The difference in interest rates for non-agency jumbo mortgages compared with conforming mortgages is often reported based on average interest rates. According to an analysis by researchers at the Federal Reserve Bank of New York, looking at average rates obscures some major differences in pricing for jumbos and mortgages eligible for sale to the government-sponsored enterprises. The researchers used data from Optimal Blue, a mortgage processor that allows lenders to ...

Ellington Financial is looking to ramp up activity involving non-qualified mortgages after a positive reception for its first mortgage-backed security. In November, Ellington issued a $141.2 million MBS predominantly backed by non-QMs. The deal closed with “excellent execution and strong investor demand,” according to Laurence Penn, president and CEO of Ellington. Investors included Putnam Investments, Janus Henderson Investors and JPMorgan Asset Management. “We had a ...

S&P Global Ratings released a revised methodology and assumptions this week for non-agency mortgage-backed securities issued in 2009 and later. The revision included slightly more favorable treatment of mortgages to multiple borrowers and recalibrated loss severity assumptions, including an over/undervaluation framework that incorporates property values in markets compared with price-to-income ratios. New Penn Financial loosened ... [Includes two briefs]

MBS backed by expanded-credit loans increased by more than 400 percent last year, with an even better year anticipated in 2018. And although the growth in terms of dollar volume wasn’t huge, due diligence firms are beginning to feel bullish about their prospects.

Originations of non-agency jumbo mortgages declined by 17.8 percent on an annual basis in 2017, according to a new ranking and analysis by Inside Nonconforming Markets. The sector lost market share as total mortgage originations declined by 12.3 percent during that span. Jumbo originations were down among most of the top 10 lenders, including banks and nonbanks, with many reporting weaker consumer demand, particularly as refinances became ... [Includes one data chart]

The jumbo mortgage-backed security market received a boost this week as a new issuer stepped into the ring. Teachers Insurance and Annuity Association of America is preparing to issue a deal this month, according to presale reports. TIAA, a multi-faceted enterprise with more than $1 trillion in managed assets, acquired EverBank in 2017 and rebranded the operations as TIAA, FSB. The bank is set to issue a $381.54 million jumbo MBS using EverBank’s MBS shelf registration ...

The delinquency rate on non-qualified mortgages in mortgage-backed securities remains low, as issuers are largely avoiding risk-layering. As of the end of 2017, the average current-to-delinquent roll rate for non-QMs in MBS seasoned for one year was 0.4 percent, according to Bank of America Merrill Lynch. Only three non-QM loans tracked by CoreLogic have liquidated so far, and none realized a loss. Non-QM MBS have thicker credit enhancement than ... [Includes one data chart]

A new expanded-prime mortgage-backed security from Redwood Trust is nearly 40.0 percent larger than the prior deal from the real estate investment trust. Redwood is set to issue the $444.29 million Sequoia Mortgage Trust 2018-CH-1, following a similar $320.30 million deal in November and a $307.64 million deal in September, the first from Redwood to focus on loans from the firm’s Choice program. Choice mortgages have slightly wider underwriting standards than ...

Flagstar Bank is set to issue its third jumbo mortgage-backed security in as many quarters, according to presale reports published this week. The bank plans to issue a $487.66 million deal, which follows a $576.44 million deal from October and a $443.79 million issuance in July. Underwriting characteristics across the three MBS are largely similar. The new issuance includes mortgages with an average credit score of 761, an average combined loan-to-value ratio of 67.4 percent and ...

The GOP housing-finance reform bill being developed in the Senate would keep the current standards for loan limits that apply to the government-sponsored enterprises, according to a draft of the bill released last week. Boosters of the non-agency mortgage market have long called for lower GSE loan limits, but Congress hasn’t shown an appetite to reduce them. The bill was drafted by Sen. Bob Corker, R-TN, and many Democrats have withheld support to this point, including ...