A number of new issuers appear set to come to market with non-agency MBS backed by newly originated jumbo loans and non-qualified mortgages. Officials at Redwood Trust said they see new issuers emerging, which they said will put pressure on loan prices for aggregators while increasing liquidity in the secondary market. Since the third quarter of 2016, the jumbo MBS arena has been dominated...

The clock is ticking on the phrase-out of the London Interbank Offered Rate, or LIBOR, a benchmark the mortgage market has relied on for the past few decades. Now comes the debate: is it something to worry about or no big deal? A new report from Bank of America Merrill Lynch suggests that when it comes to MBS at least, the changes will be felt, depending on the sector. “Certain agency MBS cash flows will be impacted directly,” BAML notes. “For example, underlying cash flows on LIBOR-indexed hybrid ARMs may change if an alternate index is chosen.” The researchers noted...

The private mortgage insurance industry is calling for a level playing field between the government-sponsored enterprises and FHA and VA as the Consumer Financial Protection Bureau begins its assessment of the ability-to-repay rule. In comments to the CFPB, U.S. Mortgage Insurers urged the bureau to determine whether potential arbitrage in QM standards for Fannie Mae and Freddie Mac and those for FHA and VA have had any negative effect on consumers ...

Non-qualified mortgages are starting to look attractive to some nonbanks with refinance activity declining and interest rates projected to increase. Officials at Nationstar Mortgage revealed late last week that they plan to launch a non-QM offering later this year or in early 2018. “You’re starting to see some activity there,” Jay Bray, Nationstar’s president, chairman and CEO, said during the nonbank’s recent earnings call. “And when we look at our portfolio, we may be in the best position in the industry, frankly, to offer some of those products.” Nationstar serviced...

Industry analysts expect that issuance of non-agency MBS in 2017 will outpace the volume seen last year. But 10 years after the start of the financial crisis, the non-agency MBS market is nowhere close to its level before the crisis, and a full recovery doesn’t look imminent. Some $28.8 billion of non-agency MBS was issued in the first half of 2017, up 32.0 percent from the same period last year, according to the Inside Mortgage Finance MBS Database. Non-agency MBS issuance peaked in 2006 at $1.19 trillion. Some 71.8 percent of the issuance that year was backed by subprime mortgages and Alt A loans. Post-crisis non-agency MBS issuance has been dominated...

Two high-profile real estate investment trusts – Annaly Capital Management and New Residential Investment Corp. – appear to be refining their investment strategies these days, heading in different directions in terms of what asset classes they prefer. New Residential is continuing to make huge bets on mortgage servicing rights. According to its just-released earnings statement, the investor is showing no reluctance whatsoever when it comes to size. A new tally from Inside Mortgage Finance shows that New Residential ended the second quarter with $353.0 billion of “full servicing” rights in its possession, up 40.1 percent from March 31. A year ago, the REIT wasn’t...

Mortgage investors and lenders alike have a number of questions about underwriting self-employed borrowers under the federal ability-to-repay rule issued by the Consumer Financial Protection Bureau. As the CFPB undertakes a mandatory review of the ATR rule and its qualified-mortgage provisions, the Structured Finance Industry Group pointed to the self-employment issue, starting with how the term is defined and the documentation required by the rule’s Appendix Q underwriting guidance. “Many times, consumers have...

In a move that would benefit the secondary market for loans made by national banks, members in the Senate and the House of Representatives recently introduced legislation to clarify that interest rates on certain loans remain unchanged after the sale or transfer of the loan. In the Senate, Democrat Mark Warner of Virginia late last week introduced S. 1642, which would amend the National Bank Act to clarify that loans which are valid when made remain valid when they’re sold, even to buyers subject to different state law. Similar language would be added to the Home Owners’ Loan Act, the Federal Credit Union Act, and the Federal Deposit Insurance Act. Joining Warner in sponsoring the bill were...

Impac Mortgage Holdings has continued to increase its production of non-qualified mortgages and plans to issue a $400.0 million mortgage-backed security collateralized by such loans, according to officials at the nonbank. Impac originated $289.60 million of non-QMs in 2016. In the first half of 2017, the nonbank had $416.70 million in non-QM volume. “We’ve seen a decrease in the conforming market and now month-over-month, we’re seeing an increase in the non-QM market ...

The private mortgage insurance industry urged the Consumer Financial Protection Bureau this week to consider including the qualified-mortgage standards of the FHA, VA and the U.S. Department of Agriculture in its assessment of the ability-to-repay/QM rule. In a comment letter, industry trade group U.S. Mortgage Insurers said it would be impossible to perform a full assessment of the ATR/QM rule without considering the different federal agency QM rules. If it does not expand the scope of its assessment, the CFPB should at least consider the impact the rules have on consumers in relation to the agency QM rules. In May, the CFPB notified stakeholders of its plan to evaluate the effectiveness of the ATR/QM rule in terms of its benefits and costs. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which established new standards for mortgage lending, including requiring lenders to assess consumers’ ability to repay. The statute also established a class of “qualified mortgage” loans that cannot have certain risky product features and are presumed to comply with the ATR requirement.