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Inside Nonconforming Markets

March 11, 2016

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Jumbo MBS Issuance Set to Resume As Industry Addresses ‘TRID-Lock’

Two Harbors Investment is preparing to issue a jumbo mortgage-backed security that will include loans subject to the TRID integrated disclosure rule. The deal could help resolve the so-called “TRID-lock” seen in the jumbo secondary market as industry participants try to sort out the liability posed by the controversial rule. “TRID has proved to be a very strong headwind,” Diane Wold, a managing director at Two Harbors, said last week at the ABS Vegas conference produced by ... Read More

Banks’ First-Lien Holdings Increase in 2015

Bank and thrift first-lien portfolio holdings continued to grow in 2015, including a sharp increase in the fourth quarter, according to a new ranking and analysis by Inside Nonconforming Markets. Banks and thrifts held a total of $1.87 trillion in first-liens in portfolio at the end of the fourth quarter of 2015, up 0.9 percent from the end of the previous quarter and up 3.4 percent from the fourth quarter of 2014. The increase in holdings was largely driven by ... [Includes one data chart] Read More

Non-Agency MBS Deal Agent Closer to Reality

One of the major obstacles to increased issuance of non-agency mortgage-backed securities remains the lack of a deal agent to protect investors. Until last week, investors had not even agreed on the general responsibilities for a deal agent, suggesting that the implementation of the concept was a long way off. A working group, co-led by Alessandro Pagani, head of securitized assets at Loomis, Sayles & Company, announced principles for a deal agent last week ... Read More

Jumbo Conduits Face Operating Issues

Two nonbanks with jumbo conduit operations have faced issues recently. Premium Point Investments recently announced the New Issue Opportunity Fund will no longer invest in new jumbo mortgage-backed securities from WinWater Home Mortgage. Premium Point is an asset-management firm that established WinWater in late 2013. Premium Point said the NIOF purchased approximately $3.3 billion in whole loans and invested in 10 mortgage-backed securities issued by ... Read More

Banks Pushed Redwood Out of GSE Lending

Competition from banks for conforming mortgages prompted Redwood Trust to discontinue its aggregation of mortgages for sale to the government-sponsored enterprises, according to officials at the real estate investment trust. “The business assumption that has changed is that we no longer believe that our conduit can generate sufficient conforming loan sale margins, primarily due to the unrelenting competitive pricing pressure from some major banks,” Redwood said in a document ... Read More

Ocwen Under Pressure as Restructuring Continues

Ocwen Financial recently reported a large loss in the fourth quarter of 2015 along with investigations by a number of regulators, leading to a sharp decline in the company’s stock price and pressure to restructure its priorities. Ocwen took a pre-tax loss of $129.3 million for the fourth quarter of 2015. The biggest contributor to the loss was a non-cash charge of $101.9 million to establish a valuation allowance against deferred tax assets in the United States and the U.S. Virgin Islands ... Read More

News Briefs

The pessimistic pricing in the secondary market for jumbo mortgage-backed securities with exposure to the oil industry might be unwarranted, according to Standard & Poor’s. The rating service completed a stress test on the 59 jumbo MBS issued in 2012 and beyond. “Assuming the entire oil-sector workforce in three major oil-producing states defaults on their mortgages, even under extreme economic stress, the incremental collateral pool losses ... [Includes three briefs] Read More

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