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Inside Nonconforming Markets

February 27, 2009

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Non-Prime Mortgage Originations Fall To a 17 Year Low in 2008 at $64.0 Billion

Originations of subprime, Alt A and “other” non-prime mortgages all but stopped in 2008. Only an estimated $64.0 billion in such mortgages were originated last year, according to a new ranking and analysis by Inside B&C Lending. Production of non-prime mortgages last hit such levels in 1991, at $59.0 billion. That was the start of the sector’s gradual... [Includes one chart and one graph] Read More

Subprime Debate Delays House Cramdown Vote

The House started deliberation on legislation to allow cramdowns this week only to postpone a vote as negotiations to limit cramdowns to subprime mortgages continue. Next week, the House is expected to vote on H.R. 1106, the “Helping Families Save Their Homes Act.”The legislation combines cramdown provisions previously approved by the House Judiciary Committee (H.R. 200) with a... Read More

Majority of Subprime Mortgages Eligible for Mods

The “Homeowner Stability Initiative” unveiled by President Obama last week could greatly increase subprime loan modifications, with lesser effects on nontraditional mortgage products. Among other initiatives, the $75 billion plan will provide cash-incentives to servicers for completed loan modifications and to borrowers for timely mortgage payments. Some 57 percent of subprime... Read More

Sample Subprime Modification

The Treasury Department provided the following example of a subprime modification completed under the Homeowner Stability Initiative: In 2006, a borrower received a 30-year subprime mortgage for $220,000, on a house worth $230,000 at the time. The interest rate on the mortgage was 7.5 percent and the borrower provided less than a 5.0 percent downpayment... Read More

Treasury Plan Could Cause Non-Prime MBS Losses

The Obama administration’s $75 billion “Homeowner Stability Initiative” could increase loan modifications on non-prime mortgages at the expense of investors in mortgage-backed securities. Even with a $1,500 payment to “holders” of mortgages modified before default, analysts warn that investors holding non-prime MBS will see losses.Laurie Goodman, a senior managing director at Amherst Holdings... Read More

Servicers: Loss Mit is ‘More Art than Science’

Non-prime servicers have increased their loss mitigation efforts in the past year, but their methods vary greatly. After attending the Mortgage Bankers Association’s annual servicing conference last week, Paul Miller, an analyst with Friedman, Billings, Ramsey, noted that “servicing is more art than science.” Non-prime servicers detailed their loss mitigation methods this week at a hearing by... Read More

Servicers Work to Speed Mod Closing Process

A large number of troubled borrowers have verbally agreed to loan modifications but refused to sign formal documents, according to Steven Horne, founder and CEO Wingspan Portfolio Advisors, a servicer specializing in severely delinquent loans.“One of the most common reasons for loan modifications to fail before they get started is that borrowers will often give up on... Read More

Freddie Mac Updates Predatory Mortgage Policy

Reviews of mortgages purchased by Freddie Mac in recent months prompted the government-sponsored enterprise to update its anti-predatory lending guidance. The GSE recently issued an industry letter restating its aversion to high-cost mortgages as defined by the Home Ownership and Equity Protection Act alone or by similar definitions in 14 states. While a review of HOEPA... Read More

News Briefs

Moody’s Investors Service this week placed $680 billion in subprime mortgage-backed... Standard & Poor’s this week put $172 billion in prime jumbo mortgage-backed securities issued... Barclays last week closed its subprime unit EquiFirst, which it had purchased from Regions... The Office of the Comptroller of the Currency and the Office of Thrift Supervision said their... Read More

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