Originations of non-agency nonprime mortgages have been limited in the years since the financial crisis, with many borrowers with low credit scores receiving FHA loans instead. Officials at a number of nonprime lenders have noted that loan originator compensation requirements have limited incentives for loan officers to work on nonprime mortgages. A loan originator might be able to complete two FHA mortgages in the time it takes to close one nonprime mortgage, and there’s always a ...

Other issuers are looking to follow Lone Star Funds in issuing rated nonprime mortgage-backed securities that include non-qualified mortgages, according to industry participants. The $161.71 million COLT 2016-1 Mortgage Loan Trust was the first post-crisis nonprime MBS backed by new originations to receive a rating. The deal received an A rating from DBRS and Fitch Ratings. “DBRS is currently evaluating similar pools from various originators,” according to the rating service ...

JPMorgan Chase is preparing to issue its second large prime non-agency mortgage-backed security with loans eligible for sale to the government-sponsored enterprises, according to documents filed with the Securities and Exchange Commission this week. While there has been some speculation about the benefits big banks will see from such MBS, Marianne Lake, Chase’s CFO, said the Chase Mortgage Trust transactions are attractive to the bank. “We’re keeping the ...

Annaly Capital Management completed its acquisition of Hatteras Financial this week, prompting a hold on jumbo operations at Hatteras, according to a message reviewed by Inside Nonconforming Markets. Hatteras formed its jumbo conduit, Onslow Bay Financial, in 2013, with a focus on adjustable-rate mortgages. In a note sent to conduit sellers recently, an official at Onslow Bay Financial said Annaly notified the conduit that the real estate investment trust stopped ...

An aggregator review of Redwood Trust by Moody’s Investors Service included an affirmation of an “above average” assessment of the firm’s prime jumbo activities along with some criticism of Redwood’s quality control process, among other issues. Moody’s assessment of Redwood’s quality control and audit activities was lowered from average to below average “because Redwood eliminated its independent third-party review quality control process in lieu of due diligence results ...

Underwriting characteristics on the jumbo mortgage-backed securities issued in the second quarter of 2016 loosened slightly, according to a new analysis by Inside Nonconforming Markets. The average combined loan-to-value ratio increased somewhat compared with recent quarters and average credit scores declined. Small fluctuations in average debt-to-income ratios have also been seen in the past years. The underwriting characteristics for ... [Includes two data charts]

The costs and benefits of a deal agent will vary based on loan characteristics, according to a new analysis by Fitch Ratings. Costs for jumbo mortgage-backed securities will be relatively low, while costs for nonprime MBS will be higher, along with potentially greater benefits when assessing the representations and warranties on a deal. Non-agency MBS issuers continue to work toward including a deal agent in new transactions as some investors have called for the feature ...

A federal jury in late June ruled in favor of former officials from Thornburg Mortgage in a lawsuit brought by the Securities and Exchange Commission in 2012. The charges centered on disclosure and accounting issues the jumbo lender faced in early 2008. The trial involved 10 counts against Larry Goldstone and Clay Simmons, the former CEO and chief financial officer of Thornburg, respectively. The jury ruled in favor of the former Thornburg officials on six counts and was ...

Investors in non-agency mortgage-backed securities serviced by Ocwen Financial released a report this week calling for Standard & Poor’s to upgrade Ocwen’s servicer ratings. In June 2015, S&P downgraded Ocwen Loan Servicing’s servicer ratings to “below average,” citing regulatory issues and investor scrutiny along with concerns about internal audits at Ocwen. The downgrade is a focus for some investors because some of the non-agency MBS serviced by Ocwen have ...

Social Finance is originating $70 million per month in jumbo mortgages and is considering issuing a jumbo mortgage-backed security, according to industry participants that have met with officials at the marketplace lender. Adjustable-rate mortgages accounted for approximately 25.0 percent of jumbo originations in May, according to Black Knight Financial Services. The firm said the jumbo ARM share of originations has declined from 29.0 percent as recently as ... [Includes five briefs]