Citadel Servicing Corp. and Angel Oak Companies – two of the most active nonprime lenders operating today – are looking at record originations for the second quarter and all of 2017. But don’t expect a torrent of conventional lenders to jump into the space anytime soon. According to interviews conducted by Inside Mortgage Finance in recent weeks, there’s plenty of interest in the “new” subprime market, a business predicated on sober loan-to-value ratios and rigorous underwriting, but most conventional lenders do not see it as safe. At least not yet. “Right now, there’s...

The banking industry again boosted its holdings of single-family MBS during the first quarter of 2017, although results varied significantly among various major players in the market. Banks and thrifts reported $1.762 trillion in held-to-maturity and available-for-sale MBS as of the end of March, a 1.5 percent increase from the previous quarter, according to a new Inside MBS & ABS ranking and analysis of bank call reports. With Federal Reserve MBS purchases in a holding pattern, banks and other investors are in a better position to increase their holdings as the supply of agency MBS slowly grows. The industry held...[Includes two data tables]

Recent remarks by Craig Phillips, counselor to the secretary of the Treasury Department, suggest that the Trump administration supports proposals to reduce regulatory burdens in the MBS and ABS markets. The agency is in the process of finding regulations that can be “clarified, modified or tailored” to help boost the housing market. “We believe it’s time to assess whether regulatory requirements have unnecessarily tightened the credit box for new originations,” Phillips said at a credit-risk transfer symposium in New York City. “Regulatory requirements have also contributed to increased cost in servicing. Capital and liquidity standards have put private-label securitization at a disadvantage.” The Structured Finance Industry Group noted...

Two of the most active nonprime originators operating today may be headed in different directions when it comes to securitizing the non-qualified mortgages they’ve been originating. An official at the Angel Oak Companies told Inside MBS & ABS this week that the lender hopes to securitize at least once a quarter “going forward.” Citadel Servicing Corp., Irvine, CA, had hoped to issue its first security either late this month or in June, but appears to be pushing back its timetable. Dan Perl, CEO and founder of Citadel, declined...

A new working paper from University of California at Irvine economics professor Eric Swanson suggests the U.S. central bank’s bond buying activities will continue, to one extent or another, perhaps indefinitely. The reason? What the Federal Reserve did in the wake of the financial crisis produced longer-lasting results than what it said. Swanson, a former researcher at the Federal Reserve Bank of San Francisco, said both the Fed’s Open Market Committee guidance on the likely future path of the federal funds rate and its large-scale asset purchases (LSAPs) have had positive effects. The goal of both policies was...

Participants in the non-agency mortgage-backed security market and banks have proposed different ways of how to address debt-to-income ratio standards for qualified mortgages. The Structured Finance Industry Group wants the Consumer Financial Protection Bureau to consider speeding the timeline for ending the so-called QM patch, while the American Bankers Association seeks a permanent fix for the DTI issue. The debate centers on the 43.0 percent DTI ratio standard for QMs ...

The Trump administration has revived a controversial proposal to tap FHA lenders to help pay for technology upgrades at the Department of Housing and Urban Development. HUD is among nine federal agencies facing significant cuts in their discretionary budgets, al-though guarantee commitments for FHA’s single-family mortgage insurance program and Ginnie Mae mortgage-backed securities programs were kept at their previous fiscal levels, $400 billion and $500 billion, respectively. The White House budget plan incorporates...

There wasn’t much mention of the interpretation and enforcement of the Real Estate Settlement Procedures Act during oral arguments this week before the U.S. Court of Appeals for the District of Columbia Circuit in PHH Corp. v. Consumer Financial Protection Bureau. Instead, nearly all of the discussion revolved around constitutional questions. The biggest issue was about just how much power to “faithfully execute” the laws of United States the president is left with if the only way to remove the head of a single-director agency is “for cause.” The other constitutional issues that garnered some attention were...

The Financial Services Roundtable advised the Trump administration that the structure of the CFPB needs to be changed, and that the agency should revise a handful of its key mortgage rulemakings, most notably the ability-to-repay/qualified mortgage rule, the Home Mortgage Disclosure Act rule and the Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure rule, or TRID. The FSR’s call came in a detailed response to President Trump’s Executive Order 13777, “Reducing Regulation and Controlling Regulatory Costs,” issued earlier this year, directing the Treasury Department to conduct an assessment of financial regulations to evaluate how they align with the White House’s core principles of financial regulation.In terms of the bureau itself, the industry organization said the governance structure ...

The CFPB has stepped back into the Real Estate Settlement Procedures Act enforcement ring by probing Zillow over issues related to co-marketing. The probe of the company’s co-marketing initiative was disclosed to the public earlier this month by Zillow CFO Kathleen Philips during the company’s first quarter earnings conference call with investors. “Over the past two years, the CFPB has been reviewing our program for compliance with RESPA,” Philips said. “Recently, the CFPB requested additional information and documents from us as part of their evaluation, which we are working with them on,” she added. “We believe our co-marketing program has, and continues to, allow agents and lenders to comply with the law while using our product.” This could be another ...