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Inside Nonconforming Markets

August 7, 2015

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Jumbo Originations Surge, Fierce Competition on Pricing, Underwriting

Originations of jumbo mortgages continued to increase in the second quarter of 2015 and lenders are chasing volume by lowering interest rates and loosening underwriting standards. Some $93.0 billion in jumbos were originated in the second quarter, according to estimates by Inside Nonconforming Markets. Halfway through 2015, originations totaled an estimated $163.0 billion, up 58.3 percent compared with the mid-point of 2014. Banks continue to ... [Includes one data chart] Read More

Two Harbors Sees Growth in Non-Agency Conduit

Two Harbors Investment is ramping up its conduit activity with plans to increase issuance of jumbo mortgage-backed securities and a new non-qualified-mortgage offering. The real estate investment trust is on track to issue its fifth jumbo MBS of the year this month. Bill Roth, Two Harbors’ CIO, said the REIT could issue as many as 10 jumbo MBS this year. He said that as of the end of June, the REIT’s pipeline for jumbo acquisitions was approximately $1.3 billion ... Read More

Redwood Faces Headwinds with Jumbo Activity

Redwood Trust this week reduced the amount of jumbo-mortgage volume the real estate investment trust expects to acquire this year, citing competition for originations, among other issues. At the beginning of the year, officials at Redwood projected that the REIT would purchase $7.0 billion in jumbos. Through the end of July, Redwood had purchased $3.0 billion in jumbos. Officials at Redwood said the REIT is on track to purchase $5.5 billion to $7.0 billion in jumbos ... Read More

Variety in Jumbo MBS from Chase, Two Harbors

Two of the most prolific issuers of jumbo mortgage-backed securities this year have offered investors some variety with their latest deals. JPMorgan Chase stocked its deal with older loans while Two Harbors Investment has focused on fresh originations. Last week, Chase issued JPMorgan Mortgage Trust 2015-5. The $489.64 million deal was backed by loans with a weighted average loan age of 28.9 months, according to Kroll Bond Rating Agency. The MBS ... Read More

Shellpoint Set to Return to Jumbo MBS Issuance

Nearly two years after facing difficulty selling a jumbo mortgage-backed security, Shellpoint Partners is preparing to issue a new deal. The $269.29 million Shellpoint Co-Originator Trust 2015-1 is set to receive AAA ratings with credit enhancement of 8.30 percent on the senior tranche, according to a presale report from DBRS. The deal includes originations from Shellpoint’s New Penn Financial along with contributions from 30 other lenders. Shellpoint issued its first jumbo MBS ... Read More

Ocwen Holds on to Non-Agency Servicing

Ocwen Financial looks to be close to completing its downsizing through servicing sales that will leave its non-agency mortgage portfolio mostly intact. The nonbank is also working toward being able to acquire servicing again and has plans to boost originations. Ocwen handled servicing on $154.79 billion in non-agency mortgages as of the end of the second quarter of 2015, including subservicing. The unpaid principal balance of non-agency mortgages ... Read More

New ‘Streamlined’ Non-Agency HAMP Offering Set

The largest servicers participating in the non-agency portion of the Home Affordable Modification Program will be required to offer streamlined HAMP mods beginning in 2016, according to a directive from the Treasury Department. The Streamline HAMP offering will allow borrowers to qualify for mods without full completion of a HAMP application, without income verification and without the front-end debt-to-income ratio limit of 31 percent for typical HAMP mods ... Read More

Flagstar Sees Success in Addressing Vintage IOs

Flagstar Bancorp held a portfolio of $1.56 billion in interest-only mortgages at the end of 2011, with payments for many of the borrowers set to double in the coming years. A year ago, officials at the bank were touting its efforts to work with borrowers to limit the payment shock that kicks in when IOs reset and they have to start repaying principal. While those efforts continue, Flagstar has also sold more than half of its IO holdings, seeing strong demand from ... Read More

News Briefs

Fitch Ratings updated its criteria for estimating losses on mortgages in non-agency mortgage-backed securities this week. The main change for jumbo MBS involves the treatment of retail originations by lenders that have not been reviewed by Fitch. Previously, retail originations from such lenders would not receive positive consideration in the calculation for the probability of default. The rating service will now apply the retail benefit to ... [Includes three briefs] Read More

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