(Read More: Housing Recovery Leaves Some Behind)

The jumbo securitization market is tiny, however, as most jumbo loans are still held on bank balance sheets. There are so far just two players in jumbo securitizations, Redwood Trust Inc. and very recently Credit Suisse Group AG, although others, including JPMorgan Chase, are preparing to join them.

There were no jumbo securitizations at all between 2008 and 2010. When Redwood dipped its toes in, securitizations totaled less than $1 billion in 2010-2011. By 2012 they hit $3.5 billion, according to Inside Mortgage Finance, and are already at $2 billion so far for 2013. Hebron believes they could surge dramatically in the very near future.

The rebirth of jumbo securitizations is being driven not just by investor confidence, but by growth in jumbo originations, which increased after the conforming loan limit was lowered. Originations of non-agency jumbo mortgages jumped by over 19 percent in 2012 from 2011, according to Inside Mortgage Finance.

So why is the conforming-jumbo spread shrinking? Not because jumbo rates are falling but because conforming rates are rising due in part to government intervention.

“Congress keeps raiding the guarantee fees (g-fees) Fannie and Freddie charge lenders in the securitization process for other purposes, like funding payroll tax cuts,” noted Hebron. “For each 10 basis point hike in g-fees, we’ve seen consumer rates rise about 0.125 percent.

Article source: http://www.cnbc.com/id/100543189

The National Association of Home Builders confidence survey now stands at 40, although 50 is still the line between positive and negative. This is a vast improvement from where it was just one year ago: 14.

“Builders across the country are expressing a more positive,” notes NAHB Chief Economist David Crowe in a release. “However, against the improving demand for new homes, concerns are now rising about the lack of building lots in certain markets and the rising cost of building materials. Given the fragile nature of the housing and economic recovery, these are significant red flags.”

Builders also cite tight credit conditions for builders and buyers as another barrier to a stronger recovery. Still, the builders say they see improvements in current sales conditions, buyer traffic, and future sales expectations, with the last one rising above 50 into the positive territory. (Watch: US Housing Most Affordable in Years – Pro)

This sentiment appears to be widespread.

Confidence rose in every region of the country with the highest monthly gains in the West and Midwest where there are the largest volumes of new construction.

This confidence mirrors investor confidence in the stocks of the public builders, which are now at their highest levels since 2007. (Watch: Home Builders Are on Fire)

Even before this index was released, Goldman Sachs Group
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] Tuesday reiterated its optimism in the sector, citing, “a long list of positives” including the recent announcement from the Federal Reserve that it would purchase billions of dollars’ worth of agency mortgage backed securities, as well as rising home prices and low inventories. Goldman’s top picks are MDC Homes
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], Toll Bros.
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• Surging Homebuilders Have Further Upside: Analyst
• Builder Stocks With Big Potential: Pro
• Flood of Foreclosures 
• Cities With the Most Affordable Homes              

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