MBS Characteristics

Browse articles from all of our Newsletters related to MBS Characteristics.

October 21, 2016 - Inside FHA/VA Lending

Nonbanks Took Over GNMA Servicing Market in 3Q16

Nonbanks crossed a threshold in the third quarter of 2016, posting a hefty 6.3 percent increase in their combined Ginnie Mae servicing portfolio, according to a new Inside FHA/VA Lending analysis. Nonbanks serviced $826.6 billion of Ginnie single-family mortgage-backed securities as of the end of September. That represented 51.3 percent of the total Ginnie market. The nonbank servicing total includes a small amount of Ginnie servicing held by state housing finance agencies, roughly 1.0 percent of the entire market. But it doesn’t include the significant amount of Ginnie servicing that nonbanks do as subservicers for both depository and nonbank clients. Interestingly, the biggest gain for nonbanks in percentage terms came in servicing VA loans, which rose 8.1 percent from the second quarter to $252.1 billion, or 51.0 percent of the market. The VA sector is one business from ... [4 charts ]

October 21, 2016 - Inside Nonconforming Markets

Some Variety in New Jumbo MBS from Redwood

The latest jumbo mortgage-backed security from Redwood Trust includes some differences compared with the two jumbo MBS the firm issued earlier this year. The $343.16 million deal includes loans from many lenders and contributions from a Federal Home Loan Bank program. Sequoia Mortgage Trust 2016-3 received preliminary AAA ratings from Kroll Bond Rating Agency and Moody’s Investors Service. The MBS will include...

October 21, 2016 - Inside MBS & ABS

Freddie Mac and Dealers Begin Testing Portal For Exchanging Legacy PCs for Single Securities

Freddie Mac has begun pilot testing its new Dealer Direct system for swapping legacy participation certificates for new single securities with a select group of dealers, the government-sponsored enterprise said in an update issued this week. In transitioning to the single security, Freddie will give all investors in its existing MBS that have a 45-day payment cycle the option to exchange them for the new 55-day securities. That process will be transacted through the Dealer Direct electronic platform. Holders of legacy MBS will work...

October 14, 2016 - Inside Mortgage Trends

Market Tilt Toward Purchase-Mortgage Lending Boosts Correspondent Share

Fannie Mae and Freddie Mac saw a robust 29.7 percent jump in single-family mortgage business during the third quarter, with most of the gain coming from the purchase-mortgage side of the business. And more purchase-mortgage business usually means a bigger share for correspondent lenders. Correspondent originations accounted...[Includes two data tables]

October 7, 2016 - Inside FHA/VA Lending

Around the Industry

Ginnie Mae FY 2016 Highlights. “So far, we’ve pretty much broken every record,” said a Ginnie Mae spokesperson. Total mortgage-backed securities issuance for FY 2016 was $490.3 billion, “an all-time high by a pretty wide margin,” according to the spokesperson. September MBS issuance was also at an all-time high: $54.8 billion. Ginnie Mae commitment authority for the fiscal year was $430.2 billion. Approximately 2.3 million mortgage loans worth $462 billion underlay Ginnie’s single-family MBS pools in FY 2016. Of this total, $278 billion (1.4 million loans) were purchase mortgages, and $184 billion (0.9 million loans) were refinances or modified loans. Of the purchase dollar volume, first-time homebuyers accounted for $200 billion (1.1 million loans). Of the $462 billion single-family MBS pools, FHA accounted for 57.1 percent ($264 billion), VA, 38.8 percent ($179 billion), and rural housing loans, 3.9 percent ($18 billion). New California Law Protects Spouses of HECM Borrowers from ‘Widow Foreclosure.’ On Sept. 29, 2016, California Gov. Jerry Brown, D, signed Senate Bill 1150 into law to protect widows, widowers and other heirs of mortgage borrowers from unnecessary foreclosures.

October 7, 2016 - Inside FHA/VA Lending

IG Audit Finds GNMA Left Hundreds Of Uninsured Loans in MBS Pools

Requiring an undercapitalized issuer to repurchase uninsured performing mortgages out of a mortgage-backed securities pool could increase risk to the federal government, warned Ginnie Mae. Responding to an adverse audit report from the Department of Housing and Urban Development’s Office of the Inspector General, Ginnie said that while it generally accepts the IG’s recommendations, forcing an undercapitalized issuer to buy out performing loans and either hold them in portfolio or sell them at a substantial loss would put the government at greater risk. “This is something we need to be alert to in certain cases,” the agency said. According to the report, Ginnie improperly allowed more than $49 million of single-family mortgages with terminated insurance to remain in its MBS pools for more than one year without obtaining FHA coverage. The IG warned Ginnie could be on the ...

