The total dollar volume of non-agency mortgage-backed securities backed by new originations nearly doubled in 2018, according to a new ranking and analysis by Inside Nonconforming Markets. Some $29.08 billion of non-agency MBS backed by new loans was issued in 2018, a 94.3 percent increase from 2017. Issuance of both prime non-agency MBS and expanded-credit deals hit post-crisis highs last year. Some $17.69 billion of prime non-agency ... [Includes one data chart]

The market for mortgage-backed securities with non-qualified mortgages will continue to grow in 2019, according to industry analysts. However, the annual doubling of volume seen in recent years appears unlikely. Analysts at both Bank of America Merrill Lynch and Wells Fargo Securities project non-QM MBS issuance to increase by about 60 percent in 2019. Some $11.38 billion of expanded-credit MBS, including non-QMs, was issued in 2018, according to Inside Nonconforming ...

Industry analysts expect Mark Calabria to shake things up at the Federal Housing Finance Agency – that is, once he’s approved by the full Senate. “The nomination of Calabria should, in our view, be taken as an indication of the administration’s and the Treasury Department’s will to tackle housing reform proactively, rather than maintain the status quo,” analysts at Bank of America Merrill Lynch said. According to Wells Fargo Securities, Calabria’s nomination is one of the most significant ...

Issuers of non-agency mortgage-backed securities are adding more variety to the stop-advance features of the deals, leading to criticism from rating services. Industry analysts, though, said the move doesn’t necessarily create new risks. With non-agency MBS, master servicers have to advance the principal and interest due for delinquent loans. Historically, they had to make the payments if the advances were deemed recoverable, analysts at Deutsche Bank Securities noted ...

Issuance volume and lending practices in the prime non-agency mortgage-backed security market in 2019 will be linked in several ways to the government-sponsored enterprises, according to industry analysts. Volume projections for prime non-agency MBS depend on pricing differences between non-agency execution and delivery of loans to Fannie Mae and Freddie Mac. Non-agency lenders are also expected to increasingly use tools developed by the GSEs. “We expect robust issuance from ...

The adjustable-rate mortgage share of total originations declined in the third quarter of 2018, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $50.0 billion of ARMs were originated in the third quarter, accounting for 11.5 percent of total originations. In the previous quarter, an estimated $55.0 billion of ARMs were originated, making up 12.4 percent of the market. ARM volume was also down from ... [Includes one data chart]

Ocwen Financial announced last week that it plans to launch non-agency originations in the second quarter of 2019, focusing on borrowers already in its servicing portfolio. The company detailed the plans in presentations to investors. Officials said Ocwen is expanding from originating agency mortgages into non-agency mortgages in an effort to maximize the potential to recapture borrowers in Ocwen’s servicing portfolio. The move is years in the making and follows a ...

Holdings of first-lien mortgages by banks and thrifts increased in the third quarter, according to an Inside Nonconforming Markets analysis of call reports. Banks and thrifts held $2.07 trillion of first liens in their portfolios at the end of September, up 1.2 percent from June and 4.3 percent from a year ago. The holdings have largely been boosted by jumbo mortgages along with loans eligible for sale to the government-sponsored enterprises ... [Includes one data chart]

An increase in asset-based underwriting by banks prompted warnings from the Office of the Comptroller of the Currency last week. The OCC said its examiners have seen greater use of asset dissipation underwriting, a practice used to qualify borrowers using a hypothetical income stream from their asset liquidation rather than debt-to-income ratios. Banks are increasingly using asset dissipation or asset depletion as a response to “intense competition” from nonbanks, among other ...

With 2018 winding down, issuers of non-agency mortgage-backed securities introduced two new deals this week. Neuberger Berman is set to issue its second expanded credit MBS of the year while Verus Mortgage Capital is planning its second deal backed by nonprime loans for investment properties. Neuberger Berman’s Homeward Opportunities Fund I Trust 2018-2 will be a $320.1 million deal and Verus Securitization Trust 2018-INV2 will be a $254.8 million issuance. Sprout Mortgage ...