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Inside Nonconforming Markets

April 8, 2016

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Four Prime Non-Agency MBS Issued in 1Q16, Led by Two Unprecedented Deals

The volume of prime non-agency mortgage-backed securities issued in the first quarter of 2016 reveals little about how the market is functioning, according to a new analysis and ranking by Inside Nonconforming Markets. Some $2.92 billion in prime non-agency MBS was issued in the first quarter of 2016, a 61.3 percent increase from the previous quarter but a 36.4 percent decline compared with the first quarter of 2015. Only four prime ... [Includes one data chart] Read More

Mortgage Investors Cite Common TRID Errors

The Association of Mortgage Investors recently detailed a number of issues involving the TRID disclosure rule that have been uncovered in pre-purchase due diligence reviews on non-agency mortgages. The example errors were included in a letter from the AMI to the Consumer Financial Protection Bureau, which designed and mandated the new disclosure based on requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act. “In the near term ... Read More

SFIG Plots TRID Compliance; Lenders Take Hits

A single mortgage must meet nearly 150 requirements to achieve compliance with the TRID disclosure rule, according to a framework proposed by members of the Structured Finance Industry Group. Third-party due diligence firms will test loans for most of the TRID requirements, according to a draft of the TRID compliance review scope obtained by Inside Nonconforming Markets. Since the TRID rule took effect in October, due diligence firms have found widespread violations ... Read More

Originations of IOs Increased in 2015

The volume of interest-only mortgages originated in 2015 increased compared with the previous year, according to a new ranking by Inside Nonconforming Markets. IOs appear to be the most common type of non-qualified mortgage currently being offered by lenders. A group of 12 lenders originated $29.56 billion in IOs in 2015, up 8.5 percent compared with the previous year. The loans fell outside of QM standards set by the Consumer Financial ... [Includes one data chart] Read More

Fitch Adjusts Criteria to Rate Nonprime MBS

Fitch Ratings revised its criteria for rating non-agency mortgage-backed securities backed by non-qualified mortgages last week. The new standards set the stage for Fitch to rate nonprime non-QM MBS. The new non-QM criteria from Fitch include expanded product assumptions for rating nonprime mortgages and loans to self-employed or non-wage-earning borrowers. When determining litigation liability, Fitch said it will make a distinction between non-QMs for “very high ... Read More

Mixed Performance from Vintage IOs After Reset

As interest-only mortgages originated in the run-up to the financial crisis reset, performance has varied depending on the extent of borrowers’ payment shock, according to analysts at Bank of America Merrill Lynch. The analysts noted that delinquencies increase significantly when an IO borrowers’ monthly payment more than doubles, while some borrowers with strong credit or low loan-to-value ratios have been able to refinance or receive a loan modification. IOs include a ... Read More

Warren Rehashes Blame for Subprime Crisis

Sen. Elizabeth Warren, D-MA, used a hearing by the Senate Banking, Housing and Urban Affairs Committee this week to highlight the Federal Reserve’s lack of action on subprime mortgages prior to the financial crisis of 2008. Leonard Chanin, currently of counsel at the law firm of Morrison & Foerster, took the brunt of Warren’s criticism. He was deputy director of the division of consumer and community affairs at the Federal Reserve and helped lead the division from ... Read More

News Briefs

A district court of appeals in Florida ruled in favor of a borrower this week in a case involving a foreclosure on a mortgage in a non-agency mortgage-backed security. The District Court of Appeal of the State of Florida, Fourth District, found that the trustee on a non-agency MBS issued by Bear Stearns in 2006 didn’t have the proper documentation to complete a foreclosure initiated in 2009. “An exhibit filed during the trial contained no indication that ... [Includes three briefs] Read More

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