Private-label

An early look at securitized residential home-loan performance amid the coronavirus pandemic indicates encouraging trends thus far in impairment levels of non-qualified mortgages, according to a new report from investor analytics firm Dv01.

Ocwen Financial has approximately $749 million of liquidity from various sources to deal with servicing issues arising from the coronavirus, a company press release said.

The two deals continue a late-year surge of private-label RMBS deal volume totaling $8.37 billion priced since Oct. 1.

Lenders have bundled more than $18 billion worth of non-QM, private-label loans into bonds this year that they then sold to investors, a 44% increase from 2018 and the most for any year since the securities became common post-crisis.

With prospects for government-sponsored enterprise reform improving, players in the private residential mortgage-backed securities market are starting to think about how they could better compete against the GSEs while awaiting change.

Private-label mortgage securitizations with variable servicing fee arrangements could become more common going forward as issuers look to increase investor cash flow while reducing the loan servicer's economic exposure, Fitch said.

Non-qualified mortgage-backed securities record issuance in the first quarter puts it on pace to top full-year volume predictions, according to Keefe, Bruyette & Woods.

Liquidity, products and pricing are the main concerns for the secondary mortgage market in 2019.

Although forecasts anticipate a continuing drop in overall originations, private-label residential mortgage-backed securitizations backed by newer loans are expected to keep increasing through next year, according to Bank of America.

Rating agencies are sparring over a new feature in a private-label RMBS that upends the relationship between senior and sub bondholders.

Wells Fargo’s first private-label mortgage securitization since the financial crisis doesn’t break any new ground — and that’s probably the point.

New investor appetite for mortgages over $1 million is motivating more nonbank lenders to offer super jumbo loans, often with weaker credit terms than traditional banks.

Fannie Mae and Freddie Mac enjoy considerable advantages because of their lower cost of capital and significant government subsidies. But with some conforming loans, the private market is finding a way to compete.

Lauren Hedvat, Angel Oak's managing director of capital markets, said that the rising non-qualified mortgage volume in the market has expanded the number of third-party origination loan packages for purchase.

Impac Mortgage Holdings will sell up to $600 million of non-qualified mortgage loans to Starwood Property Trust over the next 12 months that will be securitized.

Since its inception, the qualified mortgage rule has been synonymous with loans purchased by Fannie Mae and Freddie Mac or guaranteed by government agencies. But a broader QM definition could change that by creating more competitive private-label options.

Anticipated changes to the qualified mortgage rule will give lenders more options and force them to rethink their views on risk.

The $446 million Pearl Street Mortgage Company 2018-1 Trust is backed by 30-year, fixed-rate loans with credit characteristics in line with recent private-label prime jumbo transactions rated by Fitch Ratings.

A new due diligence firm created by a trio of former Clayton Holdings executives wants to shake up a static business model.

Some commercial buildings that are not required to obtain earthquake insurance may still be susceptible to significant structural damage that could put the borrowers at risk of default, according to Kroll Bond Rating Agency.