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Inside Nonconforming Markets

December 2, 2011

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Non-Agency Jumbo Lending Already Growing Before Loan Limits Decline

Banks significantly increased their non-agency jumbo originations even before the high-cost conforming loan limit was lowered in October, with jumbo originations outpacing overall originations during the period. A number of lenders large and small continue to see opportunities in the jumbo space, though securitization is likely to remain limited in the near-term. Some $27.0 billion in non-agency jumbos were originated in the third quarter of 2011, according to estimates by affiliated publication Inside Mortgage Finance ... [Includes one data chart] Read More

Little Non-Agency Impact Likely from FHA Limits

Non-agency participants maintain that the reinstatement of “emergency” high-cost loan limits for FHA loans – but not Fannie Mae or Freddie Mac – will not impede originations of non-agency jumbo mortgages. Meanwhile, some housing trade groups and congressmen representing high-cost districts continue to push for a reinstatement of the government-sponsored enterprises’ high-cost loan limits. In November, President Obama signed legislation that restored the maximum $729,750 loan limit for the highest-cost FHA markets ... Read More

Fannie Focusing on Special Servicing Transfers

Fannie Mae recently started to transfer “higher-risk” mortgages to special servicers in an effort to improve performance, typically on non-prime loans. In its earnings filing for the third quarter of 2011, Fannie said it is “transferring servicing on loan populations that include loans with higher-risk characteristics to special servicers with whom we have worked to develop high-touch protocols.” The protocols include ... [Includes one data chart] Read More

Foreclosure Decisions Favor Non-Agency Servicers

Saxon Mortgage prevailed in a closely watched case decided by the Arizona State Supreme Court in November. The 5-0 ruling determined that the recording of an assignment is not necessary to enforce a foreclosure under Arizona law. The decision in Vasquez v. Saxon Mortgage could have a wide-ranging impact, according to legal analysts. Jean Braucher, a professor of law at the University of Arizona, said the court essentially approved of servicers’ “sloppy procedures,” ... Read More

More Settlements for Non-Agency MBS Issuers

Settlements regarding non-agency mortgage-backed securities are starting to increase as industry analysts suggest that the agreements limit the future liability faced by issuers. Bank of America and the Royal Bank of Scotland recently reached separate non-agency MBS settlements. At the end of October, BofA quietly settled with investors – including the Public Employees’ Retirement System of Mississippi – in 18 non-agency securities issued by Merrill Lynch. The settlement price was not disclosed but was reportedly $315.0 million. ... Read More

Springleaf Considering Benefits of REIT IPO

Springleaf Finance continues to consider an initial public offering for its real estate investment trust as a way to refinance a portion of its business to pay off debts. The Springleaf REIT filed for an IPO in May and while investor demand has not been overwhelming, the company maintains that it is still considering going public. “The REIT will be primarily engaged in the business of sourcing, screening and acquiring performing whole loans secured by mortgages on residential real estate,” Springleaf Finance said ... Read More

Alt Mortgages Remain a Focus for Regulators

Officials with the Consumer Financial Protection Bureau once again stressed the need for regulation of alternative mortgages this week. However, the performance of such “risky” loans continues to be debated among consumer advocates and economists. “In the lead up to the crisis, when a competitor began to steal market share – or to earn outsize profits – by introducing products like option ARMs or no-doc loans, the pressure to follow suit was intense,” Raj Date, special advisor to the Treasury on the CFPB, said ... Read More

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