Issuance of expanded-credit MBS is set for a strong start in the third quarter. Presale reports for eight deals were published in the past two weeks, including the second-largest post-crisis issuance.
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Average credit scores, DTI ratios and LTV ratios are staying relatively steady as expanded-credit MBS issuance booms. Lenders are putting more emphasis on underwriting based on alternative documentation.
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JPMorgan Chase is increasing its issuance of jumbo MBS backed by loans with relatively high LTV ratios. Meanwhile, Flagstar Bank is contributing loans to a jumbo MBS from Goldman Sachs.
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The Alternative Reference Rate Committee detailed how a modified SOFR could be used in place of LIBOR for new ARM originations. It also proposed fallback language to move new ARMs away from LIBOR.
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The CFPB should allow compensating factors to be considered in lieu of a strict 43% DTI ratio limit for determining QM status, according to two separate proposals.
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