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Inside Nonconforming Markets

May 6, 2016

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Non-QM Originations Grow with Focus On Purchase Loans, Challenges Remain

Lenders are getting more comfortable with originating non-qualified mortgages, particularly as opportunities to complete refinances decline. Non-QMs accounted for 14.0 percent of mortgages originated by 159 banks in 2015, up from a 10.0 percent share of originations the previous year, according to a survey by the American Bankers Association. “More banks are adjusting underwriting criteria to target selected non-QM loan opportunities,” the trade group said. The ABA found... Read More

TRID Guidance to Help Non-Agency, Eventually

After months of pleading by participants in the non-agency market, Consumer Financial Protection Bureau Director Richard Cordray said the agency will issue formal guidance regarding the TRID mortgage disclosure rule. The announcement last week regarding issues involving requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act prompted relief and apprehension among industry participants. And help for the non-agency market doesn’t appear to be moving quickly, as Cordray said the effort will start with a notice of proposed rulemaking in late July. Cordray revealed... Read More

New Developments at Leading Jumbo REITs

Announcements by two real estate investment trusts that are prominent in jumbo lending underscore two key themes in the market: increased competition and the lingering headache caused by the TRID disclosure rule. Redwood Trust recently launched an “expanded prime” program known as “Redwood Choice” for correspondent sellers. “The Choice program is a prime program that is fully documented, but with credit parameters outside our more recent underwriting guidelines,” Redwood said. Choice features... Read More

EverBank Slows Jumbo Correspondent Lending

Competition in the correspondent channel prompted EverBank Financial to slow its jumbo production, according to company officials. EverBank had $724.54 million in jumbo originations in the first quarter of 2016, down 32.5 percent from the previous quarter and down 44.3 percent from the first quarter of 2015. Officials said the reduction was focused in correspondent lending. The bank also has retail and consumer direct origination channels. Robert Clements, EverBank’s chairman and CEO, said... Read More

Subprime Servicing Drops, Regulatory Issues Don’t

Ongoing declines in the volume of subprime mortgages outstanding have done little to limit regulatory issues involving subprime servicing. An estimated $287.0 billion in subprime mortgages were outstanding as of the end of the first quarter of 2016, down 16.3 percent from the first quarter of 2015, according to a new ranking and analysis by Inside Nonconforming Markets. The Consumer Financial Protection Bureau released...[Includes one data table] Read More

Regulatory Issues Take Toll on Ocwen

The costs of ongoing monitoring mandated by various regulators contributed to the large $111.2 million net loss posted by Ocwen Financial in the first quarter of 2016 that included $30.0 million in monitoring costs. Ocwen continues to make progress toward decreasing settlement-related costs though regulatory pressures persist. Ocwen’s monitor costs were... Read More

MBS Leads Declines in GSEs’ Nonprime Holdings

Among the government-sponsored enterprises’ holdings of nonprime mortgages, non-agency mortgage-backed securities are declining much more quickly than purchased/guaranteed mortgages, according to an analysis by Inside Nonconforming Markets. The combined nonprime MBS holdings of Fannie Mae and Freddie Mac declined by 9.6 percent during the first quarter of 2016 compared with the end of 2015. The GSEs’ combined purchased/guaranteed holdings of subprime mortgages and Alt A mortgages declined by 4.1 percent in that time. Similar trends are evident on a yearly basis. MBS account... Read More

News Briefs

Caliber Home Loans recently loosened the standards for one of its non-qualified mortgage products. The lender’s “Fresh Start” mortgage now allows loan-to-value ratios up to 85.0 percent, up from 80.0 percent. And private mortgage insurance isn’t...[Includes five briefs] Read More

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