MBS Investors

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

June 24, 2016 - Inside MBS & ABS

Single-Security Transition Could Become Model for Figuring Out What to Do With GSE MBS After Reform

Mortgage-finance reform doesn’t look to be anywhere on the horizon, but at some point government policymakers will have to figure out what to do with trillions of dollars of Fannie Mae and Freddie Mac MBS if the two government-sponsored enterprises are put out to pasture. In fact, the transition to a new GSE single security that’s scheduled to start in 2018 could become a test run of sorts for the even bigger changes ahead, according to a paper published by the Urban Institute. Crafted by five mortgage-industry veterans, “A More Promising Road to GSE Reform” is centered on the creation of a new government corporation that would replace Fannie and Freddie. The National Mortgage Reinsurance Corp. would issue...

June 24, 2016 - Inside MBS & ABS

SFIG Publishes Standards to Help Non-Agency MBS Market Address TRID Issues, But CFPB Guidance Seen as Critical

The Structured Finance Industry Group late last week published a final draft of the standards for due diligence firms to use when testing loans for compliance with the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule. “The underlying premise of this documentation is to establish a best practices approach to pre-securitization testing logic that will drive the due diligence conducted by third-party review firms,” SFIG said. The RMBS 3.0 TRID Compliance Review Scope documentation addresses...

June 17, 2016 - Inside FHA/VA Lending

USDA Securitization Down in 1Q16, Agency to Lower Premium, Fees

Ginnie Mae securitization of rural home loans got off to a wobbly start in the first quarter of 2016 as securitization volume fell 13.8 percent from the prior quarter, according to an Inside FHA/VA Lending analysis of Ginnie data. Approximately $3.9 billion in loans with a USDA guarantee were securitized during the first three months, with the top five issuers accounting for $2.1 billion of mortgage-backed securities produced by the segment during the period. USDA securitization volume dropped 9.2 percent year over year. Top USDA issuer Chase Home Finance accounted for $1.2 billion of securitized rural housing loans, while PennyMac, in distant second place, finished the quarter with $378.5 million. Wells Fargo ($294.0 million), Pacific Union Financial ($122.8 million) and Amerihome Mortgage ($102.2 million), in sequential order, comprised the rest of the top five issuers. Pacific Union climbed over ...

June 17, 2016 - Inside MBS & ABS

UI Suggests GSEs Avoid Overreliance on STACR, CAS Credit-Risk Transfers to Prevent Future Rate Volatility

The Urban Institute is warning against Fannie Mae and Freddie Mac putting all of their eggs into one credit-risk transfer basket. The CRT programs at the two government-sponsored enterprises have relied heavily on structured debt notes sold to capital market investors – Freddie’s Structured Agency Credit Risk and Fannie’s Connecticut Avenue Securities – as well as reinsurance. Although the influx of private capital is a good thing, Karan Kaul, research associate with UI, said...

June 17, 2016 - Inside MBS & ABS

Fed’s Pause on Rate Hikes Means a Correction In MBS Prices Could be a Long Way Off

The long-awaited correction in MBS prices was put on hold this week with the news that the Federal Reserve isn’t ready to hike interest rates anytime soon. Moreover, now there’s a growing belief among some economists and mortgage market watchers that the central bank may not raise interest rates at all this year. And there’s even a school of thought that suggests the yield on the benchmark 10-year Treasury bond might hit 1.0 percent before it reaches 2.0 percent. As Inside MBS & ABS went to press this week, the 10-year was...

June 17, 2016 - Inside MBS & ABS

Commercial MBS Issuers Still Unsure of How to Comply with Risk-Retention Requirements that Take Effect in December

With time ticking toward a Dec. 24 compliance date, issuers of commercial MBS continue to try to develop structures that will meet risk-retention requirements. Richard Jones, a partner at the Dechert law firm, warned that the industry is “in trouble.” In an analysis published this month, he wrote, “We as an industry don’t have a scalable solution to the problem. We … do not know what this will cost, who will pay for it, and to what extent this is an existential risk to commercial real estate capital formation as it has been conducted for the past 25 years.” He noted...

