MBS & ABS Performance

Browse articles from all of our Newsletters related to MBS & ABS Performance.

July 24, 2015 - Inside FHA/VA Lending

FHLB Chicago’s MPF Program Announces First Ginnie Mae MB

The Federal Home Loan Bank Mortgage Partnership Finance program has announced its first security issuance with a Ginnie Mae guarantee. The $5 million security is backed by home loans originated by community banks and credit unions through the MPF Government MBS product. The Mortgage Bankers Association welcomed the new MBS, seeing it as another opportunity for all lenders to access the capital markets directly, reducing costs and increasing originations. “Many community banks use the FHLB MPF program to sell conventional mortgages into the secondary market,” observed Ron Haynie, senior vice president at the Independent Community Bankers of America. “This expansion in aggregating and securitizing government loans provides community banks with the opportunity to reach more borrowers, especially in rural and small-town markets, and to safely sell those loans to ...

July 24, 2015 - Inside MBS & ABS

JPM Pays Big to Settle

JPMorgan Chase last week ended six years of litigation by agreeing to a $388 million settlement to resolve allegations that the bank misled investors about the quality of pre-crisis MBS they had purchased. Still requiring court approval, the settlement would conclude one of the last remaining MBS purchaser class actions arising out of the financial crisis, according to plaintiff attorneys. The suit was filed...

July 24, 2015 - Inside MBS & ABS

Factors Favor Non-Agency MBS in Second Half 2015, Outlook Cautious on Agency MBS Basis at Mid-Year

Market factors are more favorably disposed toward non-agency MBS in the second half of the year than for agency bonds, according to a mid-year review and outlook from Deutsche Bank. “For the second half of 2015, we are cautiously optimistic for the non-agency MBS market, given the favorable fundamentals and technicals,” said Deutsche Bank analysts, who expect home price appreciation and servicer practices to continue to be the two biggest drivers of the MBS credit. On the technical front, the most important factor that affected legacy RMBS is...

July 24, 2015 - Inside MBS & ABS

Large Banks Add to Holdings of Residential MBS, ‘Demand Has Legs’ Due to Capital Requirements

Bank holdings of MBS have increased significantly this year, with the growth concentrated among large banks. Industry analysts suggest that large banks have increased their MBS holdings due to capital requirements, and demand is expected to persist for months to come, pushing up MBS prices. The 25 largest banks held a combined $1.15 trillion in MBS as of the end of June, according to an Inside MBS & ABS analysis of data from the Federal Reserve. The holdings increased by $63.90 billion compared with the end of 2014 and coincide with an increase in deposits at banks. “MBS performance so far this year owes...

July 24, 2015 - Inside MBS & ABS

Loan-to-Value Ratios on New Conduit Commercial MBS Surpass Peak Seen Before Financial Crisis

Moody’s Investors Service is worried about increasing leverage in commercial MBS conduit deals, which reached peak levels not seen since 2007. Issuance of non-agency commercial MBS has been strong in recent years, boosted by demand for conduit deals. In a recent report, Moody’s noted that the credit quality of conduit deals continues to deteriorate, with the third-quarter pipeline indicating further increases to loan-to-value ratios derived by the rating service. The Moody’s LTV ratio on conduit CMBS hit...

July 10, 2015 - Inside FHA/VA Lending

Issuance of Government-Backed Ginnie MBS Increases in 2Q15

Ginnie Mae issuance of government-insured mortgage-backed securities rose a whopping 47.3 percent in the second quarter of 2015 from the previous quarter, powered by a robust FHA refinancing volume, according to an Inside FHA/VA Lending analysis of agency data. Government-backed Ginnie MBS production in the second quarter totaled $117.5 billion, up from $79.8 billion in the prior quarter. Volume year-to-date also increased by 57.7 percent from the first six months of last year. From May to June, government-backed securitization increased a modest 2.9 percent. FHA loans comprised 62.6 percent of Ginnie MBS issuance in the second quarter while VA accounted for 33.7 percent. Securitized loans with a Rural Housing Service guaranty represented 3.6 percent of total Ginnie MBS issuance during the period. FHA loan securitization was robust in the second quarter, as volume ... [ Charts ]

July 10, 2015 - Inside Nonconforming Markets

Jumbo MBS Withstands Rating Reviews

Two rating services in the past month have completed reviews of jumbo mortgage-backed securities issued in 2010 and later. The reviews led to numerous rating confirmations, some upgrades and no downgrades, prompting questions about whether criteria for rating jumbo MBS are too stringent. “I’d guess the rating services internally said ‘never again’ for downgrades,” said one participant in the jumbo MBS market. Officials at Fitch Ratings and DBRS ...

