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Th e M Rep o RT | 43 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING local edition new residential $900B mortgage Pool from springleaf The deal is anoTher in a long lisT of acquisiTions for The company. new york // Real estate investment trust (REIT) New Residential Investment Corp. announced a commitment to purchase interests in a $900 mil- lion pool of non-agency loans. According to a release from New Residential, the loans involved in the deal were previously securitized by an affiliate of Springleaf Financial Corporation, which was previ- ously affiliated with AIG until it was acquired by Fortress Investment Group managed funds in 2010. Though the terms of the deal were not disclosed, New Residential expects to settle the acquisition by the end of this year's first quarter. The latest transaction isn't New Residential's first foray into mortgage servicing assets acquisi- tions. Late last year, the compa- ny announced an agreement to acquire $3.2 billion of servicing advances from Nationstar. "We continue to believe that our robust portfolio of servicing related assets, non-Agency RMBS [residential mortgage-backed securities], consumer loans and other related investments posi- tions us well to generate strong returns for our shareholders," CEO Michael Nierenberg said at the time. subprime showtime are banks ready for The spoTlighT subprime will bring? california // According to a report by Reuters, Wells Fargo is looking to re-enter the subprime mortgage market by lowering its standards of acceptable credit scores for borrowers. Wells Fargo is the largest U.S. mortgage lender, and a move back into subprime mortgages may signal a sizable shift in the mortgage lending environment. Wells Fargo is interested in customers with credit scores as low as 600, notes the report. Its prior limit was 640, often regarded as the limit between mortgages that are considered prime and subprime. Credit scores range from 300 to 850. Other large banks, however, seem reticent to follow Wells Fargo's lead, remaining cautious about any return to the subprime market. Lenders are wary of subprime mortgages, due in large part to the passage of the 2010 Dodd-Frank Law. If mortgage borrowers don't meet the law's eight criteria to qualify for a mortgage and later default on a loan, a borrower can sue the lender and argue the loan should have never been made. Lenders venturing back into the high-risk loans market are even using a subtle marketing trick to assuage fear and spur demand—subprime loans become "another chance mortgages" or "alternative mortgages," shedding the stigmatized "subprime" label. Incentivized by rising mortgage rates, lenders have plenty of reasons to target borrowers with lower credit scores. Rising rates are expected to reduce U.S. lending by 36 percent in 2014, according to the Mortgage Bankers Associations (MBA) forecast, due to a large drop in refinancings. Wells Fargo is looking to lend to borrowers with weaker credit, but only under the condition the mortgages can be guaranteed by the Federal Housing Administration (FHA). Since the loans would be backed by the government, Wells Fargo can package them to sell to investors as bonds. Subprime mortgages were at the center of the financial crisis, but many lenders believe that with proper controls the risky business ventures can be properly contained and generate profit. DALLAS, TEXAS THE LARGEST EVENT IN SERVICING IS THE ULTIMATE NETWORKING EXPERIENCE SEPTEMBER 14-16, 2014 COMPLIANCE | FORECLOSURE | INVESTMENT | PROPERTY MANAGEMENT | REO | SERVICING STAR SPONSORS LEADERSHIP SPONSORS HOSTING SPONSOR REGISTER BY MARCH 31ST FOR OUR BIGGEST SAVINGS OF THE YEAR! fsc2014_Ad_r1.indd 1 3/13/14 4:18 PM