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Inside Nonconforming Markets

November 7, 2014

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Strong Demand for Jumbo Originations From Both Banks and MBS Investors

Pricing for jumbo mortgage-backed securities has improved in recent months, prompting an increase in issuance from some firms, but bank demand remains robust. “Although the difference has narrowed, our whole-loan sale execution for most jumbo loans continues to be more attractive than our securitization execution as a result of strong demand from banks,” Brett Nicholas, president of Redwood Trust, said this week during a call with investors. In the third quarter of 2014, Redwood issued ... Read More

Two Harbors Sees Promise in Non-Agency Lending

Two Harbors Investment is working to increase its non-agency conduit activity, launching a nonprime product along with a low-downpayment jumbo for high-quality borrowers. Officials at the real estate investment trust said Two Harbors also plans to be a regular issuer of non-agency mortgage-backed securities. “It has been clear to us for some time that the market has a need for products like this, and we are excited to be able to extend our reach as a capital provider to these segments ... Read More

Ocwen Sets Sights on Non-Agency Originations

With growth via acquisitions of servicing portfolios on hold, Ocwen Financial is pursuing a number of different initiatives, including originations of non-agency mortgages. The nonbank primarily known for servicing high-touch mortgages is currently testing originations of jumbo mortgages and working toward originating nonprime mortgages. “The business is building a robust new product pipeline and is currently in the market testing a new jumbo mortgage product,” Michael Bourque ... Read More

Non-QM Originations Off to a Slow Start

Originations by nonbanks of loans that don’t meet standards for qualified mortgages are off to a slow start, according to industry participants. “There is obviously a lot of noise in the area, a lot of announcements about people getting involved. And from what we have seen, there is nothing of any size and replicable flow that seems readily securitizable,” Michael Commaroto, CEO of Apollo Residential Mortgage, said this week during a call with investors. He said ... Read More

Loan Mod Activity Slows in Third Quarter

The number of loan modifications completed in the third quarter of 2014 was lower than activity in other recent quarters, according to servicers and data from the Home Affordable Modification Program. While improved borrower performance contributed to the slowdown, some servicers suggest that changes in federal modification programs were also a factor. A total of 29,384 permanent HAMP mods were started in the third quarter of 2014, down 14.6 percent from ... [Includes one data chart] Read More

FDIC Addresses LO Comp and Portfolio Loans

Lenders can vary the compensation paid to loan originators for portfolio loans versus originations of mortgages to be sold to investors, but only in certain circumstances, according to officials at the Federal Deposit Insurance Corp. The LO compensation rule issued by the Consumer Financial Protection Bureau in 2013 provides a two-part proxy analysis to determine whether LO comp can be based on certain factors. FDIC officials addressed questions regarding the LO comp rule in a recent webinar ... Read More

Chase Tops Bank Holders of Non-Agency MBS

JPMorgan Chase had the largest amount of holdings of non-agency mortgage-backed securities – by far – among banks and thrifts at the end of the second quarter of 2014, according to a new ranking and analysis by Inside Nonconforming Markets. Chase held $44.53 billion in non-agency MBS at the end of June, accounting for 34.5 percent of all non-agency MBS held by banks and thrifts. TD Bank, the second-ranked holder of non-agency MBS, had a ... [Includes one data chart] Read More

News Briefs

Ocwen Financial is working on a settlement with the New York Department of Financial Services regarding various servicing-related concerns raised by the state regulator. The $100 million in legal reserves that Ocwen booked in the third quarter of 2014 for a potential settlement is the minimum the company expects to spend, according to William Erbey, Ocwen’s chairman. “I would caution that this does not mean that we have settled with the [NYDFS] ... [Includes two briefs] Read More

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