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Inside Nonconforming Markets

September 21, 2018

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Wells on Track to Test Issuance of Jumbo MBS; Assets Are a Good Bank Investment

Wells Fargo is getting closer to returning to the jumbo mortgage-backed security market, according to John Shrewsberry, a senior executive vice president and chief financial officer at the bank. “We will be securitizing some of our jumbo loans, which has been a dormant market for a long time, but just as a method of demonstrating liquidity and getting market pricing,” he said last week at a conference hosted by Barclays. Wells has been plotting a return to the non-agency MBS market for ... Read More

Banks Largely Increasing Portfolio Holdings

A wide majority of banks and thrifts continued to increase their first-lien residential mortgage holdings in the second quarter, according to a new ranking and analysis by Inside Nonconforming Markets. Some $2.04 trillion of residential first liens were held in bank and thrift portfolios as of the end of June, up 0.9 percent from March and up 5.2 percent compared with June 2017. Among the top 50 banks and thrifts, only six reduced their holdings on an annual basis ... [Includes one data chart] Read More

Deephaven Brings its Largest Nonprime MBS

Deephaven Mortgage is preparing to issue its largest nonprime mortgage-backed security to date, according to presale reports published this week. The planned $326.1 million Deephaven Residential Mortgage Trust 2018-3 will top a $308.2 million deal the firm issued in January. Mortgages in the new deal look similar to previous issuance from Deephaven. The loans have a weighted-average credit score of 700, an average combined loan-to-value ratio of 72.7 percent and an average ... Read More

IO Originations Up in 2Q, Down at Midyear

Originations of interest-only mortgages increased in the second quarter, but not enough to move production ahead of the pace set halfway through 2017, according to a new ranking and analysis by Inside Nonconforming Markets. A group of 15 lenders originated $5.08 billion of IOs in the second quarter, a 25.2 percent increase from the previous period. Through the first six months of the year, the lenders had $9.13 billion of IO originations ... [Includes one data chart] Read More

Signs of Expanded-Credit Slowdown in MBS

Issuance of expanded-credit mortgage-backed securities is moving at a steady pace, but deal sizes are declining and loan seasoning is increasing, suggesting a slowdown in originations. Redwood Trust is set to issue a $362.7 million deal, according to presale reports by Kroll Bond Rating Agency and Moody’s Investors Service. It’s the fourth expanded-credit MBS of the year from Redwood, including a $520.5 million issuance in May and a $417.0 million deal in July. The average seasoning ... Read More

ARM Originations Up 25 Percent in Second Quarter

Originations of adjustable-rate mortgages increased by 25.0 percent on a quarterly basis in the second quarter of 2018, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $55.0 billion of ARMs were originated in the second quarter. The increase looks to be tied to seasonal factors and trends in interest rates. Through the first half of 2018, an estimated $99.0 billion of ARMs were originated, down 2.0 percent from ... [Includes one data chart] Read More

Chimera Preps Investment-Property MBS

Chimera Investment is preparing to issue a non-agency mortgage-backed security in which all the loans are eligible for sale to the government-sponsored enterprises. The deal is backed solely by mortgages on investment properties, according to presale reports by DBRS and Moody’s Investors Service. The deal follows a similar issuance in May by Flagstar Bank as industry analysts suggest that non-agency MBS offer issuers better execution than delivering some types of ... Read More

Chase Tries New Servicing Fee Structure for MBS

JPMorgan Chase is changing the servicing-fee structure in its latest prime non-agency mortgage-backed security. Many of the loans will be subject to a variable servicing fee as opposed to the flat fee traditionally used by Chase and many other issuers. Some 80.1 percent of the unpaid principal balance of the planned $513.9 million issuance is subject to the variable fee, a structure that is more commonly seen on MBS backed by nonperforming mortgages. The servicing fee will ... Read More

News Briefs

New Penn Financial launched a non-agency product for condominiums last week. The SmartCondo offering allows for two non-warrantable features, which are characteristics that exclude the loans from being delivered to Fannie Mae or Freddie Mac. For example, New Penn will allow a higher portion of commercial space, reduced pre-sale requirements and increased flexibility for single-entity ownership, among other features. The mortgages are available for ... [Includes one brief] Read More

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