June 16, 2016 - Inside Mortgage Finance

Seneca’s Outsourcing Deal with Nationstar Could Be a Sign that PE Firms Are No Longer in Love with MSR

Seneca Mortgage Servicing LLC, which entered the business just three years ago, has decided to outsource the monthly processing of loans to Nationstar, a sign that private-equity firms are no longer so enamored with the returns generated by mortgage servicing rights. According to a statement issued by Nationstar, it will service all of Seneca’s $50 billion portfolio and any rights Seneca might obtain going forward. Moreover, it will take control of the firm’s Depew platform in upstate New York. No terms were disclosed. However, according to interviews with servicing advisors, Seneca – whose backers include The Blackstone Group, EJF Capital and Arbor Commercial Mortgage – may not be...

June 10, 2016 - Inside MBS & ABS

MBS Trading Volume Hits High for the Year, But Liquidity Still a Concern. June Rate Hike in Doubt

The average daily trading volume in agency MBS climbed to $215.9 billion in May, the highest reading of the year, according to the Securities Industry and Financial Markets Association. But don’t get too excited. May’s activity is still below the two-year high established in January 2015 and nowhere near the peaks established back in 2008 when crumbling financial markets caused investors to go gaga for agency MBS. The relatively low daily trading volumes continue...

June 10, 2016 - Inside MBS & ABS

Fannie Details Types of Loans that Will be Included In New MBS Backed by Re-Performing Mortgages

Fannie Mae plans to start issuing MBS backed by single-family, fixed-rate re-performing mortgages later this year. This week, the government-sponsored enterprise detailed some of the types of loans that will be included in the planned issuance. Both loans that cured on their own and mortgages that received a modification will be eligible for the new RPL securitization program. Among other factors, the mortgages must have been performing for at least six months. Loans modified via the Home Affordable Modification Program will be eligible for the MBS along with loans modified through the GSE’s proprietary mod programs. A number of different loan types will be excluded...

June 3, 2016 - Inside FHA/VA Lending

Firm Allegedly Scammed GNMA, Executives to Pay $12.7 M to SEC

A California-based mortgage lender and six senior executives have agreed to pay $12.7 million to the Securities and Exchange Commission to resolve allegations they schemed to defraud investors in the sale of residential mortgage-backed securities with a Ginnie Mae guarantee. The SEC complaint alleged that, from March 2011 to March 2015, Ginnie Mae issuer First Mortgage Corp. and its top executives pulled current performing loans out of Ginnie Mae MBS. The issuer falsely claimed that the loans were delinquent so that it could recycle them as newly issued MBS and sell them at a profit. FMC allegedly issued Ginnie Mae MBS prospectuses with false and misleading information by using a Ginnie Mae rule that allowed issuers to repurchase seriously delinquent loans. In addition, the SEC complaint alleged that FMC deliberately delayed depositing checks from borrowers who had been behind on ...

June 3, 2016 - Inside FHA/VA Lending

FHA Securitization Spikes in 1Q16, VA Activity Drops Year-over-Year

FHA originations rose significantly in the first quarter of 2016 from the same period last year even as VA loan production decreased slightly, according to an analysis of Ginnie Mae data. Lenders delivered $54.4 billion of FHA-insured loans to Ginnie Mae for securitization during the first three months, up 36.2 percent from the previous year. In contrast, the volume of VA loans securitized over the same period, $35.0 billion, fell 1.5 percent compared to the same period a year ago. A strong purchase-mortgage market drove FHA activity from January to March. The reduction in FHA’s annual insurance premium in January 2015 continued to have an impact on FHA’s purchase-loan market share. In 2015, FHA purchase originations accounted for $151.0 billion of the estimated $881.0 billion in total purchase originations (conventional and government single-family forward originations), according to ... [ 2 charts ]

June 3, 2016 - Inside MBS & ABS

MBS Backed By Dutch Mortgages First to Receive ‘Green Bond Assessment’ for Energy Efficient Houses

Moody’s Investors Service assigned its first “Green Bond Assessment” last week to an MBS backed by Dutch mortgages that were selected on the basis of the underlying properties’ energy efficiency. The rating service said it expects future “green transactions” from issuers such as financial institutions and governments. “Green bonds” are securities that raise capital for use in financing or refinancing projects and activities with specific climate or environmental sustainability purposes. Moody’s said green bonds include securitizations collateralized by projects or assets whose cash flows provide the first source of repayment, debt obligations with direct recourse to issuers and project finance or revenue bonds. Green Storm 2016 B.V. received...

