Cart

Inside Nonconforming Markets

July 6, 2012

View Archived Issues

Credit Suisse Issues its Second Jumbo MBS Of 2012, Taps Out Supply of MetLife Loans

A subsidiary of Credit Suisse Group issued its second non-agency jumbo mortgage-backed security of the year last week. The transaction was backed by $425.09 million of jumbo mortgages, largely originated by MetLife Home Loans, which ceased originations at the beginning of this year. The privately-placed deal – CSMC Trust 2012-CIM2 – received AAA ratings from Standard & Poor’s and DBRS with credit enhancement of 8.25 percent on the AAA tranche. S&P also placed a AAA rating on CSMC Trust 2012-CIM1, the $741.94 million ... Read More

Redwood Completes Jumbo Whole Loan Sales

Redwood Trust completed whole loan sales of jumbo mortgages during the second quarter of 2012, according to Mike McMahon, managing director of the real estate investment trust. Redwood also completed an issuance of a non-agency jumbo mortgage-backed security last week, the third of the year for the REIT. While Redwood’s two most recent non-agency securities have been backed by 30-year fixed-rate mortgages, the whole loan sales consisted of hybrid ARMs, according to McMahon. “We have completed some whole loan sales of ... Read More

Delinquencies Increase on Home-Equity Loans

Delinquencies on home-equity loans increased in the first quarter of 2012 and industry analysts expect further increases even though first-lien mortgage performance has been improving. The top two holders of HELs have differing strategies on HEL originations, and some smaller banks are also pushing the products. The serious delinquency rate on HELs hit 2.83 percent in the first quarter of 2012, according to the Inside Mortgage Finance Bank Mortgage Database. Delinquencies increased 34.1 percent from the end of 2011 and ... Read More

Wide Differences Persist in Re-Default Rates

Loan modifications performed on mortgages in bank portfolios perform much better than mods on mortgages included in non-agency mortgage-backed securities, according to an analysis by Inside Nonconforming Markets of new data from the Office of the Comptroller of the Currency. The performance varies significantly even as the two types of non-agency mortgages receive the vast majority of principal reduction loan mods. The 12-month re-default rate on mods implemented from 2008 through the first quarter of 2011 was ... Read More

FDIC Hopes to Mark ‘The Worst’ Subprime Loans

The Federal Deposit Insurance Corp. is revising its definition of subprime mortgages in an effort to better compare bank portfolios, according to analysts that worked on the rule proposed by the FDIC in March. Brenda Bruno, a senior financial analyst at the FDIC, said the regulator is looking to classify “the worst” of subprime mortgages as higher-risk. “We are looking at those assets that are really sort of the ‘bottom of the barrel’ type assets,” she said last week during a webinar sponsored by VantageScore Solutions ... Read More

MBS Investors Oppose Eminent Domain Proposal

Non-agency mortgage-backed security investors strongly oppose a proposal in California to reduce principal for borrowers with negative equity by acquiring mortgages via eminent domain. The proposal could set a troubling precedent according to non-agency MBS investors, who are still considering options to prevent such seizures. In June, San Bernardino County along with two cities in the county, Ontario and Fontana, approved a resolution that would allow the municipalities to acquire mortgages with negative equity using eminent domain ... Read More

Two Harbors Sees High Yields in Subprime MBS

Subprime mortgage-backed securities offer returns of at least 10.0 percent per year for selective investors, according to Bill Roth, co-CIO at Two Harbors Investment. “We are able to assume the default of a significant portion of borrowers who are currently making their payments, assume a declining housing market and still be able to earn an attractive yield,” Roth said last week during a webinar hosted by the real estate investment trust. He added that home prices could decline by another 20 percent in the next year and ... Read More

Morningstar Seeks Non-Agency Servicing Changes

Compensation for non-agency mortgage-backed security servicers should be adjusted and the industry should adopt practices from commercial MBS servicing, according to Morningstar Credit Ratings. The firm that recently established its non-agency MBS rating capabilities said enhanced servicing could help revive the issuance of non-agency MBS. “Without these reforms it may prove very difficult to attract investors back into the fold of private-label residential mortgage securities given the weaknesses exposed in ... Read More

CFPB Concerned About Reverse Mortgages

Lenders are potentially abusing reverse mortgage borrowers, according to the Consumer Financial Protection Bureau. Last week, the CFPB released a study on reverse mortgages and issued a request for information on the products along with threats of increased regulation. “In some situations the product can be misused in ways that harm borrowers,” said Richard Cordray, director of the CFPB. He noted the age of reverse mortgage applicants and lump sum payments to borrowers as particular concerns. The CFPB’s study ... Read More

News Briefs

Default risk on non-agency jumbo mortgage-backed securities continues to improve gradually, according to economic risk factors applied to Fitch Ratings’ non-agency jumbo MBS loan loss model. The rating service released the economic risk factors for the second quarter of 2012 last week. Fitch said the improvement is tied to home price trends and it expects home prices to “touch bottom” in 2013. New Jersey and New York have the highest default risk in the country, with expected defaults well above ... [Includes three briefs] Read More

Latest Imf News

More Imf News

Featured Data

More Featured Data

Featured Reports

More Latest Reports

Featured Poll

As homeowner equity continues to build, more and more lenders are launching home equity lending products. Are you thinking of joining this market?

View Results