Tom Hutchens, SVP of sales and marketing at Angel Oak, said originations of nonprime non-QMs have predominantly been purchase mortgages. However, refinance activity is starting to increase…

Some small and medium-sized lenders continue to fear that their access to the secondary mortgage market could be hampered if the fledgling common securitization platform of Fannie Mae and Freddie Mac is turned over to the private sector. At this point, the CSP is a joint venture owned by the two government-sponsored enterprises with a long-term future as uncertain as that of the GSEs themselves. But there are rumors that Congress may transfer the CSP to private owners sooner than expected. The vehicle for such a transfer would not be...

The complex financing arrangements used by certain investors and a lack of clarity from federal regulators can make it difficult to determine the entity responsible for meeting risk-retention requirements in some MBS and ABS, according to Charles Sweet, senior counsel at the law firm of Morgan Lewis. The Dodd-Frank Act generally required the sponsor of a security to retain at least 5.0 percent of the risk from the security. Sweet said determining the sponsor of an MBS or ABS can be fairly straightforward when one company originates the assets, services the receivables and initiates securitization, as in the case of an ABS backed by automobile retail contracts from a captive finance company of a car manufacturer. However, where securitization roles are more dispersed, Sweet said...

Five years have passed since the Federal Housing Finance Agency filed suit against 18 Wall Street firms and banks for peddling nonprime MBS to Fannie Mae and Freddie Mac in the years leading up to the housing crisis. All of the defendants have settled or lost with one glaring exception: Royal Bank of Scotland. As for when (and if) RBS will settle, that’s a different and complicated matter. The bank is presently owned by the British government, which took control of it during the financial crisis. In other words, any settlement might entail taxpayer money and cause a political controversy in the U.K. And the bill could be...

In a potential legal coup for Fannie Mae and Freddie Mac shareholders, Federal Claims Court Judge Margaret Sweeney ordered the U.S. Treasury Department and Federal Housing Finance Agency to turn over another large batch of documents in relation to the Fairholme Funds Inc. v. United States, et al. net worth sweep case. Sweeney this week forced the government agencies to produce more documents, close to 60 this time, for the plaintiff’s attorneys. The agencies have attempted to keep the various memos, emails, presentations and other communications hidden under executive privilege. Shareholders say...

Mortgage lenders, start your engines: the Fannie Mae/Freddie Mac loan limit is set to rise...

CORRECTION: Redwood Trust’s Choice program doesn’t allow for stated-income documentation, as originally reported in the Sept. 9, 2016, issue of Inside Nonconforming Markets. And Redwood does allow underwriting exceptions for Choice mortgages, a change that was made after the program was introduced. The baseline conforming loan limit for Fannie Mae and Freddie Mac will likely go up to about $422,000 in 2017, according to an Inside ... [Includes four briefs]

Ginnie Mae continues to wrestle with issuers lacking liquidity and net worth although the number of such cases has gone down significantly, thanks to tight oversight, according to the agency’s top counterparty risk officer. Briefing participants at this year’s Ginnie Mae summit in Washington, DC, Zack Skochko, director of counterparty risk, reported that some issuers are still struggling to comply with Ginnie Mae’s liquidity and net worth requirements.A number of small issuers failed their liquidity and net worth audits this year by not maintaining the minimum $1 million cash or 10 basis points of outstanding Ginnie securities required to participate in the agency’s mortgage-backed securities program. Ginnie Mae also requires issuers to meet a minimum net worth of $2.5 million plus 35 bps of the issuer’s total effective single-family obligations The requirements were designed to ensure that the ...

Meanwhile, bank whole loan portfolios have been increasing – largely because of the resurgence of jumbo mortgage originations, along with the recovery in home-equity lending.

The improved numbers suggest that the industry’s fears those rules would crush or even depress the market somewhat were overblown.