June 3, 2016 - Inside MBS & ABS

Mortgage Company, Execs Settle With SEC Over Allegations of Defrauding Investors in Ginnie MBS

First Mortgage Corp., a privately-held mortgage company based in Ontario, CA, and six executives have agreed to pay the Securities and Exchange Commission $12.7 million to resolve charges they concocted a scheme to defraud investors in Ginnie Mae MBS, the SEC announced this week. According to the SEC’s complaint, from March 2011 through March 2015, FMC repurchased current loans from Ginnie pools that it claimed were delinquent. FMC bought...

June 3, 2016 - Inside MBS & ABS

TRID Loans, Risk Retention a Focus On New Jumbo MBS From Redwood

A new jumbo MBS from Redwood Trust will mark the second non-agency MBS to include mortgages subject to the TRID mortgage disclosure rule. The real estate investment trust plans to issue a $344.89 million deal next week, according to a presale report from Kroll Bond Rating Agency. The rating service said 366 mortgages, accounting for 74.8 percent of the loan pool, are subject to the combined Truth in Lending Act/Real Estate Settlement Procedures Act rule. Redwood will issue...

May 27, 2016 - Inside MBS & ABS

FRBNY Trading Desk Holds First of Two Small-Scale Agency MBS Sales Transactions. Is This a Dry Run?

The Federal Reserve Bank of New York’s Open Market Trading Desk this week conducted the first of two small-value agency MBS sales operations, “for the purpose of testing operational readiness.” The second test is slated for June 1, 2016. The total current face value of sales across the two operations will be less than $150 million, according to the bank. The first transaction, which involved four Fannie Mae MBS currently valued at approximately $120 million, occurred in the middle of this week. The settlement date is June 13, 2016. Meanwhile, the June 1 operation will involve...

May 27, 2016 - Inside MBS & ABS

Potential Investors in New Non-Agency MBS Stress The Need for a Deal Agent, Operational Issues Persist

Some potential investors in new non-agency MBS insist that a deal agent or transaction manager is necessary to revive the non-agency MBS market. Some issuers are willing to include a deal agent in their securities, though the exact functions and pricing issues still need to be worked out. “Many potential buyers of residential MBS have a strong desire for improved transaction governance mechanisms such as the use of independent deal agents,” Moody’s Investors Service said in a report published late last week. The rating service recently held a meeting with investors, issuers and others involved in the non-agency MBS market. Moody’s said...

May 20, 2016 - Inside Nonconforming Markets

Investors Ready for Non-Agency MBS, GSE Reform

A group of investors pushed back against suggestions that so-called private capital won’t return to the market for new non-agency mortgage-backed securities. The Association of Mortgage Investors took exception to recent comments by Timothy Mayopoulos, president and CEO of Fannie Mae. He predicted that the non-agency MBS market won’t come back due to significant losses suffered during the financial crisis. However, the AMI said the government-sponsored enterprises are ...

May 20, 2016 - Inside Nonconforming Markets

Banks Seen as Key for Non-QM MBS

For the issuance of mortgage-backed securities with non-qualified mortgages to take off, industry analysts suggest that banks need to play a larger role. To this point, nonbanks have been the only issuers of non-QM MBS. Ron D’Vari and Timothy Bernstein, analysts at New Oak, authored an overview of non-QM MBS issued in the latest issue of The Journal of Structured Finance, which was published this month. The analysts said real estate investment trusts and hedge funds ...

May 20, 2016 - Inside Nonconforming Markets

Clayton Receives First Rating as MBS Deal Agent

Clayton Holdings was rated as a deal agent for non-agency mortgage-backed securities last week. The rating by Morningstar Credit Ratings was the first formal assessment of a deal agent, a role aimed at improving protections for investors in new non-agency MBS. Morningstar also assessed Clayton as a representation-and-warranty reviewer, assigning ratings of MOR RV2 for both functions. The firm’s rating scale ranges from RV1 to RV4 and Morningstar said it is the only ...

