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Inside Nonconforming Markets

February 9, 2018

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Non-Agency Jumbo Originations Fell 18 Percent in 2017, Demand Weakened

Originations of non-agency jumbo mortgages declined by 17.8 percent on an annual basis in 2017, according to a new ranking and analysis by Inside Nonconforming Markets. The sector lost market share as total mortgage originations declined by 12.3 percent during that span. Jumbo originations were down among most of the top 10 lenders, including banks and nonbanks, with many reporting weaker consumer demand, particularly as refinances became ... [Includes one data chart] Read More

TIAA Brings Back EverBank as Jumbo MBS Issuer

The jumbo mortgage-backed security market received a boost this week as a new issuer stepped into the ring. Teachers Insurance and Annuity Association of America is preparing to issue a deal this month, according to presale reports. TIAA, a multi-faceted enterprise with more than $1 trillion in managed assets, acquired EverBank in 2017 and rebranded the operations as TIAA, FSB. The bank is set to issue a $381.54 million jumbo MBS using EverBank’s MBS shelf registration ... Read More

Strong Performance for Non-QMs in MBS

The delinquency rate on non-qualified mortgages in mortgage-backed securities remains low, as issuers are largely avoiding risk-layering. As of the end of 2017, the average current-to-delinquent roll rate for non-QMs in MBS seasoned for one year was 0.4 percent, according to Bank of America Merrill Lynch. Only three non-QM loans tracked by CoreLogic have liquidated so far, and none realized a loss. Non-QM MBS have thicker credit enhancement than ... [Includes one data chart] Read More

Redwood Goes Bigger with Expanded-Prime MBS

A new expanded-prime mortgage-backed security from Redwood Trust is nearly 40.0 percent larger than the prior deal from the real estate investment trust. Redwood is set to issue the $444.29 million Sequoia Mortgage Trust 2018-CH-1, following a similar $320.30 million deal in November and a $307.64 million deal in September, the first from Redwood to focus on loans from the firm’s Choice program. Choice mortgages have slightly wider underwriting standards than ... Read More

Flagstar Maintains Steady Jumbo MBS Issuance

Flagstar Bank is set to issue its third jumbo mortgage-backed security in as many quarters, according to presale reports published this week. The bank plans to issue a $487.66 million deal, which follows a $576.44 million deal from October and a $443.79 million issuance in July. Underwriting characteristics across the three MBS are largely similar. The new issuance includes mortgages with an average credit score of 761, an average combined loan-to-value ratio of 67.4 percent and ... Read More

Senate Bill Would Maintain GSEs’ Loan Limits

The GOP housing-finance reform bill being developed in the Senate would keep the current standards for loan limits that apply to the government-sponsored enterprises, according to a draft of the bill released last week. Boosters of the non-agency mortgage market have long called for lower GSE loan limits, but Congress hasn’t shown an appetite to reduce them. The bill was drafted by Sen. Bob Corker, R-TN, and many Democrats have withheld support to this point, including ... Read More

Bill Would Restore REIT Access to FHLBanks

A bill introduced in the Senate last week with some bipartisan support would allow real estate investment trusts to regain access to funding from Federal Home Loan Banks. The bill would overturn a 2016 rule from the Federal Housing Finance Agency that restricted captive insurance companies from being FHLBank members. Before the FHFA rule took effect, a number of REITs established captive insurers to gain access to FHLBank advances, which come with better terms than ... Read More

News Briefs

PennyMac Financial will resume originating jumbo mortgages in the correspondent channel this year, the lender announced this week. And jumbos will be offered in the broker channel operations recently launched by PennyMac. The House approved a bill this week that would shrink the potential market for non-qualified mortgages. H.R. 1153, the Mortgage Choice Act, was approved on a 280-131 vote with some bipartisan support. The legislation would ... [Includes two briefs] Read More

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