New single-family MBS issuance accounted for a record 90.1 percent of home loan originations during the first quarter of 2013, according to a new Inside MBS & ABS analysis. An estimated $500.0 billion of new home mortgages were originated during the first three months of the year, down 4.8 percent from the fourth quarter of 2012, as refinance activity began to weaken. But mortgage securitization activity declined at a slower pace, falling just 0.6 percent in the first quarter. That pushed...[Includes one data chart]

Officials at the Consumer Financial Protection Bureau claim that lenders will originate home loans that don’t meet the new qualified mortgage standard, though industry participants have been skeptical due to the liability involved with such loans. Raj Date, the former deputy director of the CFPB, announced last week that his new firm will indeed originate non-QMs, with an initial focus on non-agency jumbo mortgages. “It’s an example of a great market opportunity where we can ...

Redwood Trust’s latest non-agency jumbo mortgage-backed security, its eighth of the year, consisted of originations from 67 lenders. No lender accounts for more than 6.4 percent of the originations in the $460.16 million deal. The non-agency jumbo MBS issued this week received AAA ratings with credit enhancement of 7.10 percent on the top-rated tranche. The top contributors to the deal were George Mason Mortgage, Cole Taylor Mortgage, W.J. Bradley Mortgage Capital and PrimeLending, each accounting for ...

Lenders’ contributions to non-agency mortgage-backed securities could continue to be subjected to high levels of scrutiny as the rating services emphasize upfront due diligence. Standard & Poor’s recently cautioned investors in non-agency jumbo mortgage-backed securities from putting too much faith into the representations and warranties provided on new securities. “The fact remains that we believe loan and borrower quality are the most important factors for evaluating residential MBS ...

“People are finally calling us,” Dan Perl, CEO of the privately held Citadel Loan Servicing Corp. of Irvine, CA, told Inside Nonconforming Markets. He said the newly launched subprime or “hard money” lender is starting to gain traction. Perl said the origination business was slow two months ago, but Citadel is on track to fund $6 million to $8 million in mortgages in June. The lender is originating residential loans for borrowers with low credit scores, offering loan-to-value ratios up to 75 percent ...

Policymakers looking for a model to replace the government-sponsored enterprises should look no further than the non-agency jumbo market, according to Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee. “We don’t have to look overseas to see a well-functioning housing market without GSEs,” he said at a hearing this week. “Prior to the housing bust, the jumbo market was approximately 20 percent of the total housing market. There was capital, liquidity, competition ...

The FHA and the Department of Justice have ramped up enforcement actions against more than a dozen mortgage lenders in recent weeks for alleged agency rule violations. At least two of the lenders have received notices from the DOJ that they are in violation of the False Claims Act. According to the Collingwood Group, a Washington-based business advisory firm, the agencies have sent notices of enforcement or “administrative” actions to as many as 15 FHA direct endorsement (DE) lenders, some of whom could lose their DE status if found to have engaged in improper lending practices that resulted in huge losses for the FHA. The latest enforcement actions have ...

The Department of Veterans Affairs is planning to raise the residual income limit requirement for home loan applicants by 15 percent – a move that could shut out many veterans who have limited income. The proposal is one of several measures under consideration for the VA’s Home Loan Program, said Carol Barnard, a loan production officer in the VA Regional Loan Center in Denver, during a recent webinar hosted by the Collingwood Group, a Washington-based advisory firm. Barnard is also a senior consultant with Collingwood. This change means that, for a family of four in the VA’s Northeast region, the required income residual could jump to ... [1 chart]

The Department of Housing and Urban Development’s Office of the Inspector General is drafting legislative recommendations to strengthen the FHA’s ability to mitigate risk and recover losses to the insurance fund. Testifying recently before Senate appropriators, HUD Inspector General David Montoya said he strongly agrees with HUD on the need for legislation to help the FHA act more quickly and decisively in response to market changes and avoid losses that can accrue during a long rulemaking process. He said the FHA has been too slow in addressing its financial problems. Based on past experience with the FHA over the years, Montoya said ...

Rep. Darrell Issa, R-CA, chairman of the House Committee on Oversight and Government Reform, is planning to quiz top FHA officials about an apparently deliberate effort by the agency to withhold important information from Congress regarding the true financial health of the FHA insurance fund. In a recent letter to FHA Commissioner Carol Galante, Issa said that the stress test employed by Integrated Financial Engineering in its FY 2012 actuarial review of the FHA Mutual Mortgage Insurance Fund yielded a more troubling result than what HUD reported to Congress in November last year. In the actuarial review, IFE reported that ...