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52 WHAT WILL IT TAKE TO GET PRIVATE CAPITAL BACK INTO JUMBO RMBS IN 2016? e issuance of jumbo residential mortgage- backed securities has been slow—and the outlook for jumbo RMBS issuance for 2016 doesn't look good, according to the January 2016 RMBS Research Report issued by Morningstar Credit Ratings. Housing prices have been on a steady upward climb—earlier this week, Black Knight Financial Services reported that the median price of a home in October 2015 was $254,000, a 5.5 percent increase year-over-year and only 5.3 percent off of the peak price of $268,000 reached in June 2006. Recovering home prices have translated to improved investor sentiment, but that has not lifted the private label RMBS market for three reasons, according to Morningstar. First, issuers find the GSE market easier to navigate; secondly, issuers find agency sales (selling loans to GSEs) and whole loan sales (selling the loans into the secondary market) more economical and more favorable than selling loans through private-label securitization (PLS); and finally, issuers are skeptical about loosening their tight credit standards and originating loans outside of the January 2013 qualified mortgage guidelines issued by the Consumer Financial Protection Bureau (CFPB), Morningstar said. While the issuance of jumbo RMBS has been slow, issuances of resecuritization (also known as REMICs) and transactions backed by both nonperforming loans (NPLs) and reperforming loans (RPLs) is expected to continue its growth in 2016, according to Morningstar. "ere is a steady flow of issuance on these transactions, but most are nonrated," wrote Morningstar Analytical Manager Brian Grow and SVP Gaurav Singhania, the authors of the report. "In 2015, Morningstar Credit Ratings, LLC rated eight re-REMICs and one nonperforming loan transaction. We expect the flow of re-REMICs, NPLs, and RPLs to persist in 2016, and we expect a growing number of these transactions to be rated. is should bolster investment in the residential mortgage securitization market because ratings on these nonjumbo transactions expand the investor base and broaden market participation because of favorable capital charge requirements." Morningstar stated that the revival of jumbo RMBS issuance will drive the rejuvenation of the private-label RMBS market, but such a revival is unlikely in the near term. Issuers prefer to sell to loans to GSEs rather than to the private market because there is much less risk involved in originating and selling loans to the GSEs. Another reason why the outlook is less than positive for jumbo RMBS issuance is that the share of the agency market compared with private- label securities has long been disproportionate and has not shown any signs of improving. PLS accounted for only 7.5 percent of the total mortgage market as of the second quarter in 2015, according to the Urban Institute—and private-label originations made up less than 1 percent (0.96) of first-lien originations in the first half of 2015. "is disproportionate share enjoyed by the GSEs in the mortgage market has acted as a deterrent for private capital and has resulted in the GSEs bearing most of the risk for the country's mortgage market," Grow and Singhania wrote. "More participation of private capital is needed to reduce the mortgage risk held by the U.S. government and to build a sustainable housing market." When originators are faced with the choice of keeping loans on the books, selling the loans to another buyer or securitizing the loan, the decision depends on the best execution outcome—and right now, whole loan sales offer a higher yield than securitization, making an increase in the pace of new-issue RMBS unlikely. "Private-label transactions requiring due diligence on 100 percent of the securitized loans, additional third-party oversight, and other expenses add substantial costs to RMBS securitization, and the originators might find it more attractive to hold the loans instead," Grow and Singhania wrote. "Morningstar believes a framework that balances investor protection with reasonable due-diligence requirements is a more desirable outcome from a practical standpoint." CFPB: CONSUMERS ARE COMPLAINING LESS ABOUT OCWEN Ocwen Financial's mortgage servicing practices have been the center of much scrutiny from regulators and consumers alike, but new data shows that this picture is slowly but surely changing. e Consumer Financial Protection Bureau's (CFPB)monthly consumer complaint snapshot showed that although Ocwen is still listed among the top 10 most-complained-about companies, complaints are declining at this company. From July 2015 to September 2015, Ocwen had an average of 409 complaints. e majority of these complaints were mortgage-related and a small amount involved debt collection. Bank of America, Wells Fargo, JPMorgan Chase, and Nationstar also had a significant amount of mortgage-related complaints. Year-over-year, during this same time period from July to September 2015, Ocwen complaints fell 19 percent, the only company in the top ten to see a decrease this month. is will mark the second time in the CFPB's report that Ocwen complaints have fallen. e CFPB found that TransUnion (53 percent), Equifax (26 percent), Citibank (22 percent), Wells Fargo (16 percent), JPMorgan Chase (16 percent), Nationstar Mortgage (15 percent), Capital One (15 percent), and Experian (8 percent) all saw increases in the number of complaints at these companies. Bank of America was the only company to experience no growth or decline in complaints from July to September 2014 to July to September 2015. According to the data, Equifax (1,137), TransUnion (1,123), and Experian (969) were the most-complained-about companies for July to September 2015. e CFPB has handled about 770,100 complaints as of December 1, 2015, which includes 21,000 complaints in November. e CFPB reported that debt collection, mortgage, and credit reporting complaints remain the top three most-complained-about consumer financial products and services, collectively representing about 68 percent of complaints submitted in November 2015. Overall, complaints are down 12 percent from October 2015 to November 2015, the CFPB said. During the same time period, mortgage complaints declined 10 percent. In November, the CFPB received 4,045 mortgage complaints, bringing the total to 205,915.

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