When I read this article, I kept hearing that song “Take It To The Limit One More Time”! They’ve changed the words “Sub-Prime” to “Non-Prime” and we re going to take it to the limit one more time…


Subprime mortgages make a comeback—with a new name and soaring demand
The subprime mortgage industry vanished after the Great Recession but is now being reinvented as the nonprime market.
Carrington Mortgage is now offering mortgages to borrowers with “less-than-perfect credit.”
Demand from both borrowers and investors is exceeding expectations.
Diana Olick | @DianaOlick
Published 10:45 AM ET Thu, 12 April 2018 Updated 1:54 PM ET Thu, 12 April 2018
CNBC.com
https://www.cnbc.com/2018/04/12/sub-prime-mortgages-morph-into-non-prime-loans-and-demand-soars.html
Subprime stages comeback as ‘non-prime’ loans Subprime stages comeback as ‘non-prime’ loans
1:41 PM ET Thu, 12 April 2018 | 01:28

They were blamed for the biggest financial disaster in a century. Subprime mortgages – home loans to borrowers with sketchy credit who put little to no skin in the game. Following the epic housing crash, they disappeared, due to strong, new regulation, and zero demand from investors who were badly burned. Barely a decade later, they’re coming back with a new name — nonprime — and, so far, some new standards.

California-based Carrington Mortgage Services, a midsized lender, just announced an expansion into the space, offering loans to borrowers, “with less-than-perfect credit.” Carrington will originate and service the loans, but it will also securitize them for sale to investors.

“We believe there is actually a market today in the secondary market for people who want to buy nonprime loans that have been properly underwritten,” said Rick Sharga, executive vice president of Carrington Mortgage Holdings. “We’re not going back to the bad old days of ninja lending, when people with no jobs, no income, and no assets were getting loans.”

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All loans will not be the same


Sharga said Carrington will manually underwrite each loan, assessing the individual risks. But it will allow its borrowers to have FICO credit scores as low as 500. The current average for agency-backed mortgages is in the mid-700s. Borrowers can take out loans of up to $1.5 million on single-family homes, townhomes and condominiums. They can also do cash-out refinances, where borrowers tap extra equity in their homes, up to $500,000. Recent credit events, like a foreclosure, bankruptcy or a history of late payments are acceptable.

All loans, however, will not be the same for all borrowers. If a borrower is higher risk, a higher down payment will be required, and the interest rate will likely be higher.

“What we’re talking about is underwriting that goes back to common sense sort of practices. If you have risk, you offset risk somewhere else,” added Sharga, while touting, “We probably are going to have the widest range of products for people with challenging credit in the marketplace.”

Carrington is not alone in the space. Angel Oak began offering and securitizing nonprime mortgages two years ago and has done six nonprime securitizations so far. It recently finalized its biggest securitization yet — $329 million, comprising 905 mortgages with an average amount of about $363,000. Just more than 80 percent of the loans are nonprime.

A ‘who’s who of Wall Street’
Investors in Angel Oak’s nonprime securitizations are, “a who’s who of Wall Street,” according to company representatives, citing hedge funds and insurance companies. Angel Oak’s securitizations now total $1.3 billion in mortgage debt.

Angel Oak, along with Caliber Home Loans, have been the main players in the space, securitizing relatively few loans. That is clearly about to change in a big way, as demand is rising.

“We believe that more competition is positive for the marketplace because there is strong enough demand for the product to support multiple originators,” said Lauren Hedvat, managing director, capital markets at Angel Oak. “Additionally, the more competitors there are, the wider the footprint becomes, which should open the door for more potential borrowers.”

Big banks are also getting in the game, both investing in the securities and funding the lenders, according to Sharga.

“It’s large financial institutions. A lot of people with private capital sitting on the sidelines, who are very interested in this market and believe that as long as the risks are managed well, and companies like ours are particularly good at managing credit risk, that it’s a good investment opportunity,” he said.

As the economy improves, and rents continue to rise, more Americans are trying to become homeowners, but the scars of the Great Recession still stand in the way. One-fifth of consumers today still have very low credit scores, often disqualifying them from obtaining a mortgage in today’s tight lending market.

Relaxed lending standards
Last summer, Fannie Mae announced it would relax its lending standards for prime loans, allowing borrowers with higher debt and lower credit scores to obtain loans without additional risk overlays, such as large down payments and a year’s worth of cash reserves.

Fannie Mae raised its debt-to-income (DTI) limit from 45 percent to 50 percent. DTI is the amount of total debt a borrower can have compared to his or her income. As a result, demand from buyers with higher debt exceeded all expectations. The share of high DTI loans jumped from 6 percent in January 2017 to nearly 20 percent by the end of February 2018, according to a study by the Urban Institute.

