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Volume 2019 - Number 4

February 15, 2019

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Jumbo Lending Falls in 4Q On Weaker Demand

Originations of non-agency jumbo mortgages declined in the fourth quarter as well as full year 2018, according to an Inside Nonconforming Markets analysis. The sector also lost market share with lenders noting weak demand. Some $65.0 billion of jumbos were originated in the fourth quarter, down 14.5% on a sequential basis. Full-year jumbo production declined 12.2% to $281.0 billion. Jumbos accounted for 17.2% of total first-lien originations ... [Includes one data chart]

Redwood Maintains Margins With Multiple Loan Outlets

Redwood Trustís mortgage banking income in the fourth quarter was essentially level compared to the previous quarter even with lower origination volume and strong competition in the non-agency market. Officials said margins held up because the real estate investment trust had multiple outlets to sell loans. Redwoodís mortgage banking segment generated $9.09 million of income in the final quarter of 2018, down 3.9% on sequential basis. ďOur ability to utilize both ...

Hopes Dim for Lower Loan Limit Mandate from Senate

A leading Republican in the Senate plans to leave loan limit decisions in the hands of the Federal Housing Finance Agency instead of mandating lower conforming loans limits as part of housing-finance reform legislation. Sen. Mike Crapo, R-ID, chairman of the Senate Committee on Banking, Housing and Urban Affairs, released an outline for reform legislation at the start of February. It calls for replacing the current guarantee functions of Fannie Mae and Freddie Mac with ...

Seer Capital Enters Non-QM MBS Market

Seer Capital Management is set to issue its first mortgage-backed security with non-qualified loans. The New York-based company launched its non-QM program in 2013 and it owns HomeXpress Mortgage, a wholesale lender founded in 2016. The investment managerís Residential Mortgage Loan Trust 2019-1 will be a $227.11 million issuance, according to presale reports published this week. HomeXpress will be the top contributor to the deal, accounting for 57.9% of the issuance ...

Non-QM MBS Issuance, Investing Attractive to REITs

Mortgage-backed securities with non-qualified mortgages look attractive to some real estate investment trusts. PennyMac Mortgage Investment Trust plans to join other REITs issuing non-QM MBS while officials at Chimera Investment said the firm is considering buying non-QM MBS from other issuers. In January, PennyMac Financial Services started a non-QM program through its correspondent originations channel. Stan Kurland, executive chairman of PMIT, a REIT affiliated ...

Non-Agency Pricing for GSE-Eligible Loans in Flux

The pricing offered in the non-agency market for certain loans eligible for sale to the government-sponsored enterprises isnít as attractive to sellers as it once was, according to industry participants. Kevin Doyle, managing director of whole-loan trading at Cantor Fitzgerald, said last week some sizable pools of GSE-eligible loans didnít trade in the private market due to pricing. He said it was the first time in a while that GSE-eligible loans put out for bid to non-agency investors failed to trade ...

GSE Nonprime Assets Have Differing Run-Off Rates

Fannie Mae and Freddie Mac continue to let their holdings of nonprime mortgages run off, with some differences in the rate at which the holdings are diminishing, according to a new analysis by Inside Nonconforming Markets. The holdings are concentrated on mortgages originated before the financial crisis, largely purchased/guaranteed loans held in portfolio. Fannie held $56.10 billion of such loans as of the end of 2018, down 24.5% annually ... [Includes one data chart]

Expanded-Credit MBS Issuance on a Roll

Mortgage-backed securities with expanded-credit underwriting standards are flowing into the market. Presale reports were published this week for three deals and others are in the works. The largest of the three deals is a $345.43 million MBS from Deephaven Mortgage. Loans in the deal were sourced from 86 lenders, led by Deephaven with a 15.9% share. Servicing will be handled by Shellpoint Mortgage Servicing. Loans in the deal have an average credit score of 698, an average combined ...

News Briefs

Carrington Mortgage Services has loosened its underwriting guidelines and improved pricing for various expanded-credit products. The maxi-mum debt-to-income ratio for 12-month bank statement mortgages increased from 43% to 50% and reserve requirements reduced for certain products. Home Point Financial started offering expanded-credit mortgages this month. The lenderís ďEdgeĒ program includes jumbo mortgages with loan-to-value ... [Includes four briefs]

Average Jumbo Mortgage Interest Rates and Mortgage Performance

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


Do mortgage lenders really need a new credit-scoring model or is the current FICO system adequate?

It’s fine. Stick with what works.


Time for a change. Borrowers are different today.


Undecided, still assessing the situation.