October 7, 2016 - Inside FHA/VA Lending

Ginnie Mae Crushed Single Family MBS Issuance Records in 3Q16

Ginnie Mae rode a surging purchase-mortgage market and heavy refinance activity to new production records during the third quarter of 2016. The agency issued a whopping $145.14 billion of single-family mortgage-backed securities during the third quarter, according to an Inside FHA/VA Lending analysis of MBS disclosures. That figure is based on pool-level disclosures that reveal exact principal balance amounts and it includes securities backed by FHA home-equity conversion mortgages. The data in the table below are based on truncated loan-level disclosures and do not include HECM activity. New Ginnie MBS issuance in the third quarter was up 15.7 percent from the previous quarter. Ginnie MBS production set three consecutive monthly records during the third quarter, culminating in a huge $52.46 billion month in September. Purchase-mortgage activity was the key driver, but the ... [ 4 charts ]

October 6, 2016 - Inside Mortgage Finance

Refi Borrowers Increasingly Taking Cash Out, Equity Extraction in Second Quarter at Highest Level Since 2009

Continued increases to home prices along with low interest rates have prompted a number of borrowers to take cash out when completing a refinance. Some 41.0 percent of refinances completed in the second quarter of 2016 resulted in a loan amount at least 5.0 percent higher than the unpaid principal balance of the original loan, according to Freddie Mac. In the second quarter of 2015, the share was 33.0 percent and between 2010 and 2013 it typically ranged from 15.0 percent to 20.0 percent, according to Freddie. The total amount of home equity cashed out has also increased...

October 6, 2016 - Inside Mortgage Finance

GSE Purchase-Mortgage Business Hits Post-Crash High in 3Q16, While Refi Sector Keeps Percolating

Fannie Mae and Freddie Mac securitized $135.69 billion of single-family purchase mortgages during the third quarter, according to a new Inside Mortgage Finance analysis of mortgage-backed securities disclosures by the two government-sponsored enterprises. That was up a hefty 26.2 percent from the previous quarter, and it represented the biggest quarterly flow of purchase mortgages to the GSEs since the housing market collapse. Although the loans were pooled in MBS issued during the third quarter, a significant number of them were actually originated during the April-June cycle. The third quarter typically has...[Includes three data tables]

September 23, 2016 - Inside FHA/VA Lending

Liquidity, Net Worth Issues Persist But Nothing Ginnie Can’t Manage

Ginnie Mae continues to wrestle with issuers lacking liquidity and net worth although the number of such cases has gone down significantly, thanks to tight oversight, according to the agency’s top counterparty risk officer. Briefing participants at this year’s Ginnie Mae summit in Washington, DC, Zack Skochko, director of counterparty risk, reported that some issuers are still struggling to comply with Ginnie Mae’s liquidity and net worth requirements.A number of small issuers failed their liquidity and net worth audits this year by not maintaining the minimum $1 million cash or 10 basis points of outstanding Ginnie securities required to participate in the agency’s mortgage-backed securities program. Ginnie Mae also requires issuers to meet a minimum net worth of $2.5 million plus 35 bps of the issuer’s total effective single-family obligations The requirements were designed to ensure that the ...

September 23, 2016 - Inside FHA/VA Lending

Streamline Refi Segment Causing Problems for VA, Ginnie Investors

The Department of Veterans Affairs is working on a change to its existing streamline refinancing policy to address a problem that is giving VA and Ginnie Mae the fits. Under the VA’s qualified-mortgage rule, a VA borrower must wait six months and show six months’ worth of mortgage payments before they can refinance into an IRRRL (Interest Rate Reduction Refinance Loan) and take advantage of the lower rate. However, it seems not all VA lenders are adhering to the rule and that a good number are refinancing veterans into IRRRLs even before the mandatory seasoning period ends for fear interest rates might rise and the borrower might not benefit from the lower rate. “I’ve redone the numbers in 20 different directions on how much a borrower would save if they had to wait two more months and the rate went up a quarter of a point because they lost those two months ...

September 15, 2016 - Inside Mortgage Finance

Single Women Borrowers Better at Keeping Up With Mortgage Than Single Males in Recent Years

Although single-women borrowers are more likely to pay their mortgages on time than single-male borrowers, they tend to pay higher mortgage rates and are more often denied credit. Those findings come from a new Urban Institute study that merged Home Mortgage Disclosure Act data for 2004-2014 with CoreLogic data on loan performance. A combination of a male and female borrower (usually in that order) accounted...

