Conforming loan limits should be lowered to help draw private capital into the mortgage market, according to recommendations from a bipartisan think tank led by former policymakers. The Bipartisan Policy Center recommended phasing out the government-sponsored enterprises and replacing them with a new “Public Guarantor” that would shift mortgage finance risk to the private sector. “A gradual reduction of the loan limits for government-guaranteed mortgages would help to rebalance the ...

Lending groups are urging the Consumer Financial Protection Bureau to broaden classifications of “qualified mortgages” that it adopted in its final rule implementing ability-to-repay standards mandated by the Dodd-Frank Act. The Mortgage Bankers Association said the interest-rate threshold for determining which loans are eligible for safe harbor provided to QM loans should be raised. The CFPB rule generally allows QM status for loans with annual percentage rates up to 1.5 percentage points higher than ...

AIG announced this week that it launched a new unit to purchase whole loans as long-term investments, with AIG managing the servicing. The new Connective Mortgage Advisory Company recently facilitated AIG’s first correspondent mortgage purchase with AIG’s mortgage insurance subsidiary United Guaranty helping to identify and buy the whole loans. “Direct investment in residential mortgage loans offers attractive investment returns and enables a proactive approach to managing ... [Includes two briefs]

Redwood Trust plans to more than triple the dollar amount of non-agency jumbo mortgage-backed securities it issues this year compared with its issuance from 2012, according to comments this week from officials at the real estate investment trust. Redwood also plans to securitize conforming jumbos and even aggregate conforming loans to sell to Fannie Mae and Freddie Mac. The REIT’s goal for 2013 is to issue about $7.0 billion in non-agency MBS. While potential competitors struggled to ...

JPMorgan Chase is close to selling a non-agency jumbo mortgage-backed security, according to traders and jumbo executives familiar with the company’s activities. Chase is treating the MBS as a test deal – which has been delayed – though it could close by the end of this month. A spokesman for Chase declined to comment on the matter but a source at the company confirmed that a deal is in the works. Chase might issue the deal as a private placement or the company might keep the security for its own portfolio and ...

The ability-to-repay rule from the Consumer Financial Protection Bureau will not have a negative impact on First Republic Bank’s originations of interest-only mortgages, according to James Herbert, chairman and CEO of the bank. Officials at Redwood Trust also said the rule is unlikely to impact its acquisition and securitization of IOs. If anything, First Republic’s Herbert said the new rule from the CFPB, which included harsher treatment for IO originations beginning in 2014, could help increase ...

Firms are looking to issue new non-agency mortgage-backed securities with looser representation and warranty standards than most post-crisis issuance, according to Fitch Ratings. The rating service issued a report this week critical of looser reps and warrants and pointed to Redwood Trust as an issuer with high standards for reps and warrants. “We believe that transactions with these more aggressive rep and warranty provisions have the potential to weaken a transaction and effectively reduce ...

Federal regulators said they are nearly finished writing the final rule on risk retention in non-agency mortgage securitizations, including a revised definition for qualified residential mortgages. Issuance of the rule was delayed until the Consumer Financial Protection Bureau finished its ability-to-repay rule which set standards for qualified mortgages. “QM coming out really now does allow us to finish it,” Federal Reserve Governor Daniel Tarullo said of the risk-retention rule ...

Federal regulators are under pressure from Congress and others to bring more mortgage-related lawsuits, particularly involving “Wall Street banks.” Obama administration officials and former employees of the regulators suggest that more lawsuits are likely, including a focus on non-agency mortgage-backed securities. The latest calls for lawsuits came last week from Sen. Elizabeth Warren, D-MA. At a hearing by the Senate Banking, Housing and Urban Affairs Committee, she questioned how much ...

FCI Lender Services ended December with $2.3 billion of private money loans in its servicing portfolio, a 27 percent gain from the same period a year earlier. The nation’s largest private money servicer said it is seeing an increase in contracts and growth in “soft money” loans backed by residential real estate. Gordon Albrecht, chief strategy officer at FCI, said soft money loans currently account for 50 percent of the firm’s business, which is based in Anaheim, CA. “That’s a record for us,” ...