The Federal Housing Finance Agency said in December that it would wait until at least October before setting new “purchase limits” for Fannie Mae and Freddie Mac. The regulator of the two government-sponsored enterprises is considering establishing purchase limits below the statutory conforming loan limits. In the highest-cost markets, the biggest loan the GSEs could buy would be $600,000, instead of $625,500. The national purchase limit would be $400,000, roughly 4 percent below the $417,000 conforming ...

Originations held in bank portfolios couldn't outpace portfolio runoff, according to a new ranking and analysis by Inside Nonconforming Markets. The dollar volume of first liens in bank and thrift portfolios declined by 0.6 percent in the third quarter of 2013 compared with the previous quarter. Total residential mortgages outstanding increased by a scant 0.1 percent during that time, the first quarterly increase in total mortgages outstanding since early 2008. While banks ... [Includes one data chart]

Non-agency mortgage originations are expected to remain relatively strong in 2014, led by bank jumbo production and an expected resumption of issuance of non-agency mortgage-backed securities. Through three quarters in 2013, an estimated 22.4 percent of the $1.59 trillion in mortgages originated (including second liens) had non-agency execution, according to affiliated publication Inside MBS & ABS, with most of the non-agency activity concentrated in bank portfolios. Total mortgage originations ...

The Federal Reserve’s asset purchases will continue to dominate execution of jumbo mortgage-backed security issuance until the significant purchases of agency MBS are stopped, according to analysts at Bank of America Merrill Lynch. The tapering of the Fed’s quantitative easing beginning this month will do little to end the advantages agency MBS have over new jumbo MBS. “We believe that the Fed’s ‘non-economic’ bid for agency MBS contributes to the distorted price advantage for agency MBS ...

The qualified mortgage requirements set to be implemented next week present jumbo lenders with opportunities as well as compliance challenges, according to industry participants. “We are particularly bullish about the jumbo mortgage business because we believe that multiple regulatory and competitive factors provide strong tailwinds to our business,” Greg Garrabrants, president and CEO of BofI Holdings, said during a recent investor presentation. He said the debt-to-income ratio requirements ...

Higher guaranty fees at the government-sponsored enterprises and lower loan limits for FHA mortgages in 2014 aren’t expected to prompt an increase in the issuance of non-agency mortgage-backed securities because the economics for securitization remain unattractive. Industry analysts are also concerned that the Senate’s confirmation of Rep. Mel Watt, D-NC, as director of the Federal Housing Finance Agency could slow efforts to shift business from Fannie Mae and Freddie Mac to the non-agency market. The FHFA announced ...

The rating services are slowly rolling out their criteria for non-agency mortgage-backed securities issued after the Consumer Financial Protection Bureau’s qualified-mortgage requirements take effect. The consensus among the rating services appears to be that jumbo issuers will initially stick to QMs that receive safe-harbor protections. To meet QM requirements, lenders must document eight underwriting characteristics, including income, employment and debt-to-income ratio. QMs also cannot include ...

After years of servicing loans for distressed subprime borrowers but avoiding mortgage originations, Ocwen Financial is planning to offer nonprime mortgages. “Nonprime lending is sort of like crabgrass,” William Erbey, Ocwen’s executive chairman, said last week at an investor conference hosted by the firm. “I’ve been around long enough to see it get hit by Roundup and come back through the cracks.” Ocwen jumped into the agency origination market last year with its acquisition of Homeward Residential ...

Federal regulators this week issued a final rule regarding appraisals for higher-priced mortgages as required by the Dodd-Frank Act. The rule is the latest in a long line of DFA-related requirements that will have an impact on the non-agency market. The final rule issued this week exempts three classes of higher-priced mortgages from appraisal requirements: certain streamlined refinances, some transactions secured by manufactured homes and transactions of $25,000 or less. Higher-priced mortgages ...

Servicers are complying with most of the requirements under the $25 billion national servicing settlement and the Home Affordable Modification Program. Regulators have warned that penalties will be severe if problems persist. The monitor of the national servicing settlement said in a report last week that CitiMortgage failed one of more than 24 metrics tested in the second quarter of 2013. Joseph Smith, the settlement monitor, said the failure regarding whether loans were delinquent ...