June2016 - Chase[ing] the Dream

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TH E M R EP O RT | 61 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 THE LATEST SECONDARY MARKET © 2016 Fair Isaac Corporation. All rights reserved. Is your migration plan ready? Learn more about FICO ® Score 9, the most current and predictive FICO ® Score. Are Jumbo MBS Disappearing? After making their way back into the market, TRID may be causing Jumbo MBS to wane. F or the last 10 years, jumbo mortgage-backed securities (MBS) have been easing their way back into the market, but did the implementation of TRID and other factors put a stop to growth in this sector? Jumbo MBS was considered a non - conforming product a decade ago when subprime gave nonconforming a bad reputation, even though many jumbo securities were prime credits, according to CoreLogic's April 2016 Market Pulse report. "The sector has spent the last 10 years trying to re-establish a steady market," said Sam Khater, Deputy Chief Economist at CoreLogic. "And just when it seemed that the market was gaining traction, eco - nomics, low interest rates, and compliance all turned into headwinds." The entire private-label securities (PLS) market has been mostly flat since its dropoff in 2007, never quite reaching an upside. The prime jumbo purchase market reached its height at $100 billion in 2005 and began to show new signs of life in 2012, the report showed. Khater stated the new "TRID rules, some observers believe, are exacerbating the challenger of prime jumbo securitization." "Having a healthy private-label securities market is an essential part of a healthy, robust mortgage market," Khater explained. "It is the missing piece in the recovery." U.S. prime jumbo residential mortgage- backed securities (RMBS) have already passed the 2014 total, according to a report from Fitch Ratings. Although the third quarter of 2015 only saw seven RMBS transactions from six issuers, a continued decline from 12 transactions in the first quarter and 10 transactions in the second quarter, the 29 transactions and approximately $10.1 billion of issuance so far this year have already exceeded the 26 transactions and $8.3 billion issued in 2014. Carolina

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