MBS & ABS Performance

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

September 4, 2015 - Inside FHA/VA Lending

Increased Purchase, Refi Activity Boost Ginnie First Half Issuance

Securitized FHA,VA and rural housing loans in Ginnie Mae mortgage-backed securities totaled $188.5 billion in the first six months of 2015, fueled by significant purchase and refinance activity, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. An estimated $113.4 billion in FHA-insured mortgages were securitized during the first half of the year. Of that total, $60.6 billion were purchase mortgages and $44.2 billion were refinance loans. FHA purchase-loan production increased 58.8 percent in the second quarter from the prior quarter while refi lending jumped 160.8 percent over the same period as FHA’s reduced annual mortgage insurance premium began to take hold. The FHA loans that went into Ginnie MBS showed an average loan-to-value ratio of 92.8 percent and an average debt-to-income ratio of 39.7 percent. Borrowers’ average FICO score was 675.9, which was indicative of ... [ 2 charts ]

September 4, 2015 - Inside MBS & ABS

Issuance of Servicer-Advance ABS Resumes As Market Adjusts to Criteria Set by S&P

Some $800 million in servicer-advance ABS was issued by New Residential last week, helping to restart activity in the sector. New servicer-advance ABS issuance had stalled due to issues with ratings from Standard & Poor’s, the predominant rating service in the market. The two deals concurrently issued by New Residential followed a $225 million issuance by Ocwen Financial at the end of June. The firms helped end a year-plus long break in the issuance of rated servicer-advance ABS. In April 2014, S&P placed...

September 3, 2015 - Inside Mortgage Finance

Loan Steering, Redlining are Back, DOJ Warns, Regulators, Advocates Call for More Partnerships

Federal regulators and fair housing advocates are calling for continued vigilance in fair lending with the reappearance of mortgage redlining and loan steering. The return of pre-crisis predatory lending practices, like steering and redlining, pose new challenges to the mortgage industry and to minority communities, which have seen their home equity disappear with the collapse of the housing market, said participants in a fair-lending conference hosted by the Department of Housing and Urban Development. Credit scores raise...

September 3, 2015 - Inside Mortgage Finance

Fannie’s Affordable Lending Program Gets A Makeover, Well-Received by Industry

Fannie Mae last week replaced its MyCommunityMortgage affordable lending program with a new product called HomeReady that allows borrowers to get housing counseling online and integrated with Fannie’s Desktop Underwriter system. Both programs are targeted to lower- and middle-income borrowers in select communities. Barry Zigas, president of Zigas and Associates, a consulting firm focused on housing, said HomeReady is a “game changing announcement” in his blog post this week, especially pointing to the product’s adoption of a standardized consumer education requirement and the incorporation of the product into Fannie’s Desktop Underwriter. Zigas formerly headed Fannie’s affordable housing unit. Its new functionality through DU will allow...

August 21, 2015 - Inside Nonconforming Markets

Rating Services Take Dim View of Alt Doc Loans

Potential issuers of non-agency mortgage-backed securities looking to loosen underwriting standards on loans to be included in MBS are getting tough feedback from rating services. Fitch Ratings said last week that non-qualified mortgages with weak income documentation would likely face a “double penalty” compared with a similar non-QM that meet the documentation standards set for QMs. Non-QMs with “alternative documentation” included in non-agency MBS would ...

August 21, 2015 - Inside MBS & ABS

Goldman Sachs, Deutsche Bank Agree to Settle Ongoing MBS Lawsuits with Pension Fund, Insurer

Two more long-running legacy MBS lawsuits were resolved last week after defendants Goldman Sachs and Deutsche Bank separately agreed to settle with plaintiffs. The NECA-IBEW Health & Welfare Fund, a union pension fund in Decatur, IL, is seeking preliminary court approval of a $272 million settlement with Goldman Sachs on behalf of entities that purchased MBS issued by defendant GS Mortgage Securities and which Goldman underwrote. If approved, the settlement would put...

August 14, 2015 - Inside Mortgage Trends

Will Nonbanks Follow loanDepot Into Seconds?

loanDepot, LLC, made a big splash in the market this week, becoming the first nonbank lender to begin making ‘A’ paper second liens since the housing bust. The Irvine, CA-based lender fully expects it may soon have competition, but believes by being the first in, it will have a leg up on whichever players enter the fold. However, a quick call to a handful of nonbanks turned up...

August 14, 2015 - Inside MBS & ABS

U.S. Timeshare ABS Delinquencies Now at Lowest Level in Eight Years, More Smooth Sailing Ahead

The trajectory of delinquencies for U.S. timeshare ABS is continuing its downward trend, and issuance is expected to be near or perhaps even exceed last year’s level, with solid prospects for continued stable growth throughout the rest of the year, according to a consensus of industry analysts. U.S. timeshare ABS delinquencies fell again in the second quarter of 2015 to their lowest level in eight years, the latest index results from Fitch Ratings show. Total delinquencies for the second quarter were 2.66 percent, down from 2.79 percent in the first quarter and 2.92 percent a year ago. The ratings service has seen...

