Some experts are predicting that the new ability-to-repay rule issued by the Consumer Financial Protection Bureau, which sets the boundaries of “qualified mortgages,” will also lead some lenders to focus on so-called non-QM loans that will become the new subprime market. At the American Bankers Association’s regulatory compliance conference, held this week in Chicago, ABA Senior Regulatory Counsel Rodrigo Alba said publicly what many mortgage bankers have been thinking privately. Responding to a comment from one banker who said her institution might opt to do only non-QM lending, just for simplicity’s sake, Alba said, “Wanted or not, this may start leaning into being the new subprime.” He added...

The amount of home-equity loans held by depository institutions continued to decline in early 2013, with little sign that banks, thrifts and credit unions are likely to ramp up their lending in the near future, according to a new Inside Mortgage Finance analysis and ranking. Banks, thrifts and credit unions held some $706.95 billion of home-equity lines of credit and closed-end second mortgages on their books as of the end of March, down 2.8 percent from the previous quarter. Including their $474.09 billion in unused HELOC commitments, depository institutions reported a total home-equity business portfolio of $1.181 trillion, down 7.8 percent from the first quarter of 2012. The unpaid balance of closed-end seconds was...[Includes three data charts]

The bipartisan Senate legislation being drafted to finally resolve the conservatorships of Fannie Mae and Freddie Mac attempts to meet the needs of a lot of interests in the mortgage finance industry, including small lenders, Wall Street, the multifamily business and even, potentially, current owners of common stock issued by the two government-sponsored enterprises. A discussion draft of the bill, the Secondary Mortgage Market Reform and Taxpayer Protection Act of 2013, outlines a broad plan for shutting down Fannie and Freddie and replacing them with a new entity – the Federal Mortgage Insurance Corp. – that is intended as a transition to a fully private mortgage market. A copy of the draft legislation, which is primarily the work of Sens. Bob Corker, R-TN, and Mark Warner, D-VA, was provided to Inside Mortgage Finance. The draft bill includes...

Banks large and small are increasing their originations of non-agency jumbo mortgages, according to an analysis by Inside Mortgage Finance. Demand for the mortgages in the secondary market has increased significantly recently, giving banks another option besides holding the loans in portfolio. An estimated $54.0 billion in non-agency jumbos were originated in the first quarter of 2013, up 14.9 percent from the first quarter of 2012. Fourteen of the top 20 non-agency jumbo lenders increased their originations during that period, including Bank of America and Chase, which each increased their jumbo originations by about 66 percent. Agency jumbo production – Fannie Mae, Freddie Mac and FHA business over the traditional $417,000 conforming loan limit – was...[Includes three data charts]

EverBank Financial is preparing to issue a $303.30 million non-agency jumbo mortgage-backed security, according to a presale report issued by DBRS this week. The MBS has similar characteristics to the $307 million jumbo security EverBank issued in March. DBRS cited strong reps and warrants on the deal, including automatic reviews for seriously delinquent loans, mandatory arbitration and no sunset provisions. However, the rating service said EverBank’s limited securitization history and ...

JPMorgan Chase is set to issue a unique jumbo MBS, its second of the year, that will include originations from 20 different lenders that far outweigh the company’s contributions to the deal. Another bank, EverBank, this week took steps to issue its second jumbo deal of 2013 as well. Since 2008, big banks have largely held their non-agency jumbo originations in portfolio, seeing better execution than non-agency MBS issuance. However, strong demand from non-agency MBS investors and a desire to shrink mortgage exposure has prompted Chase to resume issuing jumbo MBS. Chase declined...

Non-agency MBS execution for certain high-quality mortgages is competitive with agency MBS execution, according to industry analysts. A slight increase in the guaranty fees charged by the government-sponsored enterprises would make non-agency securitization even more attractive, though the incentive for banks to hold non-agency originations in portfolio remains strong. Non-agency MBS execution is currently competitive with agency MBS execution for purchase mortgages with loan-to-value ratios below 70 percent and credit scores above 740, according to analysts at Barclays Capital. “For the cleanest collateral, non-agency execution could be...

Origination trends for non-agency jumbo mortgages were stronger than total mortgage originations in the first quarter of 2013, according to a new ranking by affiliated publication Inside Mortgage Finance. Lenders increasingly see jumbos as an attractive product and a number of smaller players are entering the market or growing their originations. An estimated $54.0 billion in non-agency jumbos were originated in the first quarter of 2013, down 1.8 percent from the previous quarter ... [Includes one data chart]

The new non-agency jumbo mortgage-backed security from JPMorgan Chase has been described as both encouraging and puzzling by non-agency participants. The $442.54 million non-agency MBS shows that Chase thinks the non-agency securities market – largely the domain of nonbanks since 2010 – is strong enough for the bank to issue its second jumbo security this year. Non-agency MBS participants have welcomed the competition, noting that activity from a big bank such as Chase could prompt greater ...

Stonegate Mortgage has plans to compete with banks for non-agency jumbo originations and warehouse lending. The company announced recently that it raised $115 million in a private offering of its stock, with plans for the proceeds largely tied to jumbos. “We intend to grow our originations and servicing portfolio by expanding to all 48 contiguous states by year-end,” said Jim Cutillo, Stonegate’s CEO. “We also recently launched a non-agency jumbo loan program and an integrated warehouse ...