September 15, 2016 - Inside Mortgage Finance

First-Time GSE Homebuyer Loans Perform Better than Other Purchase Mortgages Despite Weaker Profile

Originations of mortgages to first-time homebuyers in recent years have performed better than other purchase mortgages securitized by the government-sponsored enterprises, according to an analysis by Moody’s Investors Service. The stronger performance of first-time homebuyers occurred even as purchase mortgages for repeat buyers tend to have stronger borrower characteristics. The rating service suggested that tighter underwriting coupled with borrower education and counseling have improved the performance of GSE first-time homebuyer mortgages. Moody’s said...

September 9, 2016 - Inside FHA/VA Lending

USDA Securitization Rose in 2Q16, Rural Purchase Loans Dominate

Issuers delivered $8.1 billion of rural mortgage loans with a U.S. Department of Agriculture guarantee into Ginnie Mae pools during the first six months of 2016, according to an analysis of Ginnie data. Securitized USDA mortgages accounted for 1.3 percent percent of total MBS issued by Ginnie Mae during the period and comprised 2.5 percent of total loans originated during the six-month period. USDA-backed loan deliveries to Ginnie Mae in the second quarter rose 9.8 percent from the previous period. Year-over-year, issuance of MBS backed by rural loans fell 3.8 percent. USDA-backed mortgages require no downpayment. Over the first six months, the average credit score for rural borrowers was 688.1 and the average debt-to-income ratio was 34.9 percent. An estimated 93.2 percent of USDA loans originated during the period were purchase mortgages, 1.0 percent were refinances and the ... [ 2 charts ]

September 9, 2016 - Inside FHA/VA Lending

Ginnie Mae MBS Issuance Up in August as Upward Trend Continues

Ginnie Mae issued $46.5 billion of single-family mortgage-backed securities in August, up slightly from July, according to an analysis of Ginnie data. Single-family MBS monthly issuance in August was the highest monthly volume so far this year. Total issuance also was up 12.3 percent from the same month last year., Strong purchase and refinance originations in the second quarter helped push production in the third quarter. Although purchase loans with private mortgage insurance outpaced gains in FHA and VA loans in the second quarter, deliveries to Ginnie so far appear to indicate a strong third quarter. Meanwhile, VA volume has been fueled largely by refinance activity over the past few years and does not appear to be letting up. PennyMac and Freedom Mortgage battled for first place with $4.35 billion and $4.34 billion, respectively, in MBS issuance in August. Despite cutting back on its ... [1 chart]

September 9, 2016 - Inside FHA/VA Lending

VA Note Rate Lower than FHA, Private MIs; VA Refis Dominate

VA refinance mortgages accounted for the biggest share of total insured refis during the first six months of 2016, according to an Inside FHA/VA Lending analysis of agency refi data. On a monthly basis, VA refi totals exceeded refis with FHA and private mortgage insurance, peaking at $9.3 billion (58.1 percent of total VA originations) in April. Over the six-month period, the refi share of VA loans securitized by Ginnie Mae averaged 52.3 percent, compared to 29.6 percent for FHA and 21.0 percent for private MI loans securitized by Fannie Mae and Freddie Mac. In terms of total volume, however, FHA held a commanding lead, $123.0 billion, over private MIs ($102.7 billion) and VA ($84.8 billion). Interestingly, the average interest rate on VA refi loans, 3.6 percent, over the six-month period was lower than FHA’s and private MIs’ note rates of 3.9 percent and 4.0 percent, respectively. There is no clear ... [1 chart]

September 9, 2016 - Inside MBS & ABS

First Post-Crisis NPL MBS to Receive a Rating Pays Off, Investors in Senior Tranche Protected from Losses

The first rated post-crisis non-agency MBS backed by a significant share of nonperforming mortgages paid off recently, offering insights into how the deal performed and how investors fared. The $372.80 million Mortgage Fund IVc Trust 2015-RN1 was issued by Bayview Asset Management in October 2015. It received “A” ratings from Fitch Ratings and Morningstar. Fitch said it capped its rating “due to the idiosyncratic and adverse-selection risks associated with NPL collateral.” At issuance, 34.9 percent of the loans were nonperforming and 78.0 percent had been modified. The rating services said...


After the November elections, how long will it take for a new Congress and White House to pass GSE reform legislation?

I’m confident a bill will be passed the first year.


2 to 3 years. GSE reform is complicated.


Sadly it won’t happen in a Clinton or Trump first term.


Not in my lifetime.


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