Originations of nonprime mortgages in 2017 are the strongest they have been since the financial crisis but remain well below levels seen before then. Lenders are looking to lean on loan originators and borrowers in an effort to increase volume. Angel Oak Companies is on track to originate more than $1.1 billion of non-qualified mortgages this year, according to the firm. The nonbank has three lending units that largely focus on nonprime mortgages and the $1.1 billion in production will be a company record. “Clearly, investors, brokers and consumers are...

Drawing to a close, the third quarter of 2017 is turning out to be modestly better than some lenders expected with both profits and production volumes getting a second wind recently thanks to falling interest rates. “We’re having a great quarter,” said Mat Ishbia, president and CEO of United Wholesale Mortgage, Troy, MI. According to Ishbia, not only will UWM post record originations of $8.6 billion in the third quarter, but volume at the privately held nonbank will be about 20.0 percent higher than ever before. According to figures compiled by Inside Mortgage Finance, UWM is...

Anecdotal and empirical evidence confirm that mortgage lenders are continuing to lighten up on their underwriting criteria. The loosening may not be as pronounced as it was in the run-up to the financial crisis, but there are concerns that it will intensify as the Federal Reserve raises interest rates. Fannie Mae’s latest mortgage lender sentiment survey found that more lenders said they have eased credit standards than tightened them, something the government-sponsored enterprise attributed to limited demand for residential finance and a negative outlook on profit margins. “The net share of lenders reporting easing of credit standards over the prior three months has continued...

Issuance of non-agency MBS backed by newly originated home loans remains well below levels seen before the financial crisis. While new regulations have stopped some pre-crisis loan types from being originated, industry participants suggest that other major factors are also limiting the supply of loans available for MBS. Chris Helwig, a managing director at Amherst Pierpont, noted that banks are competing for prime jumbos and holding them in portfolio, and many borrowers who previously might have received subprime mortgages opt for FHA loans. “All that is left for non-agency MBS is...

Redwood Trust worked for years to revive the jumbo MBS market by issuing deals with super-prime mortgages. Now, the firm is shifting its focus somewhat to “expanded prime” mortgages that have slightly looser underwriting standards. The $316.49 million Sequoia Mortgage Trust 2017-CH-1 is the first MBS from Redwood to deviate from super-prime standards. The deal received preliminary AAA ratings this week from Kroll Bond Rating Agency and Moody’s Investors Service. The average combined loan-to-value ratio of the mortgages in the MBS is...

Delinquencies on non-qualified mortgages have been minimal and many borrowers with the loans seek to refinance relatively quickly, according to an analysis by Wells Fargo Securities. Among non-QMs with at least two years of seasoning that were included in nonprime mortgage-backed securities, more than 97 percent haven’t missed a payment, according to Wells. “Borrower credit performance has been robust so far, with delinquency rates and losses still subdued,” the analysts said. As of the end of July, only one non-QM in a nonprime MBS has gone...

An affiliate of Bayview Asset Management issued a $230.0 million non-agency mortgage-backed security this week largely stocked with seasoned mortgages, including one non-qualified mortgage. DBRS and Fitch Ratings placed AAA ratings on Bayview Mortgage Fund IVc Trust 2017-RT3, without putting much emphasis on the non-QM. Non-QMs had accounted for 2.1 percent of a $125.82 million MBS from Bayview that priced in July and 1.0 percent of a $208.13 million deal it priced in April. The sponsor of the deal will retain...

The average daily trading volume in agency MBS fell to just $200.5 billion in July, the weakest reading of the year, according to the Securities Industry and Financial Markets Association. Compared to the prior month, MBS trading fell by 4.5 percent. The strongest month of the year came in January at $229.8 billion. In general, a lower reading on average daily trading volume means...

The Consumer Financial Protection Bureau’s planned review of the ability-to-repay rule prompted comment letters from trade groups representing various industry participants along with individual comment letters from JPMorgan Chase and Wells Fargo. The big banks were critical of certain aspects of the ATR rule and requested changes that could increase originations of non-agency mortgages. “The ATR/qualified mortgage rule is not working as desired,” said Michael Weinbach, a ...

The private mortgage insurance industry has called for harmonized qualified-mortgage standards to discourage potential arbitrage that might adversely affect consumers. In a comment letter, the U.S. Mortgage Insurers urged the Consumer Financial Protection Bureau to assess whether the various QM standards established under the Dodd-Frank Act have created arbitrage opportunities to the detriment of consumers. The CFPB is about to begin a reevaluation of its ability-to-repay rule/QM rule. QM standards are different for Fannie Mae, Freddie Mac and the Federal Home Loan Banks than for FHA, VA and the U.S. Department of Agriculture. The USMI said analysis should focus on the different treatment of points and fees and maximum borrower debt-to-income ratio among the various QM standards. The CFPB can address the calculation of points and fees under its ATR/QM rule by ...