MBS Investors

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

August 21, 2015 - Inside Nonconforming Markets

Mixed Results for Ocwen on Settlement, MBS

The monitor of a $2.0 billion settlement involving Ocwen Financial revealed last week that the nonbank was found to have failed another metric under the settlement. However, the monitor noted that Ocwen has worked to address many of the issues that have dogged the company over the past year. The monitor re-tested Ocwen on a number of metrics under the settlement due to concerns that were raised about the integrity of the servicer’s internal review group ...

August 21, 2015 - Inside Nonconforming Markets

Mixed Views on the Value of Jumbo MBS

Issuance of jumbo mortgage-backed securities has slowed somewhat this summer, with a lack of consensus from industry participants on whether it’s worth participating in the market. Barclays Capital, which helps fund jumbo MBS activity, said the deals offer about 50 basis points of option-adjusted spread compared with agency MBS. Analysts at Barclays said newly-issued jumbo MBS are attractive for investors less concerned about liquidity. Officials at Anworth Mortgage Asset Corp ...

August 21, 2015 - Inside MBS & ABS

Fracking, Earthquakes and Collapsing Oil Market Pose New Challenges to Housing, Mortgage Finance

Investors have a lot more to worry about these days than the collateral damage stemming from problems in Greece and China and a bumpy U.S. stock market. Ratings analysts indicate some new energy-related risks – most notably earthquakes near “fracking” sites and a plunge in the price of oil – have emerged as potentially significant challenges to investors in real estate and to mortgage lenders. Analysts at Standard & Poor’s said in a recent client note that earthquakes in proximity to fracking sites introduce a unique risk factor into the investment equation for those with a stake in real estate located in affected regions. “In particular, determining whether or not earthquake coverage is...

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 21, 2015 - Inside MBS & ABS

Banks Continue Loading Up on Agency MBS as Holdings Reached Record $1.03 Trillion in June

Commercial banks and savings institutions continued to grow their investments in agency MBS during the second quarter of 2015, according to a new Inside MBS & ABS ranking and analysis. Banks and thrifts held $1.583 trillion of agency and non-agency MBS on their balance sheets at the end of June. That was up just 0.3 percent from the first quarter, but it was the highest level since the first nine months of 2012, when bank and thrift MBS holdings topped $1.60 trillion. All the gain came...[Includes two data tables]

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

Capital Requirements, Including Designation of ‘High Quality,’ a Major Factor for MBS Investors

The application of capital requirements to MBS and other structured finance products in the coming years will likely trump any typical collateral analysis investors currently consider, according to analysts at Standard & Poor’s. In a report published late last week, the analysts said global capital requirements have the potential to become impediments to providing financing via securitized products. “Of particular investor focus recently are...

August 14, 2015 - Inside MBS & ABS

MBS Trading Volume Finally Increases; REITs Move to Deleverage Their Mortgage Exposure

The average daily trading volume in agency MBS increased to $189.0 billion in July, a rare occurrence for an asset that’s been under selling pressure this year. According to figures compiled by the Securities Industry and Financial Markets Association, trading volume peaked in January at $245.9 billion and hasn’t looked that good since. In June, trading volume was an anemic $183.7 billion, the lowest reading of the year. Investors continue...

August 14, 2015 - Inside MBS & ABS

Value of REIT MBS Holdings Continued to Slip In 2Q15 Despite Small Gain in Non-Agency Assets

Real estate investment trusts that focus on the MBS market saw the value of their holdings slump again during the volatile second quarter of 2015. Top mortgage REITs reported a fair market value of $249.10 billion for their single-family MBS holdings as of the end of June. That was down 5.6 percent from the previous quarter, and it was the group’s lowest MBS portfolio valuation since the fourth quarter of 2011. The decline came...[Includes one data table]

August 13, 2015 - Inside Mortgage Finance

Piggyback Second Mortgages Making a Comeback with Focus on Jumbo Loans

Piggyback mortgage financing structures appear to be creeping back into the market, a trend that some observers say could destabilize the industry. Before the financial crisis, many borrowers combined a first-lien mortgage for 80 percent of home value with a second lien of 10 percent or more in order to avoid paying private mortgage insurance. While many first-lien mortgages are still originated with a simultaneous second in recent years, the combined loan-to-value ratio of the two has been capped at 80 percent or less. “From what we’ve seen from lenders who are interested in expanding their customer base, there appears...

