Increases to guaranty fees under consideration by the Federal Housing Finance Agency would directly reduce the dollar volume of new agency originations by less than 1.0 percent, according to new research published by the Federal Reserve. The g-fee increases were announced in December by Ed DeMarco, the acting director of the FHFA at the time, partly to increase the non-agency share of mortgage originations. The planned increases were put on hold by Mel Watt, the new director of the FHFA, and remain ...
Buoyed by improvement in FHA loan quality, some lenders have begun lowering the credit score requirements for FHA and other government-backed mortgages. Last month, Wells Fargo alerted FHA lenders of its decision to lower the minimum credit score for purchase home loans through its retail channel from 640 to 600. We felt it was an appropriate time to do it given the improvement in FHA loan quality, a spokesman explained. The change applies to all FHA borrowers. Last years resolution of the FHA indemnification issue also prompted the change at Wells Fargo, according to a bank official. In addition, resolving the putback risk with ...
Interest shortfalls in the residential MBS space continued to drift higher across different collateral types, tranche types and vintages throughout 2013, according to Morningstar Credit Ratings. As of the December 2013 remittance cycle, nearly one out of five deals (19.1 percent) in our sample experienced a shortfall in at least one tranche, Morningstar said in a recent report. Interest shortfalls take place...
Investors hoping to cash in on some of the huge returns realized by speculators in legacy nonprime MBS likely have missed the boat. Moreover, principal reductions on the remaining underlying loans are now deemed a credit negative. Trading in on vintage non-agency securities has been light of late. According to a recent report from Bank of America Merrill Lynch, the rally in such securities has reached the ninth inning. BAML notes...
Issuance of non-agency mortgage-backed securities is expected to remain constrained until a number of issues are sorted out, from reform of the government-sponsored enterprises to an increase in demand from investors. The non-agency MBS market is stuck somewhat in limbo until we know where the GSEs are going, said Steven Abrahams, head of securitization and MBS research in the U.S. at Deutsche Bank Securities, during last weeks ABS Vegas conference. More than 5,600 people registered ...
The Treasury Department and the Structured Finance Industry Group announced separate initiatives last week aimed at increasing activity in the non-agency market. Both efforts plan to round up a variety of industry participants to work through issues that have prevented significant issuance of new non-agency mortgage-backed securities. In the absence of an apparent leader, Treasury plans to coordinate a series of conversations with relevant regulators, market participants and other stakeholders to help ...
The risks that come with originating loans that dont receive qualified mortgage protections can be significant. However, industry participants suggest that low-risk non-QMs can be priced at levels similar to the interest rates available on QMs. While interest-only mortgages dont meet the Consumer Financial Protection Bureaus standards for QMs, a number of banks plan to continue to offer IOs to well-qualified borrowers. Analysts at Barclays Capital noted that the loans dont present lenders with ...
Mortgages included in new non-agency mortgage-backed securities that fall outside of the safe harbor for qualified mortgages will be assigned higher loss expectations, according to criteria released last week by Standard & Poors. Other rating services have released similar criteria, with credit-enhancement requirements expected to be higher for non-agency MBS that include loans other than safe harbor QMs. The Consumer Financial Protection Bureaus ability-to-repay rule established a number of ...
While the net supply of non-agency mortgage-backed securities continues to run off, holdings by banks and thrifts actually increased in the third quarter of 2013, according to a new ranking and analysis by Inside Nonconforming Markets. The entities held $145.83 billion in non-agency MBS at the end of the third quarter of 2013, up 2.2 percent from the previous quarter. Banks and thrifts held 17.8 percent of non-agency MBS outstanding at the end of the third quarter. JPMorgan Chase is the ... [Includes one data chart]
Cove Financial is targeting borrowers who cant qualify for agency mortgages and offering them a unique rent-to-own option. The lenders Mortgage Alternative Program involves a process that looks a lot like the purchase-mortgage process but instead gives a borrower time to rebuild credit before purchasing a home. Its for people who have a downpayment but dont currently qualify for a mortgage, Patrick Flanagan, CEO of Cove Financial, said of the MAP. A borrower working with Cove goes through a ...