While several industry participants want the CFPB to choose the spread-at-origination metric to determine QM status, Redwood Trust favors using the DTI ratio.
Switching from LIBOR to another reference rate looks to be difficult for vintage non-agency MBS. Adopting a replacement rate will require significant communication and cooperation among investors.
Redwood has suggested a number of changes that could boost issuance of non-agency MBS. The REIT wants reforms regarding risk retention and disclosures for non-agency MBS.
Production of expanded-credit mortgages increased in the second quarter but not by nearly as much as the surge in total originations. The sector was crowded out to some extent by conventional loan refinances.
Refinances of jumbo mortgages increased significantly in the second quarter and accounted for 35.5% of total jumbo originations. Industry participants expect refi volume to remain elevated.