“From January to July 2017, Fannie purchased 80,467 loans with DTI ratios between 45 and 50 percent. But from August 2017 to February 2018, Fannie purchased 181,911 loans in the same DTI bucket. This increase of more than 100,000 loans in just seven months exceeded our estimate (85,000 additional Fannie loans annually) and Fannie’s expectations.” – Urban Institute

The mortgage industry expectation was that Fannie Mae would mitigate the additional risk with other factors, like a higher necessary credit score, but that was not added. The mortgage insurers balked, since they would be on the hook for the risk, so last month Fannie Mae “recalibrated” its risk assessment criteria again.

“We got a bigger response than we thought we were going to, so we dialed back to make sure we were in the right spot where our governance kicks in to make sure we’re not taking excessive risk,” said Doug Duncan, Fannie Mae’s chief economist.

Millennials carry more debt
The outsized demand from borrowers with more debt as well as demand for nonprime mortgages in the private sector show just how many borrowers today would like to become homeowners but are frozen out of the mortgage market.

Millennials, the largest homebuying cohort today, have much higher levels of student debt than previous generations. Members of older generations who went through foreclosures during the housing crisis or other hits to their credit are still struggling with lower FICO scores.

In addition, credit tightened up dramatically. In fact, between 2009 and 2015, tighter credit accounted for just more than 6 million “missing” loans, according to research by Laurie Goodman at the Urban Institute. These are mortgages that would have been granted under more normal historical underwriting standards.

The rebirth of the nonprime market is focused on these missing mortgages. The hope is that the industry will also focus on better standards of underwriting and not take risk to the levels it once did, levels that resulted in disaster.

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In first, U.S. judge throws out cell phone ‘stingray’ evidence


7/13/16 REUTERS 12:19:26

July 13, 2016
In first, U.S. judge throws out cell phone ‘stingray’ evidence
Nate Raymond
https://1.next.westlaw.com/Document/I14f31320488a11e6a72ad77936ae8042/View/FullText.html?transitionType=CategoryPageItem&contextData=(sc.Default)
NEW YORK (Reuters) – For the first time, a federal judge has suppressed evidence obtained without a warrant by U.S. law enforcement using a stingray, a surveillance device that can trick suspects’ cell phones into revealing their locations.U.S. District Judge William Pauley in Manhattan on Tuesday ruled that defendant Raymond Lambis’ rights were violated when the U.S. Drug Enforcement Administration used such a device without a warrant to find his Washington Heights apartment.The DEA had used a stingray to identify Lambis’ apartment as the most likely location of a cell phone identified during a drug-trafficking probe. Pauley said doing so constituted an unreasonable search.”Absent a search warrant, the government may not turn a citizen’s cell phone into a tracking device,” Pauley wrote.The ruling marked the first time a federal judge had suppressed evidence obtained using a stingray, according to the American Civil Liberties Union, which like other privacy advocacy groups has criticized law enforcement’s use of such devices.”This opinion strongly reinforces the strength of our constitutional privacy rights in the digital age,” ACLU attorney Nathan Freed Wessler said in a statement.It was unclear whether prosecutors would seek to appeal. A spokeswoman for Manhattan U.S. Attorney Preet Bharara, whose office was prosecuting the case, declined to comment.Stingrays, also known as “cell site simulators,” mimic cell phone towers in order to force cell phones in the area to transmit “pings” back to the devices, enabling law enforcement to track a suspect’s phone and pinpoint its location.Critics of the technology call it invasive and say it has been regularly used in secret to catch suspect in violation of their rights under the U.S. Constitution.The ACLU has counted 66 agencies in 24 states and the District of Columbia that own stingrays but said that figure underrepresents the actual number of devices in use given what it called secrecy surrounding their purchases.A Maryland appeals court in March became what the ACLU said was the first state appellate court to order evidence obtained using a stingray suppressed. Pauley’s decision was the first at the federal level.The U.S. Justice Department in September changed its internal policies and required government agents to obtain a warrant before using a cell site simulator.Bernard Seidler, Lambis’ lawyer, noted that occurred a week after his client was charged. He said it was unclear if the drug case against Lambis would now be dismissed.Note: Corrects location of apartment in second paragraph to Washington Heights from the Bronx, rephrases paragraph 10 to make clear ACLU said its figure underrepresents number of devices—- Index References —-News Subject: (Civil Rights Law (1CI34); Intellectual Freedoms & Civil Liberties (1IN08); Judicial Cases & Rulings (1JU36); Legal (1LE33))Industry: (Consumer Electronics (1CO61); Consumer Products & Services (1CO62); Electronics (1EL16); Global Positioning Systems (1GL40); Mobile Phones & Pagers (1WI07); Telecom Consumer Equipment (1TE03))Region: (Americas (1AM92); Maryland (1MA47); New York (1NE72); North America (1NO39); U.S. Mid-Atlantic Region (1MI18); USA (1US73))Language: ENOther Indexing: (Bernard Seidler; Raymond Lambis; William Pauley; Mark Blinch; Nathan Freed Wessler; Mark BlinchCell)Keywords: dataprivacy (MCC:f); (N2:US); (N2:USANY); (N2:AMERS); (N2:NAMER); (N2:USA); (MCCL:OVR)Word Count: 487