May 20, 2016 - Inside Nonconforming Markets

SFIG’s TRID Effort Viewed Favorably

The proposed standards drafted by the Structured Finance Industry Group regarding mortgage disclosure rules will help address issues in the non-agency market, according to investors and rating services. Moody’s Investors Service hosted a meeting last week with a group of investors, issuers and others involved in non-agency MBS. Among other issues, the group discussed the Consumer Financial Protection Bureau’s combined Truth in Lending Act and the ...

May 20, 2016 - Inside Nonconforming Markets

Competition, Cooperation Between Redwood, Banks

One of the biggest factors limiting the issuance of jumbo mortgage-backed securities is the strong appetite banks have to hold jumbos in portfolio. Redwood Trust, which aims to issue jumbo MBS, had adapted by competing with banks and working with them. Redwood had a gross margin of 140 basis points on its jumbo business in the first quarter of 2016, much higher than the 59 basis points in gross margins on jumbos Redwood had in the full year of 2015 ...

May 20, 2016 - Inside MBS & ABS

MBS Prices Finally Begin to Ratchet Down. Is the Big ‘Correction’ Upon Us or More False Positives?

Over the past two weeks, MBS prices have been on a downward trajectory, leading some market watchers to ponder whether the long-awaited correction in values is finally upon the industry. But no one is quite ready to wave the white flag. Moreover, there’s a school of thought that says any rise in the yield on the 10-year Treasury bond could be short lived and, at some time over the next six to 12 months, rates might head south again, igniting yet another small refi rally. Some also believe the chance of a recession is in the cards. Barry Habib, who runs MBS Highway, a rate-locking advisory service, thinks...

May 20, 2016 - Inside MBS & ABS

Payout from $8.5 Billion BofA Settlement Cleared, UBS Seeks MBS Suit Dismissal, Court Favors Trustee

After nearly five years of legal entanglements, investors will soon receive their share of the $8.5 billion Bank of America agreed to pay in June 2011 to resolve legacy mortgage-repurchase and servicing claims associated with Countrywide Financial Corp. The payouts were delayed by legal wrangling over whether trustee Bank of New York Mellon had the authority to settle. Last year, the New York Supreme Court ruled in the trustee’s favor, and a state court judge recently approved the severance order and partial final judgment, which cleared the way for BNYM to begin distributing the settlement proceeds from 512 of the 530 trusts in the case. Twenty-two investors that suffered significant losses for their failed investment in MBS sold by Countrywide prior to the collapse of the housing market are...

May 20, 2016 - Inside MBS & ABS

Chimera Sees Promise in Risk-Retention Requirements For Non-Agency MBS, Projects Returns in Double Digits

Risk-retention requirements included in the Dodd-Frank Act that met strong opposition from industry participants may turn out to be a profit source for some real estate investment trusts. Non-agency MBS have been subject to risk-retention requirements since the end of 2015, while the rules go into effect at the end of this year for commercial MBS and other asset classes. “I believe...

May 20, 2016 - Inside MBS & ABS

Banks Ramp Up Holdings of Residential MBS Despite Retreat by Some Goliaths of the Industry

Commercial banks and thrifts boosted their combined holdings of residential MBS to a new record, $1.661 trillion, during the first quarter of 2016, according to a new Inside MBS & ABS analysis. The data include held-to-maturity and available-for-sale accounts, but not trading assets, which included another $45.99 billion of residential MBS as of the end of March. The banking industry’s MBS holdings in HTM/AFS portfolios rose 1.0 percent from the end of 2015, and they were up a substantial 5.2 percent from a year ago. It’s worth noting that total assets in the banking industry actually rose a bit faster, by 2.1 percent, dropping the MBS share of total assets down slightly to 10.2 percent. Unlike some quarters, when activity by one or two dominant banks accounts for most of the industry’s change, the first-quarter increase was...[Includes two data tables]

May 19, 2016 - Inside Mortgage Finance

First-Time Homebuyers Gaining Market Share Even With Strong Competition for Limited Inventory

Despite low inventory and financing conditions that can favor other types of homebuyers, first-timers are increasing their market share, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. First-time homebuyers accounted for 38.9 percent of home purchases in April, based on a three-month moving average. That was up from a 38.1 percent share the previous month and a 37.2 percent share in April 2015. “Demand from first-time homebuyers is...

