Redwood Trust’s latest non-agency jumbo mortgage-backed security, its eighth of the year, consisted of originations from 67 lenders. No lender accounts for more than 6.4 percent of the originations in the $460.16 million deal. The non-agency jumbo MBS issued this week received AAA ratings with credit enhancement of 7.10 percent on the top-rated tranche. The top contributors to the deal were George Mason Mortgage, Cole Taylor Mortgage, W.J. Bradley Mortgage Capital and PrimeLending, each accounting for ...

Lenders’ contributions to non-agency mortgage-backed securities could continue to be subjected to high levels of scrutiny as the rating services emphasize upfront due diligence. Standard & Poor’s recently cautioned investors in non-agency jumbo mortgage-backed securities from putting too much faith into the representations and warranties provided on new securities. “The fact remains that we believe loan and borrower quality are the most important factors for evaluating residential MBS ...

“People are finally calling us,” Dan Perl, CEO of the privately held Citadel Loan Servicing Corp. of Irvine, CA, told Inside Nonconforming Markets. He said the newly launched subprime or “hard money” lender is starting to gain traction. Perl said the origination business was slow two months ago, but Citadel is on track to fund $6 million to $8 million in mortgages in June. The lender is originating residential loans for borrowers with low credit scores, offering loan-to-value ratios up to 75 percent ...

A bill to reform the government-sponsored enterprises that is in the works in the Senate would reduce conforming loan limits at a much slower pace than many non-agency participants would like to see. Draft legislation from Sens. Bob Corker, R-TN, and Mark Warner, D-VA, has some bipartisan support in Congress, though it is unclear how far the bill will make it in Congress this year. The Secondary Mortgage Market Reform and Taxpayer Protection Act of 2013 would replace the Federal Housing Finance Agency with ...

Policymakers looking for a model to replace the government-sponsored enterprises should look no further than the non-agency jumbo market, according to Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee. “We don’t have to look overseas to see a well-functioning housing market without GSEs,” he said at a hearing this week. “Prior to the housing bust, the jumbo market was approximately 20 percent of the total housing market. There was capital, liquidity, competition ...

The Structured Finance Industry Group said it had substantive discussions with staff members at the Securities and Exchange Commission this week regarding loan-level data formats for mortgages. The SFIG said it plans to work with the Mortgage Bankers Association to potentially enhance the MBA’s Mortgage Industry Standards Maintenance Organization data fields. The SFIG said it is considering pushing for MISMO standards to be used in the government-sponsored enterprises’ risk-sharing ... [Includes three briefs]

The likelihood of new loans exceeding the statutory “high-priced mortgage loan” (HPML) threshold due to a recent policy change relating to FHA mortgage insurance premium payments is causing uneasiness among some lenders, said an industry trade group. This week, the Consumer Mortgage Coalition warned that lenders might not originate FHA-insured loans if they thought the new MIP policy would cause the mortgages to turn into HPMLs and subject them to increased liability. Specifically, the new MIP policy might prevent ...

Some experts are predicting that the new ability-to-repay rule issued by the Consumer Financial Protection Bureau, which sets the boundaries of “qualified mortgages,” will also lead some lenders to focus on so-called non-QM loans that will become the new subprime market. At the American Bankers Association’s regulatory compliance conference, held this week in Chicago, ABA Senior Regulatory Counsel Rodrigo Alba said publicly what many mortgage bankers have been thinking privately. Responding to a comment from one banker who said her institution might opt to do only non-QM lending, just for simplicity’s sake, Alba said, “Wanted or not, this may start leaning into being the new subprime.” He added...

At least 170 non-agency MBS serviced by Ocwen Financial took combined losses of more than $1.0 billion in May due to accounting for principal forbearance that occurred before July 2012. The reporting issue allowed mezzanine bonds to continue receiving interest payments, and industry participants are concerned that the accounting could be an issue on other non-agency MBS. Moody’s Investors Service said the newly realized losses relate to loss mitigation by Homeward Residential. Ocwen acquired Homeward at the end of 2012. The servicing transfer prompted a disclosure by Ocwen to Wells Fargo, the trustee on the deals previously serviced by Homeward, in the May remittance reports on the deals. Wells said...

At first, residential origination volumes were slow at Citadel Loan Servicing Corp., a new player in a lonely market: nonprime production. But that was two months ago, when the Irvine, CA-based company first opened its doors. “People are finally calling us,” said Dan Perl, CEO of the privately held nonbank. By the time June ends, the company will have funded almost $6 million for the month, maybe as much as $8 million. The origination numbers, of course, are miniscule compared to monthly conventional volume, but in the “new” nonprime space Citadel is probably doing more business than the two-dozen or so nonprime or hard money lenders that are quietly toiling away in selected markets. For the industry to revive...