JPMorgan Chase’s settlement with the Federal Housing Finance Agency regarding representation and warranty claims on non-agency mortgage-backed securities could prompt large settlements by other banks, according to industry analysts. Chase agreed last week to pay $4.0 billion to settle claims on $33.8 billion of non-agency MBS purchased by Fannie Mae and Freddie Mac. The securities were issued between 2004 and 2007 by Chase, Bear Stearns and Washington Mutual. The settlement sets a “relatively high bar” for ...

Wells Fargo originated nearly one out of every five jumbo mortgages completed in 2012, according to a new analysis and ranking by Inside Nonconforming Markets of Home Mortgage Disclosure Act data. Wells had a 17.8 percent share of the $220.51 billion in non-agency jumbo mortgages originated last year, more than double its nearest rival. The origination volumes are based on one-unit conventional loan limits for specific metropolitan statistical areas and the $417,000 conforming loan limit [Includes one data chart] ...

A number of small subprime lenders report that they see strong demand from borrowers as well as investors looking for the strong, if risky, returns offered by subprime lending. At least two life insurance companies have approached Citadel Servicing about buying some of its new subprime loan production, according to company CEO Dan Perl. In an interview with Inside Nonconforming Markets, Perl declined to identify the insurance companies, but said he believes a market will soon develop for subprime mortgages ...

Lenders are urging federal regulators to conform the definition for qualified residential mortgages with the qualified mortgage standards established by the Consumer Financial Protection Bureau. While regulators suggested that stricter standards for QRMs would prompt securitizations of non-QRMs, lenders warn that such standards would be onerous and likely significantly reduce non-agency mortgage originations and securitization. The Dodd-Frank Act requires federal regulators to establish risk-retention ...

Originations of nonconforming mortgages will likely be constrained by the weight of Fannie Mae and Freddie Mac as Congress takes three years or longer to enact reform legislation that will likely be implemented over a long-term transition plan, according to industry experts. The baby steps that have been taken this year – a GOP reform bill approved by the House Financial Services Committee and a bipartisan approach in the Senate – provide some momentum for resolving the five-year conservatorship of the two ...

FHA jumbo loan originations continued their quarterly fluctuations as production in the second quarter of 2013 slipped after a good run in the previous quarter, according to Inside FHA Lending’s analysis of FHA data. Volume fell 1.5 percent from the first quarter, during which the FHA posted $5.36 billion in jumbo mortgage originations. The first quarter number broke a declining production trend that began in the second quarter of last year when FHA reported $6.27 billion in jumbo lending. FHA lenders produced a total of $10.8 billion in new jumbo loans in the first half of 2013, down 2.7 percent from ... [2 charts]

Lenders continue to originate non-agency jumbo mortgages, but few are likely to be securitized in the coming months due to more favorable economics for banks retaining the loans in portfolio. Longer term, many investors suggest they won’t return to the non-agency mortgage-backed security market until issuers standardize their offerings. The ABS East conference sponsored by Information Management Network last week in Miami presented a tale of two markets: jumbo MBS and everything else ...

The jumbo mortgage-backed security market showed some signs of life this week as Shellpoint Partners offered its second deal of the year, a restructured and downsized version of the transaction targeted for late September. The $250.85 million deal is set to receive a triple-A rating with credit enhancement of 7.10 percent on the top-rated tranche, according to Kroll Bond Rating Agency. The $308.64 million deal Shellpoint was preparing in September was set to have credit enhancement of 7.90 percent ...

First Republic Bank was the top contributor to jumbo mortgage-backed securities through the first three quarters in 2013, according to a new ranking and analysis by Inside Nonconforming Markets. Meanwhile, underwriting trends for the sector were mixed. Some $2.10 billion in originations by First Republic were included in jumbo MBS this year, as of the end of September. The loans accounted for 17.2 percent of all non-agency jumbos securitized, more than double the next closest lender ... [Includes two data charts]

Opposition to lower loan limits for the government-sponsored enterprises appears to be increasing by the day as the Federal Housing Finance Agency considers the issue. Support from non-agency participants for a reduction – at least in the high-cost loan limits – has been proportional to the non-agency share of total mortgage originations: about one in 10. “My sense is that there will never be a good time to reduce the conforming loan limit,” said Mark Zandi, chief economist at Moody’s Analytics ...