Four mortgage wholesalers recently introduced or relaxed the terms of their premium jumbo products and two of them are taking the unusual step of offering these loans as qualifying mortgages.
Due to the shift resulting from the Federal Reserves ‘mortgage-backed security purchases in the early days of the pandemic, most non-compliant secondary market participants stopped buying jumbos and disappeared from lenders’ menus. But securitization of secondary markets for private labels I’ve jumped in again since thenand mortgage lenders have followed.
Since the US economy has done better in the past few weeks, it was non-banks Increase their offers of jumbo products, but mostly in retail. Now, some lenders are comfortable enough with the risk profile to offer them through mortgage brokers.
The revisions to Appendix Q that changed the QM test from a hard and fast debt-to-income ratio to one based on the price of the loan is a factor that contributes to expansion. The implementation of this rule revision by the lender is on not affected by the decision from the Bureau of Consumer Financial Protection again delay mandatory compliance by October 2022.
The screaming matchbetween Rocket Pro TPO and United Wholesale Mortgage in terms of brokers and exclusivity largely obscured the fact that both companies were offering qualified prime jumbo mortgages right from the start of their broker battle.
Mortgage rate movements can be viewed as a proxy for interest in the product. Traditionally, the jumbo mortgage business has been dominated by banks, and when the real estate market is doing well they usually offer lower interest rates than What is Available for Compliant Loans?to attract and sell these customers.
According to data from the Federal Reserve Bank of St. Louis and Optimal Blue, the jumbo rates were actually lower than the corresponding rates for much of the period between 2017 and August 2019. After that point at the start of the pandemic, there was a tight spread between these two rates.
Between March 2020 and February, conforming loan prices averaged well below the jumbo, but the rate reversal returned over much of April.
The reluctance of the Biden administration in Appendix Q only had an impact on the enforcement date, allowing Rocket Pro TPO to proceed with Jumbo Smart, the company stated.
“When you combine the intense demand for residential real estate with limited inventory, a great jumbo option for loan officers in this shopping market is a must,” said Austin Niemiec, executive vice president of Rocket Pro TPO. “Plus, most of the Refi customers have been left on the sidelines for the last year due to the lack of a great product.”
Rocket Pro TPO does not currently offer a non-QM jumbo mortgage.
“The nice thing about Jumbo Smart is that it complies with the updated QM rule, which makes this offering incredibly powerful,” said Niemiec. “The product is a great mix of solid and solid pricing and allows the loan to feel very similar to a traditional loan from a processing and documentation point of view.”
It’s available for a range of property types including primary and second homes, as well as non-owner properties. Jumbo Smart is available on loan amounts up to $ 2M, a DTI of 45% or less, and an LTV of 80%.
Investor interest in jumbo products has returned, Niemiec noted, and this is a great thing for mortgage brokers and homeowners alike.
“We saw this recently with a very successful jumbo mortgage-backed security rocket that Rocket recently offered,” said Niemiec. “This is vital as we are entering what is certainly a very hot spring and summer season for home buying.”
UWM also brought back its top notch jumbo product, with CEO Mat Ishbia making the announcement at the beginning of the same March 4th livestream It was there that he issued his ultimatum for brokers to work with rocket or fairway.
“We went for a simple, simplified, one-stop product that you could walk through [Desktop Underwriter] and you’re good to go, “Ishbia said in the video.” There are a few overlays, but a lot less because Appendix Q. This is gone, we don’t have to follow it. “
This jumbo-qualified mortgage product sets the stage for mortgage brokers to take on the banks, the company added.
Before the pandemic, UWM offered two jumbo products, High Balance Nationwide and Jumbo Bank Buster, but these were removed from tariff sheets in March 2020.
UWM’s new Prime Jumbo product has a credit limit of USD 2 million and a maximum LTV of 89.99%.
In the meantime, unqualified mortgage lender Deephaven Mortgage has launched expanded prime jumbo products, non-prime loans and mortgage coverage ratio mortgages for investors in what is known as the Spring Slam in its wholesale channel.
“We looked at our line of products as a whole and things that fit well into our mix,” said Jeff Burrus, senior vice president of wholesale, sales and operations. “With the amount of credit we are currently underwriting, the move to a Prime Jumbo fits into our mix pretty well.”
The company’s average loan size is in the mid-range of $ 400,000, which is below the current compliance limit of $ 548,250. However, the high end of the deal is in the $ 1 million to $ 1.5 million range. These loans “aren’t something that scares our insurers or our people, it’s sort of a norm,” Burrus said.
Deephaven entered the wholesale channel in 2018 after starting out as a correspondence aggregator in 2012. Now Burrus said, “We are currently actively looking to expand our wholesale side. We are actively recruiting,” on both the sales and operations side. The entry into wholesaling and this product expansion were spurred on by the station’s recovery from the lows it had sunk after the financial crisis.
“We’re already doing the correspondence page, so it just fits our model well,” said Burrus. “We thought we could help brokers with some products that they may not currently have access to.”
Deephaven was acquired by Japan in September 2019 by Varde Partners. This deal came about after Pretium bought Mortgage service provider Selene by Oaktree Capital Management and Ranieri Partners. Pretium is one of the secondary markets for Deephaven, while Selene takes on much of the service functions.
Changes to its products included lowering the wholesale Prime Jumbo credit scores to 660 with a 90% credit-to-value ratio for purchase or refinancing interest rates and terms. It was something that was available prior to COVID, and therefore “we have historical data to show this [borrowers] paid us and we wanted to go ahead and put it down, “said Burrus.” We were on a 720 [and we were] looking for ways we can help more borrowers get into a home but also make sure we don’t put people in a bad position so they can repay us. “
Another non-QM lender that offers high quality jumbo loans is A&D Mortgage. In a press release, the company said that its product differs from the rest in that it is drawn through Fannie Mae’s desktop underwriter. If the loan comes back Approved / Ineligible based on the loan amount, it is acceptable for the A&D program.
Parameters include credit limits of up to $ 2 million for primary and secondary residences and investor properties, an LTV of up to 89.99%, a minimum credit value of $ 660, and no mortgage insurance.
“We are working with brokers to bring home finance to as many people as possible and our new Prime Jumbo loan product is helping us make that a reality,” said Max Slyusarchuk, CEO of A&D Mortgage. in the press release. “We are excited to offer this product and will continue to adjust our program terms and offerings to be as competitive as possible and to meet the needs of our partners and the borrowers they serve.”