May 19, 2016 - Inside Mortgage Finance

Industry Execs Consider Liquidity, Bringing Private Capital into Government-Dominated Market

The heavy role of Fannie Mae, Freddie Mac and Ginnie Mae in the post-crisis mortgage market has brought lower rates and considerable liquidity to the mortgage business, but industry leaders question whether private capital can meet the growing need to finance nonbank servicing portfolios and the eventual pullback of the Federal Reserve. “We wouldn’t have the same price we have now without the government being there; its programs provide a 2 to 3 percent discount,” said Stan Middleman, CEO of Freedom Mortgage Corp., during a panel session at the Mortgage Bankers Association’s secondary market conference this week. “They are the whole enchilada. If you took them out, we’d have nothing.” The government-sponsored enterprises are...

May 16, 2016 - Inside the CFPB

SFIG’s Proposal on TRID Addresses Relevant Risks for RMBS: Moody’s

Analysts at Moody’s Investors Service believe that the Structured Finance Industry Group’s draft proposal on the CFPB’s integrated disclosure rule, otherwise known as TRID, generally is up to the task of addressing the relevant risks for U.S. residential mortgage-backed securities (RMBS), notwithstanding the uncertainty associated with the pending clarifying rulemaking from the bureau. The rule merges the mortgage disclosures mandated by the Truth in Lending Act and the Real Estate Settlement Procedures Act. “SFIG’s draft proposal to standardize the framework for reviewing and grading loans for TILA-RESPA Integrated Disclosure (TRID) rule compliance is adequate to identify those compliance risks that are likely to cause losses to RMBS trusts, aside from one grading provision with which we disagree,” said Moody’s Credit ...

May 13, 2016 - Inside MBS & ABS

NY Court Sides with Morgan Stanley in FHFA Lawsuit, BofA Agrees to Another Countrywide Settlement

A New York state court dismissed two mortgage repurchase actions filed by the government against Morgan Stanley, while Bank of America agreed to another settlement related to non-agency MBS issued by Countrywide Financial. Last month, Justice Marcy Friedman of the New York Supreme Court dismissed two residential MBS lawsuits filed by the Federal Housing Finance Agency against Morgan Stanley ABS Capital I Inc. and Morgan Stanley Mortgage Capital ...

May 13, 2016 - Inside MBS & ABS

Demand for Jumbo Mortgages in Secondary Market Seen as Strong, Just Not from MBS Investors

Issuance of jumbo MBS has fallen off since mortgage disclosure requirements set by the Consumer Financial Protection Bureau took effect in October. While the slowdown in jumbo MBS issuance has been blamed on TRID, there still appears to be plenty of demand from secondary market investors for jumbo whole loans. Redwood Trust’s jumbo origination and sales volume has been humming along without much impact from the CFPB’s combined Truth in Lending Act and ...

May 13, 2016 - Inside MBS & ABS

Mortgage REITs Scale Back MBS Holdings in 1Q16, But Boost Non-Agency Investment Slightly

Real estate investment trusts that specialize in the residential MBS market held $232.44 billion of agency and non-agency MBS at the end of March, according to a new Inside MBS & ABS analysis. The MBS holdings of 16 top mortgage REITs were down 0.3 percent from the fourth quarter and off 11.9 percent from March 2015. However, several REITs boosted their positions during early 2016 and the industry is slated to see a major merger of two firms ... [Includes one data chart]


What is the very best source of new mortgage customers for your lending shop? (Choose one only.)

Leads provided to me by employer


Paid internet/website leads


Real estate agents/Realtors




Our existing customer base/our servicing customers


My own personal sales "leads" database




Housing Pulse