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Inside Nonconforming Markets

June 23, 2017

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Bank Portfolio Holdings Decline in 1Q17 as Jumbo Originations Fall

Bank and thrift holdings of first-lien mortgages took a relatively rare decline in the first quarter of 2017 as jumbo production stalled during the period, according to a new ranking and analysis by Inside Nonconforming Markets. Banks and thrifts held a total of $1.93 trillion of first-lien residential mortgages in portfolio as of the end of March, down 0.1 percent from December 2016. The holdings have increased relatively steadily in recent years ... [Includes one data chart] Read More

AIG to Issue Its First Jumbo MBS

Affiliates of American International Group are set to issue their first jumbo mortgage-backed security, according to presale reports released this week. AIG’s residential mortgage lending group has been acquiring jumbos on a correspondent basis since 2013, amassing more than $4.50 billion in holdings. The planned CSMC 2017-HL1 Trust is a $511.98 million securitization of loans acquired from a variety of lenders. The MBS will be issued on a Credit Suisse shelf ... Read More

Trump Admin Seeks to Boost Non-Agency Lending

The Treasury Department last week released a report that called for regulatory reforms aimed to help boost non-agency originations and market share. Many of the reforms relating to the non-agency market could be completed without action from Congress. However, most of them are overseen by the Consumer Financial Protection Bureau, and Treasury’s recommendations appear unlikely to be enacted as long as Richard Cordray is director of the CFPB. Treasury sought input ... Read More

ARMs Gain Market Share in First Quarter

The adjustable-rate mortgage share of total originations increased in the first quarter of 2017 as some borrowers shifted to the product with interest rates projected to increase. An estimated $42.0 billion of ARMs were originated in the first quarter of 2017, according to Inside Mortgage Finance. While production was down by 23.6 percent from the previous quarter, total first-lien originations declined by 33.6 percent during that time ... [Includes one data chart] Read More

IO Originations Decline in First Quarter

Originations of interest-only mortgages by a group of top lenders declined in the first quarter, according to an analysis by Inside Nonconforming Markets. A group of 12 prominent IO lenders originated $6.81 billion of the loans in the first quarter of 2017. The lenders’ production was down by 26.7 percent from the previous quarter and down by 19.9 percent from the first quarter of 2016. According to Inside Mortgage Finance, total first-lien originations ... [Includes one data chart] Read More

Fee Structure Key to Adoption of Deal Agent

One of the most significant variables industry participants are working to address in terms of introducing a deal agent into non-agency mortgage-backed securities is the fee structure. Issuers are trying to balance paying for the services provided by a deal agent without diverting too much cash flow from investors in non-agency MBS. The fee structure will also play a key role in how rating services treat MBS that have a deal agent, with issuers looking for favorable treatment ... Read More

More ‘Alt Doc’ Loans in MBS from Deephaven

The nonprime mortgage-backed security issued by Deephaven Mortgage earlier this month was largely similar to a deal the firm issued in April, save for a greater emphasis on mortgages underwritten with less than full documentation. So-called alternative documentation mortgages accounted for 36.5 percent of the $250.13 million MBS Deephaven issued this month, up from a 17.7 percent share of its $221.14 million issuance in April. Non-agency lenders underwriting mortgages ... Read More

News Briefs

Representations and warranties on new nonprime mortgage-backed securities often include weaknesses that limit their ability to protect investors against fraudulent or defective loans, according to an analysis by Moody’s Investors Service. However, the rating service said current practices and dynamics in the nonprime MBS market help to mitigate the risks from weak reps and warranties. Moody’s hasn’t placed ratings on nonprime MBS backed by ... [Includes four briefs] Read More

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