July 10, 2015 - Inside MBS & ABS

Greek Debt Crisis Causes MBS Volatility, but the Big Fear is China; A Rate Plunge in the Cards?

Estimating where MBS prices might be headed has never been an easy game – and thanks to the debt crisis in Greece and a stock meltdown in China, it’s become a whole lot more difficult of late. But for now, analysts and market watchers are certain of one thing: MBS prices have been volatile the past two weeks thanks to a flight to quality, forcing investors everywhere to buy U.S. Treasuries. And because mortgages track Treasuries, yields have fallen and prices have increased. “The Greek crisis already has taken...

July 9, 2015 - Inside Mortgage Finance

Surveys Show Consumers Have Low Confidence in Their Home-Buying Skills

Potential homeowners may be talking themselves out of the American dream, according to several recent surveys that show consumers underestimate their ability to get a mortgage. A Genworth survey of more than 100 lending executives found that 66 percent said eligible borrowers mistakenly think they don’t qualify for a mortgage. In a similar survey on consumer’s views on homeownership, Wells Fargo reported...

July 3, 2015 - Inside MBS & ABS

Single-Family Rental Securitizations Stable and Performing Well

Single-family rental securitizations appear to be performing well, according to analysts at Morningstar Credit Ratings, with few signs of trouble on the horizon. “Vacancy rates generally remain low, cash flows remain sufficient to cover bond obligations, and … the recently released May property-level data for the single-borrower, single-family rental asset class shows performance in line with its recent history,” the rating service said in a new report. Overall, monthly retention rates remain in the mid-70s to low-80s. Also, “delinquency rates are slightly higher from their April levels but remain mostly low.” Lease expirations are generally rising across SFR securitizations, Morningstar said, but vacancy rates have remained relatively flat month-over-month. “Although delinquency rates rose slightly across most transactions, the number of tenants past due on their payments remains low,” the analysts said. Elsewhere, so far, ...

July 3, 2015 - Inside MBS & ABS

Risk to Investors in Agency MBS Seen as Limited

Clean-up calls executed by U.S. Bank on Ginnie Mae real estate mortgage investment conduits in recent years have caused problems for some investors, but industry analysts suggest that overall, the risk agency MBS investors face from clean-up calls is limited. Analysts at Performance Trust Capital Partners, an investing firm, warned recently that U.S. Bank has made about $53 million in profit the past three years by completing clean-up calls on Ginnie REMICs where the bank was the trustee. On Ginnie REMICs, trustees are allowed to complete clean-up calls when the outstanding balance on the security falls to less than 1.0 percent of the aggregate of the original class principal balance for the security. When executing a clean-up call, the trustee pays off the investors in the MBS at par. On Ginnie deals where U.S. Bank has completed clean-up calls, the REMICs have generally been trading at ...

July 3, 2015 - Inside MBS & ABS

Higher Interest Rates Could Cause Performance Problems For Commercial MBS

An increase in short-term interest rates will have an outsized impact on commercial MBS among structured finance assets, according to Moody’s Investors Service. In a report released last week, the rating service said higher interest rates will be credit negative for existing deal performance and new issuance for commercial MBS and largely neutral for residential MBS and most ABS sectors. As interest rates rise, Moody’s said term default risk on loans backing new issue commercial MBS will increase because the loans’ debt service coverage ratios will be lower than the DSCRs at the time of origination of loans in outstanding deals. “Rates on loans backing new conduit deals will increase, thereby reducing DSCR in relation to a given property’s cash flow,” the rating service said. “New conduit deals are typically backed by loan pools that were originated no more than ...

June 26, 2015 - Inside FHA/VA Lending

Handbook FAQs Hold No Surprises, But More Guidance Expected

The frequently-asked-questions guidance to using the FHA’s consolidated Single Family Policy Handbook is good to have though it shows just how complicated the FHA’s mortgage origination process is, according to lenders. In fact, the updated FHA handbook could still be confusing to borrowers simply because a lot more information is concentrated in one source, lenders said. According to the FHA, the more than 290 FAQs will enable lenders to make operation adjustments before the handbook goes into effect on Sept. 14, 2015. The FAQs are for information purposes only and do not apply to current FHA policies. They do not establish or modify policy contained in the handbook. The FAQs reiterate information in the handbook under headings such as Credit Underwriting, Closing and Insuring, FHA System Support and Consumer Information. Industry observers noted that the FAQs did not ...

