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Inside Nonconforming Markets

December 22, 2017

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Prime Non-Agency MBS Issuance Expected To Grow in 2018, Standards May Loosen

Issuance of prime non-agency mortgage-backed securities will increase next year, according to predictions from various industry analysts. Some see a gradual increase while analysts at Kroll Bond Rating Agency said volume could double when including so-called expanded-prime MBS. Kroll said prime non-agency MBS issuance could hit nearly $20.0 billion in 2018. “Assuming that spread tightening across structured finance remains at or near current levels, execution may continue to favor ... Read More

Correspondents Gaining Some Jumbo Share

The correspondent share of jumbo originations has risen in the past year while the retail share declined, according to a new analysis by Inside Nonconforming Markets. The survey found that correspondent production accounted for 18.1 percent of jumbo originations in the third quarter of 2017, up from a 14.3 percent share in the third quarter of 2016. During that time, the retail share of the lenders’ jumbo production fell from 81.3 percent to ... [Includes one data chart] Read More

GSE-Eligible Loans Prominent in MBS from Chase

Some 55.2 percent of the loans in JPMorgan Chase’s forthcoming $883.8 million non-agency mortgage-backed security will be eligible for sale to the government-sponsored enterprises. Chase has included conforming mortgages in previous non-agency MBS but usually in smaller amounts. The GSE-eligible mortgages were largely originated by Chase, along with some contributions from loanDepot. The GSE-eligible mortgages have an average balance of $536,992 ... Read More

Banks Continue to Add Loans to Portfolio

Holdings of residential first-lien mortgages by banks and thrifts increased again in the third quarter of 2017, according to a new ranking and analysis by Inside Nonconforming Markets. Banks and thrifts held first liens with a total unpaid principal balance of $1.99 trillion as of the end of the third quarter, up 1.1 percent from the previous quarter and a 3.3 percent increase from a year ago. First-lien holdings are dominated by three big banks: Wells Fargo ... [Includes one data chart] Read More

Annaly Seeing Strong Returns from Whole Loans

Significant investments in new non-agency whole loans are paying off, according to officials at Annaly Capital Management. The real estate investment trust started buying the loans in the second half of 2016 after acquiring Hatteras Financial. As of the end of the third quarter, Annaly held non-agency whole loans with an unpaid principal balance of $896.0 million. Whole loans accounted for 28.0 percent of Annaly’s residential credit portfolio as of the end of September, up from a ... Read More

Few Losses on Non-QM MBS, Some Delinquencies

Investor demand for non-agency mortgage-backed securities with non-qualified mortgages appears to have been boosted by the performance of such deals issued in recent years. There have been some delinquencies – owing to somewhat loose underwriting standards – but investors have largely been protected from losses. DBRS recently analyzed 18 non-QM MBS issued since 2015 and found that only three deals had experienced losses as of September. A $150.4 million deal from ... Read More

Citadel Boosts Nonprime Portfolio

Citadel Servicing has increased its portfolio of nonprime mortgages in the past year and has taken steps to improve operations, according to Fitch Ratings. Citadel serviced mortgages with an unpaid principal balance of $1.1 billion as of the end of November, up from a $673.1 million portfolio as of the end of 2016. Some 1.8 percent of Citadel’s portfolio was 30 or more days delinquent as of November, according to Fitch. A significant portion of the portfolio was originated after ... Read More

News Briefs

According to an analysis by Zillow, 11.2 percent of the 25.1 million homes that are currently worth enough to require a jumbo mortgage will fall under the conforming loan limit in 2018 due to higher loan limits established by the Federal Housing Finance Agency. The analysis was based on county-specific home prices and the assumption that jumbos allow a loan-to-value ratio no higher than ... [Includes two briefs] Read More

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