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Volume 2018 - Number 12

June 15, 2018

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Originations of Expanded-Credit Mortgages Increase in First Quarter, Bucking Industry

Expanded-credit products look to be a ray of sunshine in an otherwise gloomy mortgage market. Originations of the loans increased in the first quarter of 2018 while production in many other product categories declined, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $10.1 billion of expanded-credit mortgages were originated in the first quarter of 2018, up 3.1 percent from the previous quarter and a 13.5 percent ... [Includes one data chart]

Jumbo Servicing Portfolios Grow in First Quarter

The amount of jumbo mortgages handled by a large group of servicers increased in the first quarter, according to a new ranking by Inside Nonconforming Markets. The 30 servicers handled an estimated total of $1.05 trillion in jumbos as of the end of March, up 1.4 percent from the end of 2017 and a 13.5 percent increase from March 2017. Growth in jumbo servicing significantly outpaced trends in total mortgage debt outstanding. Some $10.65 trillion ... [Includes one data chart]

Accounting Change Could Impact Jumbo Pricing

A pending change to accounting standards could change the way banks price jumbo mortgages, according to industry analysts. Beginning in 2020, many banks will have to change their accounting methods to include a “current expected credit loss model.” The adoption timeline was recently set by federal banking regulators. The CECL model forces banks to make projections for lifetime losses on loans they hold and potentially increase reserves relating to the projected losses ...

Trump Admin Likely to Reduce GSEs’ Footprint

The Trump administration is likely to play a more active role in reducing the footprint of the government-sponsored enterprises in 2019, according to administration officials and industry analysts. Mel Watt’s term as director of the Federal Housing Finance Agency is set to end in January, allowing Trump to appoint a new director. The new director will likely take actions that are aligned with the Treasury Department’s goals for Fannie Mae and Freddie Mac, according to industry analysts ...

Flagstar Makes Some Changes with Latest MBS

The latest prime non-agency mortgage-backed security from Flagstar Bank will differ somewhat from two similar deals issued by the bank this year, according to presale reports released this week. The share of mortgages subject to due diligence was adjusted and there will be a higher share of mortgages in the deal that are eligible for sale to the government-sponsored enterprises. The pending $466.93 million Flagstar Mortgage Trust 2018-4 follows deals from the bank that closed in ...

Non-QMs Prepay Faster than Legacy Non-Agency

Prepayment rates on non-qualified mortgages are higher than the rates seen on legacy non-agency mortgages and performance for new production is better, according to industry analysts. “Nonprime non-QM loans have exhibited high voluntary prepayment speeds, resulting from credit curing and high initial mortgage interest rates,” analysts at Deutsche Bank Securities said. The voluntary prepayment rate on non-QM mortgage-backed securities ... [Includes one data chart]

Jumbo Demand Steady After Tax Reform

Demand for jumbo mortgages was expected to decline due to various provisions included in tax reform legislation but applications for jumbos didn’t dip in early 2018, according to CoreLogic. The analytics firm tracked loan applications in high-cost areas, concentrated in California and the northeast. Applications for purchase mortgages in the first quarter of 2018 were compared with trends seen in the prior four years. “We didn’t observe any meaningful change in purchase loan application ...

News Briefs

TIAA and Angel Oak Companies look likely to price separate new MBS before the end of the second quarter, according to documents filed with the Securities and Exchange Commission. JPMorgan Chase is also preparing an MBS that could differ from its typical issuance. Merrill Lynch agreed to a settlement with the Securities and Exchange Commission this week regarding non-agency mortgage-backed security trading from 2009 through 2012 ... [Includes two briefs]

Average Jumbo Mortgage Interest Rates and Mortgage Performance

A page of jumbo data and the performance of non-agency mortgage-backed securities.

Poll

With mortgage production down noticeably this year from 2017, how many lenders might disappear via M&A or failure during the next 12 months?

10% or less. It’s not that bad out there.
11% to 25%. It’s a challenging market.
25% to 40%. It’s going to be very ugly.
No opinion.

vote to see results