It has been more than three years since FHA introduced a new streamlined process of identifying loan defects and their severity to minimize or avoid enforcement action and hefty penalties under the False Claims Act. Despite calls by the mortgage industry to improve and clarify the process – the Single-Family Loan Quality Assessment methodology or “defect taxonomy” – the FHA has yet to make a move to meet industry demands for more detailed defect taxonomy. Contacted for an update on the defect taxonomy, a Housing and Urban Development spokesperson said simply, “Nothing to report on this.” An outgrowth of lender concern over the government’s indiscriminate use of the FCA to prosecute mortgage fraud and recover FHA losses, the defect taxonomy establishes nine categories of loan defects in loans it endorses. The nine defect categories replaced the 99 loan defect codes that were ...

Among the tranches of residential MBS issued this year that received ratings from multiple firms, nearly 40.0 percent of the bonds had so-called split ratings, with different assessments by different rating services.

Originations of jumbo mortgages were strong in the second quarter, with the sector gaining market share, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $80.0 billion of non-agency jumbos were originated in the second quarter, up 33.3 percent from the previous period. Total first-lien production increased by 17.1 percent in that span. Non-agency jumbos accounted for 18.0 percent of total originations in the second quarter ... [Includes one data chart]

Originations of expanded-credit mortgages failed to keep pace with total first-lien originations in the second quarter, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $11.40 billion of expanded-credit mortgages were originated in the second quarter, a 12.9 percent increase from the previous quarter. Total first-lien production increased by 17.1 percent during that time, according to Inside Mortgage Finance. Expanded ... [Includes one data chart]

Aggregators of jumbo mortgages have seen margins on their business decline as competition increases for the loans. Redwood Trust had $9.0 million in net income from its residential mortgage banking segment in the second quarter of 2018, down from $21.0 million in the previous period. Officials said the decline was due to lower margins during the second quarter. The real estate investment trust didn’t disclose specific figures other than to note that during the second quarter ...

The latest non-agency mortgage-backed security from JPMorgan Chase will include a higher share of conforming mortgages than the previous issuance from the firm. Chase is preparing to issue a $999.0 million MBS, according to presale reports from DBRS, Fitch Ratings and Moody’s Investors Service. Mortgages eligible for sale to the government-sponsored enterprises account for 65.1 percent of the collateral, amounting to $650.3 million. GSE-eligible mortgages ...

The $395.8 million nonprime mortgage-backed security Angel Oak Capital Advisors closed this week was met with strong demand from investors, according to the firm. “We believe that, relative to other recent [non-qualified mortgage] transactions, the tight pricing of AOMT 2018-3 demonstrates that investors have the confidence in and demand for the Angel Oak securitization program,” said Lauren Hedvat, a managing director of capital markets at Angel Oak. Pricing spreads ...

Western Asset Mortgage Capital Corp. is among a number of nonbanks investing in non-qualified mortgages. Officials at the real estate investment trust suggest that its investment strategy differs from many of the other buyers in the sector. “Our strategy for non-QMs is quite different relative to all other market participants,” said Anupam Agarwal, WAMCC’s CIO, during the REIT’s recent earnings call. He noted that WAMCC is acquiring non-QMs with strong credit scores and low loan-to-value ratios ...

Starwood Property Trust plans to be a regular issuer of mortgage-backed securities backed by non-qualified mortgages after successfully closing its first deal this week. Loans in the $374.1 million issuance were sourced from Impac Mortgage Holdings, which is working to increase non-QM production, delivering the loans to Starwood and potentially other outlets. Jeffrey DiModica, president of Starwood Property Trust, said the real estate investment trust expects to be a “frequent issuer” ...

Ellington Financial could issue its second mortgage-backed security backed by non-qualified mortgages before yearend, according to officials at the nonbank. “We are nearing critical mass of product for a follow-on securitization and plan for that later this year, subject, of course, to market conditions,” said Laurence Penn, Ellington’s CEO and president. At the end of the June, Ellington held $150.2 million of non-QMs. Mark Tecotzky, co-CIO at Ellington, noted that the firm is increasing ...