After almost a decade Wells Fargo is back in the mortgage securitization game. The last time that Wells Fargo issued a residential mortgage backed security was February of 2008… which for those of you keeping track was in the middle of the financial crisis. Wells’ decision to make its way back into the securitization market should feel like the first rescue boat showing up in the frozen Atlantic in 1912. Okay, maybe that’s a little dramatic… but monkey see monkey do, right? I don’t like to say I told you so, but I’ve been saying for almost a year now that we’re going to be seeing more privatization in the market… and now… a few months before we put a bow on 2018 and we have an MBS market with names like Caliber, Angel Oak and of course Wells Fargo.
Here’s the catch though… Caliber and Angel Oak are securitizing Non-QM and if you know me… you know how I feel about that product. Wells’ first MBS is $441.25 million backed by 660 prime fixed rate mortgages with a weighted avg FICO of 779 and a weighted avg LTV of 72.8%. The cherry on top? This is a jumbo security with an avg loan balance of $668,566 originated solely through their retail channel (play the Price is Right fail horn right now). I say that because I think we’re all in need of a good Jumbo product and as it stands right now… Wells is corning that market. What I’d like to see is for them to open that product up to third party originators and offer that product in the correspondent space. SHARE THE LOVE WELLS!
In all honesty, this is a good sign for the competitive landscape we’re in. We’re creating new products. Products that do not have to fit within in the standards of QM and do not have to follow the guidelines set forth by our big brother and big sister… Fannie & Freddie. More product offerings will help drive more business as borrowers who couldn’t get a loan (for a laundry list of reasons that I don’t have time to explain) now have different outlets to obtain home financing, whether that is through Jumbo, Non-QM or some ARM loan that hasn’t been built yet (yikes that’s scary though… a new ARM?).
Speaking of new products and programs I read a CNBC article with the headline “Thousands line up for zero-down payment, subprime mortgages”. Neighborhood Assistance Corporation of America… a Boston-based nonprofit organization is helping borrowers secure zero-down payment financing after they complete an educational course and of course provide income documentation. The program has a 90% approval rate is backed by a small regional bank named Bank of America (hopefully my sarcasm came through right there).
10-year is flirting around the 3.15 range today… and who knows what will happen. If you have any outstanding loans to get locked I suggest doing so. I hope everyone has a great week and as always…
Talk to you soon!