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Inside Nonconforming Markets

December 7, 2012

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Non-Agency Jumbo Lending Up in 2012, Originations Largely Remain in Portfolio

Originations of non-agency jumbo mortgages through three quarters in 2012 increased by 23.3 percent compared with the same period in 2011. While 12 non-agency jumbo mortgage-backed securities have been issued this year, jumbo originations are largely being held in portfolio by banks competing for high-quality borrowers. An estimated $148.0 billion in non-agency jumbos were originated through the first nine months of 2012, including an estimated $52.0 billion in ... [Includes one data chart] Read More

Credit Suisse Taps Conduit for New Jumbo MBS

A subsidiary of Credit Suisse Group last week issued a non-agency jumbo mortgage-backed security, its third of the year and the first that did not include mortgages from the shuttered MetLife. The loans were acquired on a flow basis by DLJ Mortgage Capital, a Credit Suisse affiliate. CSMC Trust 2012-CIM3 is backed by $329.89 million of jumbo loans originated by 15 lenders, including Quicken Loans (35.2 percent), PHH Mortgage (19.7 percent) and First Savings Mortgage (16.8 percent). The average ... Read More

Redwood Close to Issuing One MBS Per Month

Redwood Trust could issue a seventh non-agency mortgage-backed security before the end of this year, according to officials at the real estate investment trust, and the company is ramping up to hit a pace of a new MBS every month. “In terms of the residential business, generally I would say the stars are aligning,” Martin Hughes, CEO of Redwood, said last week during a presentation to investors. He noted increased guaranty fees for the government-sponsored enterprises, a decrease in conforming loan limits ... Read More

Industry Opposed to FHFA’s Proposed Platform

Participants in the non-agency mortgage-backed security market are largely opposed to the Federal Housing Finance Agency’s proposal to create a platform to issue standardized non-agency MBS. While the FHFA suggested that the platform could revive the non-agency market, industry participants suggest that many issues besides a platform are hindering non-agency MBS issuance. “Key elements of the platform that are advantages for government-sponsored enterprise securitizations, such as standardization ... Read More

New York Agreement Stalls Ocwen’s Acquisitions

Potential violations to a servicing agreement Ocwen Financial signed in 2011 with the New York State Department of Financial Services have stalled Ocwen’s efforts to close its acquisition of Homeward Residential and servicing from Residential Capital. Benjamin Lawsky, superintendent of the DFS, said he would not approve Ocwen’s latest acquisitions until a monitor was established to oversee Ocwen’s compliance with the September 2011 agreement. This week, Ronald Faris, president and CEO of Ocwen ... Read More

Court: FDIC MBS Lawsuit Filed Too Late

A federal court in California recently dismissed claims by the Federal Deposit Insurance Corp. related to non-agency mortgage-backed securities purchased by a bank in 2007 and 2008. According to the ruling, the FDIC should have filed the lawsuit long ago and tolling did not render the claims as timely. FDIC v Countrywide Financial relates to $62.6 million in AAA-rated Countrywide MBS purchased by Strategic Capital Bank in 2007 and 2008. The FDIC was appointed as receiver of the bank on May 22, 2009 ... Read More

Mixed Results in GSE Nonprime Holdings

Nonprime mortgages and mortgage-backed securities caused a significant portion of the losses suffered by the government-sponsored enterprises since 2008. However, the nonprime assets that the GSEs have held on to have seen lower credit losses and even profits recently due to improving home prices and investor demand for vintage MBS. Fannie Mae and Freddie Mac have allowed their non-prime exposure to run off since 2008, rather than selling the assets. As of the end of the third quarter of 2012 ... [Includes one data chart] Read More

REO Rental Market Developing Without MBS

Institutional investors are creating a rental market out of real estate owned properties without a mortgage-backed security structure in place, though industry participants anticipate that a REO rental securitization market will eventually develop. Some $8.0 billion has been raised by institutional investors to purchase REOs and rent them, according to Oliver Chang, founder and managing director of Sylvan Road Capital, which itself expects to invest $1.0 billion in the market in the next two years ... Read More

News Briefs

Wells Fargo announced that the Securities and Exchange Commission recently completed an investigation of the company’s disclosures from mortgage-backed security offering documents and no enforcement action will be taken. Arcus Lending, a mortgage broker and a direct lender in California, recently started offering an 80/10/10 mortgage in an effort to allow borrowers to avoid private mortgage insurance. “There is a huge need for such a program and very few lenders ... [Includes two briefs] Read More

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