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From: ronalsne
Date: 6/23/2013
Time: 4:14:23 AM
Remote Name: 110.89.12.9
By ANYA MARTIN More real-estate investors are seeking solid returns. But they're not buying homes. They're buying mortgages.As the residential market bounces back, investors are showing renewed interest in buying mortgage-backed securities—loans that the lenders have bundled and sold as consolidated debt. Since selling off jumbo mortgages lessens lenders' risk, more banks, credit unions and other financial institutions are offering jumbos. And more competition could mean better terms for consumers.In the first quarter of 2013, $4 billion worth of jumbo loans were sold by lenders, more than the $3.5 billion total of securitized jumbos in all of 2012, according to Guy Cecala, publisher of Inside Mortgage Finance. If the pace holds through 2013, the volume of securitized loans could reach $16 billion, Mr. Cecala said.However, while a 400% annual increase is significant, $16 billion still represents just 7% of the $220 billion volume projected for jumbo loans in 2013, he added. Lenders issued $203 billion in jumbo loans in 2012, and securitized loans accounted for less than 2% of that total."The vast majority of jumbo loans aren't securitized still, and the <secondary> market has a long way to go to be any reflection of what it used to be before the housing crash," Mr. Cecala said.Before 2008, as many as two-thirds to three-fourths of all jumbo residential mortgages were securitized, he said. Then the mortgage meltdown occurred, and investors shunned jumbo securitized mortgages in favor of investments containing pools of government-backed mortgages by Fannie Mae or Freddie Mac, which only guarantee loan amounts up to $417,000 in most of the U.S. and $625,500 in pricey metro areas, such as New York and San Francisco. That dearth of the "secondary market" meant lenders had to hold any jumbo mortgages, which are above those dollar limits, on their books. Redwood Trust Inc. was the first player to re-enter the jumbo secondary market in 2010, and the real-estate investment trust (REIT) has announced plans to securitize $7 billion in jumbo loans in 2013, three times more than its $2 billion volume in 2012. Its success has triggered more investors, including Credit Suisse, Shellpoint Partners, JP Morgan Chase Co., Two Harbors Investment Corp, and PennyMac Mortgage Investment Trust .The secondary market's rebirth has allowed EverBank Financial Corp. to offer 30-year, fixed-rate jumbo mortgages, said Tom Wind, executive vice president of residential and commercial lending for the Jacksonville, Fla.-based bank. Interest rates for a 30-year, fixed-rate jumbo mortgage were 4.20% on May 31, just 0.13 basis points more than the 4.07% rate for a conforming mortgage.EverBank sold its first pool of securitized prime jumbo loans on the secondary market in April, netting $307.4 million, according to a Securities Exchange Commission filing. The lender anticipates bundling and selling mor <a href=http://www.coach-onlinestoreoutlet.com/>Coach Factory Outlet Store</a> e jum <a href=http://www.coach-onlinestoreoutlet.com/>Coach Outlet Online</a> bos this year, Mr. Wind said.The ability to sell loans has allowed San Francisco-based RPM Mortgage to expand its jumbo originations <a href=http://www.coach-onlinestoreoutlet.com/>Coach Outlet Store Online</a> by 233% from 2011 to 2012, said Julian Hebron, vice president of the San Francisco-based boutique lender. RPM is now the second-highest volume lender to home buyers in the nine-county Bay <a href=http://soldeslouboutin.weebly.com>Christian Louboutin Pas Cher</a> Area, where jumbos now account for 48.1% of all purchase lending, according to DataQuick . RPM's year-to-date 2013 jumbo production already has exceeded its 2012 total, Mr. Hebron said.Other issues to consider: • Credit qualifications remain tight. Investors look to buy securitized loans from lenders with tight qualification standards for borrowers, so solid credit scores, high down payments and excellent loan-to-income ratios are still important, Mr. Wind said. • Customer service. When lenders securitize loans, they sometimes retain servicing, and sometimes the purchaser takes it on. Currently, RPM retains servicing on 40% of its jumbo loans, but Mr. Hebron said he hopes the expanded secondary market will allow the firm to increase that number to 80%. "We want to remain the point of contact for our customer," he added. • New rules coming. New Consumer Financial Protection Bureau regulations take effect in early 2014 that may require lenders and/or securitizers <a href=http://www.coach-onlinestoreoutlet.com/>Coach Outlet</a> to hold 5% of the amount of securitized loans that aren't qualified mortgages. Some loan types, such as interest-only loans, may be more difficult for borrowers to find, since securitizers will be less likely to want to buy them from lenders due to the 5% rule, said Keith Gumbinger, vice president at HSH.com, a mortgage-information website.A version of this article appeared June 7, 2013, on page M5 in the U.S. edition of The Wall Street Journal, with the headline: Investors Revive Market For Bundled Mortgages.