Officials with the Consumer Financial Protection Bureau once again stressed the need for regulation of alternative mortgages this week. However, the performance of such “risky” loans continues to be debated among consumer advocates and economists. “In the lead up to the crisis, when a competitor began to steal market share – or to earn outsize profits – by introducing products like option ARMs or no-doc loans, the pressure to follow suit was intense,” Raj Date, special advisor to the Treasury on the CFPB, said ...

A number of real estate investment trusts – besides Redwood Trust – are hoping to issue non-agency mortgage-backed securities in the coming years. PennyMac Mortgage Investment Trust and Two Harbors Investment have taken two significantly different strategies to reach that goal. PennyMac has focused on investing in non-performing whole loans and has established a correspondent lending platform, including some jumbo activity. The REIT is also establishing warehouse lending capabilities, with a roll-out planned by mid-2012. In the near-term...

Three more non-agency servicers agreed with New York’s Department of Financial Services to revamp their servicing practices to address alleged improper servicing. American Home Mortgage Servicing, Saxon Mortgage and Vericrest Financial last week agreed to servicing practices previously agreed to by Goldman Sachs Bank, Litton Loan Servicing and Ocwen Financial. Among other provisions, the agreements require a single point of contact for borrowers and the end of dual-track foreclosures. The servicers also must withdraw any pending foreclosure in which affidavits were inaccurate and... (Includes one data chart)

Ratings by DBRS of new non-agency mortgage-backed securities will include analysis of several factors at the metropolitan statistical area level. The new rating methodology and loss model were released last week without substantive changes from the proposal the rating service issued in October. “The experience of the last decade has made it apparent that it is not credible to consider loan performance without factoring in house prices and unemployment rates,” DBRS said. ...

Wells Fargo was the top jumbo lender in 2010, according to a ranking by Inside Nonconforming Markets based on Home Mortgage Disclosure Act data compiled by ComplianceTech/Lending Patterns. Wells had $40.87 billion in originations greater than the $417,000 standard conforming loan limit in 2010. ... [Includes one data chart]

Ocwen Financial’s pending purchase of subprime servicer Saxon Mortgage is just the latest growth spurt for the firm. “We are looking at other transactions as we speak,” William Erbey, chairman of Ocwen, said last week on a call with investors. Even with the Saxon deal, Erbey said Ocwen’s pipeline of potential acquisitions increased in the third quarter of 2011 compared with the previous quarter, to more than $300.0 billion in unpaid principal balance. ...

“We have to reduce uncertainty to bring private capital back,” Shaun Donovan, secretary of the Department of Housing and Urban Development, said at the Mortgage Bankers Association’s annual convention last week in Chicago. Industry participants remain divided on if or when non-agency securitization will resume in a significant manner. Daniel Arrigoni, president and CEO of U.S. Bank Home Mortgage, said U.S. Bank and other lenders must think about developing non-agency securitization capabilities as the federal government works toward reducing its involvement in housing finance. ...

The lower loan limits instituted this month for conforming mortgages opened a number of regional opportunities for non-agency lenders. As of Oct. 1, 250 counties have lower government-sponsored enterprise loan limits compared with the conforming loan limits of 2010, according to an analysis by affiliated publication Inside Mortgage Finance. Michael Fratantoni, vice president of single-family research and policy development at the Mortgage Bankers Association, said the portion of the market newly eligible only for non-agency financing is significant in comparison to the amount of non-agency jumbo originations in recent years. ... [includes one data chart]

Acquisitions of large non-agency portfolios by Bank of America and JPMorgan Chase resulted in poor servicing performance, according to a new analysis by Moody’s Investors Service. Successful borrower-contact initiatives, meanwhile, resulted in significantly improved servicing performance for others. “Integrating the servicing platforms, employees, processes, and technologies into their servicing operations overwhelmed the banks, reducing their ability to proactively address the increased number of problem loans in their combined portfolios,” Moody’s said. ...

Significant declines in jumbo mortgage-backed security prices tracked by the PrimeX index in recent weeks were due to investor panic, not collateral fundamentals, according to industry analysts. The sell-off began earlier this month after Fitch Ratings downgraded a number of jumbo securities and warned of negative equity, prompting fears of strategic defaults. Prices on the usually steady PrimeX index fell by as much as 10.0 percent from the beginning of October. Some of the sub-indices even fell below par for the first time. ... [includes one data chart]