A final rule issued by the Securities and Exchange Commission regarding third-party due diligence providers and rating services takes effect on June 15. The rule is set to prompt a number of changes in the non-agency mortgage-backed security market, largely targeting transparency. For MBS that receive ratings, public disclosure of results from third-party due diligence reviews will be required before a deal is priced. The disclosure requirement even applies to deals issued as private placements, which is the current practice for jumbo MBS ...

Ocwen Financial’s servicing of certain mortgages in non-agency mortgage-backed securities remains at risk due to a downgrade watch issued last week by Standard & Poor’s. Officials at Ocwen said they were surprised by the announcement while noting that Moody’s Investors Service upgraded various ratings relating to the nonbank. S&P said it placed servicer ratings for Ocwen on watch for downgrade last week due to regulatory scrutiny of the company, results from ...

Underwriting standards on jumbo mortgages tightened slightly in May compared with the previous month, according to the Mortgage Bankers Association. The results reversed six consecutive months of looser jumbo underwriting. Two-thirds of the 182 banks recently surveyed by the American Bankers Association said their originations in 2014 included non-qualified mortgages. Non-QMs accounted for 10 percent of the banks’ originations ... [Incluides three briefs]

Originations of jumbo mortgages continued strong in the first quarter of 2015, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $70.0 billion in jumbos was originated during the quarter, up 59.1 percent compared with the first quarter of 2014. A number of jumbo lenders more than doubled their production during that time. “Our jumbo pipelines are near record high, as the demand for jumbo mortgages remains healthy,” said ... [Includes one data chart]

Real estate investment trusts and new investors in the mortgage business could provide funding for nonconforming lending, but securitization remains challenged, according to various experts at the recent secondary market conference sponsored by the Mortgage Bankers Association. The non-agency mortgage-backed securities market is very subdued, said Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute. Issuance has been running at about ...

The strong performance of jumbo mortgages originated in recent years is due to more than just focusing on borrowers with healthy credit scores, loan-to-value ratios and debt-to-income ratios, according to Moody’s Investors Service. The analysts said “soft” qualitative underwriting factors play a major role in jumbo performance. Qualitative factors considered by jumbo lenders include the absence of negative events in a borrower’s credit history, the number of unblemished lines of credit and ...

JPMorgan Chase and Credit Suisse are coming to market with separate jumbo mortgage-backed securities that have some sharp differences in terms of collateral. The $379.78 million JPMorgan Mortgage Trust 2015-3 includes some unique characteristics such as a handful of loans with combined loan-to-value ratios above 80.0 percent and some interest-only mortgages. While the average combined LTV ratio for mortgages to be included in the deal is 69.9 percent, 15 mortgages ...

With little movement from Congress to reform the government-sponsored enterprises, some industry analysts have called on the Obama administration to re-capitalize the GSEs and end their conservatorships. While such an action appears unlikely, the move could help boost activity in the non-agency market. If Fannie Mae and Freddie Mac were privatized, they would likely have to increase their capital from current levels and face increased borrowing costs. Interest rates ...

In a ruling that may impact future fair-lending class actions, a federal district court judge in Manhattan has denied class certification in a lawsuit brought by the American Civil Liberties Union and National Consumer Law Center against global investment bank Morgan Stanley. Filed in October 2012, the suit was brought on behalf of African American borrowers in Detroit who obtained subprime loans from New Century Mortgage, a now-defunct originator that sold the loans to secondary-market purchasers, including Morgan Stanley, which then securitized them. New Century originated...

Privately held nonbank mortgage firms – and even some public ones – increasingly are contemplating issuing more debt securities as a way to fund growth. The reliance on debt is seen as a more attractive alternative than going public, which can leave too much of a young company in the hands of outside parties that are merely looking for a quick profit after a lender lists its stock. Then again, not too many mortgage companies are contemplating...