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Inside Nonconforming Markets

April 28, 2017

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Jumbo Originations Down Sharply in 1Q17, Lenders Say; Optimism Persists

Among the handful of lenders that provide relatively early reporting of their jumbo origination activity, production was down significantly in the first quarter of 2017 compared with the previous quarter, according to an analysis by Inside Nonconforming Markets. Officials at the lenders noted that seasonal factors contributed to the slowdown along with an increase in interest rates. And the lenders stress that originations are likely to rebound. First Republic Bank funded $2.52 billion ... Read More

Lone Star Preps Largest Post-Crisis Nonprime MBS

An affiliate of Lone Star Funds is set to issue the largest nonprime mortgage-backed security backed by post-crisis originations. The deal will be nearly twice the size of the previous record holder, which was also issued by Lone Star. Most of the mortgages in COLT 2017-1 Mortgage Loan Trust were originated by Lone Star’s Caliber Home Loans, along with a 22.0 percent share for loans originated by Sterling Bank and Trust. The deal received preliminary AAA ratings from DBRS, Fitch Ratings ... Read More

BofA Retaining More GSE-Eligible Loans

Bank of America has made a break from most of the other big banks in terms of sending conforming mortgages to the government-sponsored enterprises. Officials at the bank said BofA is retaining more of its GSE-eligible loans, though the strategy can result in short-term decreases to mortgage-banking income. “We believe retaining these mortgages will provide better economics over time, plus retention deepens our relationship with these customers,” Paul Donofrio, BofA’s chief financial officer ... Read More

CFPB Warns of ATR Issue with Non-QMs

Lenders offering non-qualified mortgages that rely solely on a borrower’s assets need to carefully prove the borrower’s ability to repay, according to guidance from the Consumer Financial Protection Bureau. In a notice issued this week, the regulator cautioned that a large downpayment alone isn’t sufficient to prove a borrower’s ability to repay a non-QM that is based on the consumer’s assets. The spring edition of the CFPB’s supervisory highlights publication provides insights from ... Read More

Ocwen Faces Lawsuits, Cease-and-Desist Orders

Last week, the Consumer Financial Protection Bureau and many state regulators took coordinated actions against Ocwen Financial, alleging a number of servicing problems. Ocwen, the largest subprime servicer, disputes the allegations. The CFPB lawsuit, along with lawsuits and cease-and-desist orders from at least 24 state regulators, could be catastrophic for Ocwen. Most of the cease-and-desist orders prevent the company from originating mortgages until it proves it can appropriately ... Read More

Bank Holdings of Non-Agency MBS Dwindle

Holdings of non-agency mortgage-backed securities by most banks and thrifts are declining, according to a ranking and analysis by Inside Nonconforming Markets. Banks and thrifts held $63.00 billion of non-agency MBS as of the end of 2016, down 23.9 percent from the end of 2015. The holdings are concentrated among five banks, which accounted for 64.9 percent of all non-agency MBS held by the industry as of the end of 2016. JPMorgan Chase held ... [Includes one data chart] Read More

Financial CHOICE Act Re-Proposed in House

Rep. Jeb Hensarling, R-TX, introduced a revised version of the Financial CHOICE Act this week. The bill would impact many regulatory reforms included in the Dodd-Frank Act, which was signed into law in 2010. Perhaps most significant for the non-agency market, the CHOICE Act would apply qualified-mortgage protections to home loans held in portfolio. Banks offering mortgages with interest-only features, balloon payments or high debt-to-income ratios that don’t currently ... Read More

News Briefs

Ventana Home Mortgage recently launched mortgage conduit operations based in part on rights that were acquired from WinWater Home Mortgage. The lender said it is focusing on acquiring non-qualified mortgages from correspondent lenders, with plans for issuing non-agency mortgage-backed securities.Ventana is a subsidiary of Window Rock Capital Partners. Neat Capital recently launched its mortgage lending platform, with a focus on ... [Includes six briefs] Read More

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