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The $320.1 million Homeward Opportunities Fund 1 Trust 2018-2 features fewer loans that rely on alternative ways to document borrower income, but borrowers have higher debt-to-income ratios and lower FICOs.
Bank jumbo mortgage underwriting standards weakened in the third quarter by the most in three years and as profitability remains under pressure, loosening should continue at an accelerated pace, a Moody's report said.
Continued diversification of its business lines and better margins in its securitization activities helped Redwood Trust overcome steep mortgage origination declines and post nearly 14% annual growth in net income during the third quarter.
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.
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.
Nearly half the loans were derived outside J.P. Morgan's retail channel, a level not seen in its conforming and prime jumbo securitizations since 2017.
Some collateral attributes, such as non-full documentation and a high percentage of non-QM and HPQM loans, fall slightly outside the credit box seen in other recent prime transactions, according to Fitch.
Redwood Trust has priced a new stock offering that is aimed at increasing funding to new initiatives like investments in the single-family rental and multifamily sectors as well as routine business.
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.
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.
The $401.2 million COLT 2018-1 is the eighth overall securitization of non-qualified jumbo mortgages issued by the Lone Star Funds affiliate.
That’s an about-face from the bank’s previous transaction, completed in October, which was backed by fixed-rate mortgages, nearly half of which were underwritten to standards for purchase by Fannie Mae or Freddie Mac.
American International Group is accessing the securitized market through a Credit Suisse deal backed by loans that were generally originated less than a year after TRID.
American International Group Inc. could securitize through a unit it has previously used to buy jumbo loans.