In first, U.S. judge throws out cell phone ‘stingray’ evidence

Antonin Scalia’s Rightful Revolution by Stephen L. Carter



Law
Antonin Scalia’s Rightful Revolution
http://www.bloombergview.com/articles/2016-04-21/antonin-scalia-s-rightful-revolution
April 21, 2016 2:11 PM EST
By
Stephen L. Carter
Annie Dookhan’s recent release from a Massachusetts prison has been an occasion for considerable comment, but little has been focused on how her case suggests why liberals might come to miss Justice Antonin Scalia. Not because Dookhan was innocent — she wasn’t — but because she was guilty.
Let me explain.
Dookhan, a former lab technician for the Massachusetts Department of Public Health, pleaded guilty in 2013 to charges stemming from an investigation that found she had tampered with crime-scene evidence. She confessed to, among other things, adding cocaine to samples so that they would test positive and forging reports to make it seem that she had performed tests that she had not. Estimates of the number of cases that might be affected run as high as 40,000. (More accurate numbers should be available next month.) Struggling to clean up the mess caused by what it called Dookhan’s “egregious misconduct,” the Massachusetts Supreme Judicial Court ruled last year that if defendants who have pleaded guilty seek to reopen their cases because of her actions, prosecutors cannot try them on more serious charges or, if a second conviction results, ask for stiffer sentences.
Okay, so Dookhan did a terrible thing, and because of it, a lot of people probably went to prison who shouldn’t have. What does any of this have to do with Justice Scalia?
As it turns out, a great deal. Over his final decade on the U.S. Supreme Court, Scalia led a movement to restore significance and force to the Confrontation Clause of the Sixth Amendment. The revolution began in 2004 with Crawford v. Washington, and the battle is raging still. And for those who buy into the neat media image in which the justices vote in unshakable left-right blocs, it’s worth noting that Scalia’s chief ally in the fight has been Ruth Bader Ginsburg, and his principal antagonists have lately been Samuel Alito and Sonia Sotomayor.
What’s the fight about? The Confrontation Clause guarantees a criminal defendant the right “to be confronted with the witnesses against him.” If you’re charged with robbing a bank, the clause is the reason that you have the opportunity to cross-examine whoever is testifying against you. You have the chance to show the jury that the witness who claims to have seen you holding the gun was mistaken, or remembering wrong.
Much of the recent controversy over the Confrontation Clause is rather technical, but the dispute has largely involved the question of who counts as a witness. Everybody had always understood that the woman who swears you drove the getaway car has to tell her story in open court. So does the man who claims he sold you the gun. The prosecutor can’t simply put the lead detective on the stand and let him tell the jury what other people said you did.
But what about a laboratory technician who determined that the substance found in your trunk was cocaine? For a long time, it was generally assumed that a forensic chemist’s performance of a routine test did not implicate the Sixth Amendment. In 2008, the Scalia-Ginsburg faction astonished pretty much everybody by cobbling together a majority of the court for the proposition that, yes, the technician who did the test and signed the report has to show up and testify. Another analyst from the same laboratory who can explain how the test works isn’t good enough. In other words, there is no “forensic evidence” exception to the rule. Chemists are treated just like every other witness.
Prosecutors were aghast. Defense attorneys were elated.
Imagine: Every time a crime lab does a test and a technician certifies the result, the technician has to appear in court if the defendant so demands. Dissenters warned that chaos would result. To have the technicians sitting around for half a day waiting to testify would involve undue expense. Scalia replied that the assumptions underlying that worry are “wildly unrealistic.” Only rarely would defense lawyers actually call the forensic technicians to testify. But on those rare occasions, the technicians are no different from any other witness.
Why does this matter? Let’s get back to Dookhan. She began work some years before the Supreme Court decided that lab technicians who perform forensic tests must testify if called, but her arrest and conviction help show why the Scalia faction is right.
Had Dookhan been required to take the stand, defense attorneys might have asked how she was able to clear 500 samples a month when the average chemist analyzes between 50 and 150. They might have asked about discrepancies in her log book that would likely only have come to light had she been a witness.
The knowledge that one will have to testify about one’s actions creates a certain discipline. Either the problems in her work would have come to light much sooner, or, knowing that she would face possible cross-examination about every test she performed, Dookhan would have cleaned up her act. Either way, a lot fewer results would have been falsified.
The great majority of forensic chemists, like the great majority of people in every line of work, do their jobs with professionalism and integrity. Unfortunately, Dookhan is far from the only bad apple. And when technicians fudge their results, people can lose their liberty.
Most court-watchers, whether they admired Scalia or despised him, will remember his positions on same-sex marriage or abortion or some other hotly contested issue. But I will remember him best for the revolution he sparked in Sixth Amendment jurisprudence. I earnestly hope that it survives him.
I didn’t believe this when I began teaching the Crawford line of cases some years ago. But real-world events have changed my mind.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Stephen L Carter at scarter01@bloomberg.net
To contact the editor responsible for this story:
Brooke Sample at bsample1@bloomberg.net