August 14, 2015 - Inside MBS & ABS

Moody’s Proposes Changes to Commercial MBS Rating Criteria, Allowing for Looser Underwriting

Moody’s Investors Service late last week proposed changes to how it rates commercial MBS. The rating service, which has been lagging in rating the type of deals subject to the revision, said the changes will result in upgrades and more positive treatment of loans with high loan-to-value ratios. Moody’s proposed to recalibrate its benchmark LTV ratios and “refine” how adjustments are made to benchmark LTV ratios. The proposal would allow for lower subordination requirements. The changes would apply to ratings of multi-borrower large loan commercial MBS and single asset/single borrower commercial MBS. “The main objective of the proposed changes for North American securitizations is...

August 14, 2015 - Inside MBS & ABS

Standard & Poor’s Tops in Rating Non-Mortgage ABS While DBRS Held the Lead in Non-Agency MBS Market

Standard & Poor’s ranked as the most active rating service in the non-mortgage ABS market at the midway mark in 2015, but came in last in the non-agency MBS sector. S&P provided ratings on $63.55 billion of non-mortgage ABS issued during the first half of the year, or 60.3 percent of total issuance. That was off slightly from its 64.1 percent market share for all of last year. The company has gotten more active in rating credit card deals, but has lost some of its share in vehicle finance and business loan ABS. Fitch was...[Includes two data tables]

August 7, 2015 - Inside FHA/VA Lending

VA Securitization in Ginnie MBS Increases in 2Q but Not Like FHA

Sellers saw a modest increase in VA loans delivered to Ginnie Mae in the second quarter of 2015, most of which were streamline refinance loans, but FHA definitely took the cake, according to an Inside FHA/VA Lending analysis of agency data. Approximately $39.1 billion in VA purchase and refi loans were placed in Ginnie Mae pools in the second quarter, up 11.8 percent from the prior quarter. Of that amount, $20.9 billion were VA refinances, up 2.1 percent from the first quarter. Some 52 percent of the VA refis were originated in-house while correspondents accounted for 30.7 percent. Brokers brought in 17.3 percent of the securitized VA refi loans. VA purchase loans underlie an estimated $18.2 billion in Ginnie mortgage-backed securities in the second quarter, 48.4 percent of them retail. That number was up 25.5 percent from the previous quarter. VA loan correspondents were busy as well, accounting for ... [ 2 charts ]

August 7, 2015 - Inside Nonconforming Markets

News Briefs

Fitch Ratings updated its criteria for estimating losses on mortgages in non-agency mortgage-backed securities this week. The main change for jumbo MBS involves the treatment of retail originations by lenders that have not been reviewed by Fitch. Previously, retail originations from such lenders would not receive positive consideration in the calculation for the probability of default. The rating service will now apply the retail benefit to ... [Includes three briefs]

August 7, 2015 - Inside MBS & ABS

FRB New York to Use Fannie/Freddie CUSIP Service to Consolidate SOMA Agency MBS

The open market trading desk at the Federal Reserve Bank of New York has announced plans to streamline the administration of agency MBS held in the Federal Reserve’s System Open Market Account (SOMA). As one of the central bank’s monetary policy tools, the SOMA assists the New York Fed in carrying out open market operations, which acquire the assets that serve as collateral for circulating U.S. currency, a tool for managing reserve balances and ...

August 7, 2015 - Inside MBS & ABS

Unsettled Markets Lead to a Volatile Week For MBS Prices. But Wait Until September

The first week of August was volatile for MBS prices as investors tried to make sense of the new job numbers and whether the “flight to quality” of U.S. Treasuries and MBS would continue unabated. “The market was very reactionary even to minor news this week,” said Joe Farr, director of sales and marketing for MBS Quoteline. As Inside MBS & ABS went to press, the bid price on the benchmark Fannie Mae 3.50 percent bond was in the neighborhood of 103.43 ...

August 7, 2015 - Inside MBS & ABS

Ocwen Prevailing in Face of Disgruntled Non-Agency MBS Investors and Downgrades by Rating Services

Close to one-third of the $154.79 billion in non-agency MBS serviced by Ocwen Financial is subject to potential servicing transfers due to downgrades to the firm’s servicer ratings and actions by investors. However, Ocwen has managed to retain servicing on a vast majority of the 119 deals thus far, helped by the proceeds the company delivers to non-agency MBS investors. Ocwen faces the potential loss of non-agency MBS servicing on two fronts. Some $43.1 billion ...

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...


During the first half of 2015 all residential lenders originated a better-than-expected $805 billion of home mortgages, according to Inside Mortgage Finance. What do you expect in the second half?

Just as good. We like what we’re seeing.
Better. Applications are strong.
Worse. We’re worried about rates, seasonality.
A lot worse. The fourth quarter could be a killer.

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