A coalition of industry trade groups asked the SEC to revise standards for publicly registered non-agency MBS. They suggested aligning standards with practices for private placements.

Beginning in March, the GSEs loosened certain appraisal standards due to complications from the coronavirus. A number of non-agency lenders are following the GSEs’ lead.

Redwood reduces both debt and the share of its debt subject to potential margin calls; Sprout launches new jumbo product.

The jumbo market was humming along at the start of the year until volatility from the coronavirus disrupted lending in March. Originations of jumbos declined sharply and the sector lost market share. (Includes data chart.)

Redwood took a $943 million loss in the first quarter amid volatility from the coronavirus. The REIT laid off about 35% of its employees in April, among other adjustments.

Underwriting standards are tighter and there are fewer lenders in the market, but jumbo mortgages are still being originated.

Four of the top five originators of mortgages included in prime non-agency MBS can’t retain originations in portfolio and the market isn’t expected to rebound in the coming months. (Includes two data charts.)

A cap imposed by the Fed on Wells’ portfolio was a major factor in its decision to stop originating jumbos through correspondents.

Following in the footsteps of Wells, a handful of correspondent aggregators have suspended originations of jumbo mortgages. Underwriting standards for the loans also have tightened.

First Republic Bank doesn’t plan to chase market share even as other jumbo lenders tighten underwriting standards.