If a Democrat wins the presidential race, industry analysts expect regulatory changes in the mortgage industry. If Trump is reelected, GSE reform efforts will continue to gather pace.
A JPMorgan Chase official noted that Fannie Mae and Freddie Mac can complete credit risk transfer deals and nonbanks have options as well, but banks? Not so much...
Some players in the market hoped that once the QM patch expired a significant amount of originations would shift from the GSEs to the non-agency market. But those hopes are fading...
Production of jumbos increased by nearly 50% in 2019. The increase was proportional to broader trends in the mortgage market, but the sector didn’t keep pace in the fourth quarter. (Includes data chart.)
CFPB Director Kathy Kraninger says the relatively small size of the non-qualified-mortgage market is one of the reasons the bureau plans to change QM standards.
Congress is unlikely to increase the g-fee charged by the GSEs, though the FHFA may as part of efforts to “level the playing field” between the GSEs and the non-agency market.
Certain non-QM lenders’ underwriting tactics might not meet the CFPB’s ability-to-repay rule, according to Moody’s. It suggested tighter standards for bank statement mortgages and loans to the self-employed.
Annaly Capital Management and Ellington Financial are both generating double-digit returns from aggregating mortgages and issuing non-agency MBS. The firms plan to increase their activity in the sector.