June 26, 2015 - Inside FHA/VA Lending

VA Jumbo Securitization up in 1Q, 2 States Account for Over 55%

Ginnie Mae securitized $6.6 billion of VA jumbo loans in the first three months of 2015, up 15.9 percent from the prior quarter, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. Jumbo loans – single-family mortgages with loan amounts exceeding $417,000 – comprised 18.7 percent of total VA originations in the first quarter. VA jumbo originations outpaced FHA jumbo production, which totaled $2.8 billion in the first quarter, up 17.0 percent from the prior quarter, according to the Inside Mortgage Finance database. VA jumbos in Ginnie mortgage-backed securities issued in the first quarter included modified VA loans as well as those originated in Alaska, Guam, Hawaii and the U.S. Virgin Islands. Wells Fargo ranked first among securitizers of VA jumbos in the first quarter, with $1.3 billion in production. Second-ranked Freedom Mortgage conveyed $652.7 million in ... [ 1 chart ]

June 26, 2015 - Inside Nonconforming Markets

Mixed Response for Redwood’s Latest Innovation

A new feature Redwood Trust has included in its two most recent jumbo mortgage-backed securities has prompted support from AAA investors along with mixed reactions from rating services. The $356.45 million Sequoia Mortgage Trust 2015-2 issued in April and the $343.21 million Sequoia Mortgage Trust 2015-3 that was issued this week included a unique stop-advance feature. Servicers of the loans won’t be allowed to provide advances of principal and interest on loans that are 120+ days delinquent. The jumbo MBS were rated by Kroll Bond Rating Agency and Moody’s Investors Service ...

June 26, 2015 - Inside MBS & ABS

Institutional Investors Exploring More Ratings Agency Options in Commercial MBS Market

Although the big three rating agencies have had a strong hold on rating commercial MBS for most institutional investors, the tides may be changing as bond buyers begin to relax their guidelines. Some of the largest bond buyers have been vocalizing frustration that the big three ratings firms, Moody’s Investors Service, Standard & Poors and Fitch Ratings, are being hired less, resulting in fewer bond offerings to choose from, according to a recent Bloomberg article. That’s good news for smaller ratings agencies like Kroll Bond and Morningstar. “We have proven...

June 26, 2015 - Inside MBS & ABS

Issuance of Catastrophe Bonds Strong at Midpoint Of 2015, with a Focus on Florida and Earthquakes

Investor appetite for insurance risk continues to outstrip demand, prompting an increase in catastrophe bonds among other insurance-linked securities, according to industry analysts. Late last week, Fitch Ratings assigned a BB rating to a $200 million catastrophe bond that will provide re-insurance protection to Hannover Ruck for exposure to earthquakes in California. The deal will push U.S.-related issuance of catastrophe bonds to $3.86 billion in 2015, according to Artemis, a firm that tracks issuance of the bonds. A record volume of catastrophe bonds was issued...

June 26, 2015 - Inside MBS & ABS

Fitch Ranked 1st in ABS Ratings During 1Q15, DBRS Led the Market in Rating Non-Agency MBS

Neither of the credit-rating industry’s perennial market leaders – Standard & Poor’s and Moody’s Investors Service – managed to claim a top spot during the first quarter of 2015, according to a new Inside MBS & ABS ranking. Fitch Ratings ranked as the top player in rating the bigger non-mortgage ABS market. The company rated 43 ABS issued during the first quarter that represented 64.2 percent of total issuance by dollar amount. The company rated all eight credit-card ABS issued in early 2015, along with most of the student-loan deals. Fitch raised...[Includes two data tables]


A lot has been written about the ‘Millennial Generation’ being key to the future of the housing/mortgage market, but how much of your mortgage workforce includes Millennials – those born roughly between the years 1980 to 1999?

Less than 10 percent


11 to 30 percent


Greater than 30 percent


It’s so small we can’t even measure it.


We’re tired of reading about how important Millennials are…


Housing Pulse