Finance

The company has been working to improve its bottom-line results by aggressively cutting expenses and repositioning its servicing operation to maximize its profitability, according to CEO Willie Newman.

The move confirms speculation that the Federal Housing Finance Agency would return to a pre-pandemic plan to tighten requirements for mortgage lenders and servicers that work with two government-sponsored enterprises.

“This puts the performance of inflation solidly back into the limelight” with the “risk that higher prices with the backdrop of heightened geopolitical uncertainty will ultimately be stagflationary.”

Athas Capital Group originated the mortgages, which have an average balance of $408,350, and an average weighted average (WA) original term of 362 months.

CDFI-originated loans are not required to comply with the Ability to Repay (ATR) rules, but the mortgages included were generally made to creditworthy borrowers.

Raising rates and running down the balance sheet “will bring down inflation over time," she said.

The 2022 origination outlook was dropped by $172 billion and for 2023, economists at the government-sponsored enterprise made a $226 billion reduction.

Despite a slowing in the private-label securitization market in January, lenders and investors are expecting a strong year for outside-the-box originations and their secondary market sales.

The portfolio is one of several particularly large, recent deals related to the cash-flows from mortgage payments, but it has an unusual composition.

About 58.1% of the loans are in California, while two California cities -- Los Angeles and San Diego -- make up the pool’s largest MSA concentrations.