major banks plan to offer mortgages that don’t meet qualified mortgage requirements, the originations will largely be limited to interest-only mortgages for well-heeled borrowers. A handful of smaller players have plans to offer a different sort of non-QM, aimed at borrowers with higher debt-to-income ratios or via hybrid adjustable-rate mortgages. Among the firms targeting the non-QM space beyond IOs is Fenway Summer, headed by Raj Date, the former deputy director at the CFPB ...

A significant number of lenders report that the liability posed by loans that don’t meet qualified-mortgage standards is so large that they won’t offer non-QMs. Others would like to offer non-QMs but can’t at the moment because they don’t have portfolios and a secondary market for non-QMs has yet to develop, due at least partly to liability concerns. “The risks of liability and protracted litigation are greatest for these loans where there is no presumption of compliance and there is a strong ...

While originations of prime conforming mortgages declined significantly in the fourth quarter of 2013, there are new signs of life in the nonprime sector. Citadel Loan Servicing raised $200 million in seed money a year ago and is operating at a current run-rate of $130 million a year. The lender offers subprime mortgages with a 20 percent downpayment requirement. Company founder and CEO Dan Perl told Inside Nonconforming Markets that the firm hopes to issue a nonprime mortgage-backed security ...

Subprime borrowers opted for adjustable-rate mortgages during the last boom due to economic considerations, not because of a lack of financial sophistication, according to new research published by the Federal Reserve Bank of San Francisco. The Fed researchers found that even accounting for house price appreciation, subprime borrowers were at least as sensitive to changes in loan pricing and other interest-rate related fundamentals as borrowers with credit scores of 760 and above. The findings were detailed in ...

More than $85 million in peer-to-peer mortgages were originated in 2013 via National Family Mortgage, according to the firm. The company facilitates real-estate lending between family members. NFM said it is on pace for $150 million in originations this year. The firm said its originations can be more affordable than mortgages from traditional lenders. In addition to using NFM to facilitate a home purchase, some borrowers have refinanced from a traditional mortgage into a family-funded loan ... [Includes one brief]

It is not a matter of “if” or even “when” but rather “how” the remaining defendants settle lawsuits filed by the Federal Housing Finance Agency over billions in non-agency MBS sold to Fannie Mae and Freddie Mac in the years leading up to the housing crisis. Last week, the FHFA announced it recovered $7.88 billion in civil settlements in 2013 from seven of the 18 defendants the agency took to court in 2011. Eleven firms have yet to settle, with Bank of America facing the largest exposure because of its ownership of Countrywide Financial Corp. and Merrill Lynch, two of the largest issuers in the now-defunct subprime MBS market. In its original claim, the conservator of Fannie and Freddie accused...[Includes one data chart]

Just three jumbo mortgage-backed securities were issued in the fourth quarter of 2013, according to a new ranking and analysis by Inside Nonconforming Markets. During the second quarter of the year, one deal was issued every week, on average. Investor demand for jumbo MBS plummeted after interest rates started to increase in May. A number of the deals that were completed in the second half of the year received minimal attention from investors, with at least one planned issuance scrapped ... [Includes one data chart]

Mel Watt, the incoming director of the Federal Housing Finance Agency, appears to be taking a less aggressive stance toward decreasing the government-sponsored enterprises’ dominance of the mortgage market than Ed DeMarco, the acting director of the FHFA. The FHFA in December announced changes to GSE mortgage-backed security guaranty fees that would amount to an average increase of approximately 11 basis points, to be implemented in March and April ...