More small banks can soon receive qualified-mortgage status for certain originations even if the loans would otherwise be non-QMs thanks to provisions in the Dodd-Frank reform legislation signed into law last week. The new type of QM will be available to banks and credit unions with less than $10.0 billion in total assets. Originations held in portfolio by such institutions will receive QM status if they meet a variety of standards. The exemption is already provided to depositories with ...

Issuers of non-agency mortgage-backed securities continued to bring a variety of deals in May. JPMorgan Chase and Redwood Trust are set to issue separate prime non-agency MBS and nonprime MBS is on the way from Deephaven Mortgage and Lone Star Funds. Both Chase and Redwood continue to include mortgages eligible for sale to the government-sponsored enterprises in their issuance. Such loans will account for essentially half of the $650.5 million issuance ...

Mortgages for self-employed borrowers look to be an area of growth for non-agency lenders. Embrace Home Loans and Truss Financial Group introduced separate products for self-employed borrowers recently. Embrace said its “beyond” products will provide finance to borrowers that other lenders have denied. “Beyond is our program that offers financing solutions for borrowers who don’t easily fit into the guidelines for conventional mortgages,” the lender said. “They call it ...

The Structured Finance Industry Group is developing best practices for servicing fees that are passed through to non-agency mortgage-backed securities. As part of the effort, the industry group is seeking examples of servicing fees that have been disputed. The non-qualified mortgage share of originations by banks increased slightly in 2017, according to a survey by the American Bankers Association. Some 10.0 percent of bank originations in 2017 ... [Includes five briefs]

Production of non-agency jumbo mortgages declined significantly in the first quarter of 2018, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $60.0 billion of jumbos were originated in the first quarter, down 26.8 percent from the previous period. Jumbo production was also off 13.0 percent from the first three months of 2017. The decline in jumbo volume was greater than the slowdown in the overall mortgage ... [Includes one data chart]

Mortgage-backed security investors remain interested in non-qualified mortgages, though the hot market may be cooling off. A particularly large non-QM MBS from an affiliate of Western Asset Management Company was delayed in closing and downsized slightly as some firms suggest that returns in the market slipped in the first quarter. WAMC’s Arroyo Mortgage Trust 2018-1 was initially sized at $1.25 billion, according to presale reports published near the end of April by ...

Redwood Trust boosted its net income in the first quarter of 2018 and continued to increase its originations of expanded-credit mortgages. The real estate investment trust is seeing strong demand for the loans in the secondary market and Redwood is set to issue its largest expanded-credit mortgage-backed security to date. Redwood had $46.9 million in net income in the quarter, up 51.4 percent from the fourth quarter of 2017 and up 26.7 percent from a year ago. The company sold ...

Impac Mortgage Holdings is putting more emphasis on originating non-qualified mortgages, with officials noting that the loans offer much better margins than conventional mortgages. Impac originated $248.2 million of non-QMs in the first quarter of 2018, up 5.6 percent from the previous cycle and a 34.7 percent increase from a year ago. Non-QMs accounted for 18.8 percent of Impac’s production in early 2018 compared with a 14.2 percent share in the previous quarter and an ...

The second prime non-agency mortgage-backed security from an affiliate of American International Group is a lot like the MBS the company issued in March, but the new deal received favorable treatment from the rating services, with lower credit enhancement on the senior tranche. PSMC 2018-2 Trust will be a $429.4 million issuance, according to presale reports published last week. The mortgages have an average credit score of 773, an average debt-to-income ratio of 33.0 percent ...

Flagstar Bank is set to issue a non-agency mortgage-backed security stocked solely with investment-property mortgages eligible for sale to the government-sponsored enterprises. The issuance is a first in the post-crisis era and it suggests that Flagstar expects better execution in the non-agency market than from delivering the loans to Fannie Mae or Freddie Mac. Flagstar Mortgage Trust 2018-3INV will be a $329.1 million issuance, according to presale reports published ...