Some 19.2% of non-QMs in MBS were modified or delinquent as of the end of August, down 70 basis points from July. Loan performance improved even as enhanced unemployment benefits expired.
While lenders like the CFPB’s proposal to provide QM status to certain non-QMs if the loans perform well for the first three years after origination, con-sumer advocates warned of reduced protections for borrowers.
If the CFPB doesn’t address the issue, sales of modified loans could stall due to compliance concerns, according to Kasasa, a third-party service provider.
Although three big banks reduced their first-lien portfolios during the second quarter, total holdings by banks and thrifts increased. (Includes data chart.)
The impairment rate on non-QM MBS declined to 19.3% in July from 20.4% in June. While loan performance is improving, MBS investors could suffer reduced cash flows and losses as modifications end.
Thousands of non-qualified mortgages could receive safe-harbor status three years after origination under a new “seasoning” provision proposed by the CFPB.
Servicing balance for jumbo mortgages fell in 2Q20 among a group of 30 servicers tracked by this newsletter, including the top three in the industry. (Includes data chart.)
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