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

Redwood Faces Headwinds with Jumbo Activity

Redwood Trust this week reduced the amount of jumbo-mortgage volume the real estate investment trust expects to acquire this year, citing competition for originations, among other issues. At the beginning of the year, officials at Redwood projected that the REIT would purchase $7.0 billion in jumbos. Through the end of July, Redwood had purchased $3.0 billion in jumbos. Officials at Redwood said the REIT is on track to purchase $5.5 billion to $7.0 billion in jumbos ...

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

Freddie and Fannie Continue to Reduce Mortgage Portfolios; Profits Up Sharply in Second Quarter

Fannie Mae and Freddie Mac reduced their retained mortgage portfolios by a combined $44.4 billion during the second quarter, a period during which the government-sponsored enterprises posted substantial increases in net earnings. Freddie Mac’s non-agency MBS holdings declined 11.6 percent, while its un-securitized whole-loan portfolio dropped 3.0 percent. The GSE sold $3.3 billion of non-agency MBS and securitized $2.1 billion of single-family ... [Includes one data chart]

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 ...

August 7, 2015 - Inside MBS & ABS

Plenty of NPLs Are Being Securitized but Don’t Expect to See Any SEC Filings on Them

More issuers are stepping up to the plate by creating securities collateralized by nonperforming residential loans, but so far the action has mostly taken place in the private-placement market. “There have been a bunch of securitizations of NPLs lately,” one trader told Inside MBS & ABS, “but it’s all been Reg. 144 filings,” a reference to the Securities and Exchange Commission rule that allows for the public resale of restricted collateral if a number of conditions are met ...

August 7, 2015 - Inside MBS & ABS

Goldman to Pay $270 Million to Settle RMBS Suit; HSBC Must Face NCUA Claims, Judge Rules

Wall Street giant Goldman Sachs this week announced it has set aside $1.45 billion for legal expenses for the second quarter of 2015, bringing its total anticipated legal costs so far to $5.9 billion to settle Department of Justice claims stemming from the sale of vintage non-agency MBS. A good chunk of that figure – $270 million – is expected to be tapped to resolve residential MBS litigation brought by pension funds led by NECA-IBEW Health & Welfare Fund of Illinois ...

July 31, 2015 - Inside MBS & ABS

No Hint of 2015 Interest Rate Increase in FOMC’s Latest Statement; Most Pros Still Expect a Move

The Federal Reserve’s Open Market Committee this week concluded its 53rd consecutive meeting without raising interest rates, issuing a statement that provided no hint whatsoever that such an increase would occur this year, notwithstanding previous commentary and the wishes of many on Wall Street. “To support continued progress toward maximum employment and price stability, the committee today reaffirmed its view that the current 0 to 0.25 percent target range for the federal funds rate remains appropriate,” said the Fed in its now-boilerplate language. In determining how long to maintain this target range, the FOMC said...

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 Nonconforming Markets

Hatteras Plans to Issue Jumbo MBS by Year-End

Hatteras Financial has ramped up its efforts to acquire jumbo mortgages and plans to issue a jumbo mortgage-backed security before the end of the year, according to officials at the real estate investment trust. “Our portfolio plus commitments of jumbo [adjustable-rate mortgages] today is estimated to be about $258 million, so we’re making progress and nearing scale where we can consider securitization,” Benjamin Hough, Hatteras’ president and COO, said this week ...

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

An Investment to Avoid: Mortgage REITs. But Is it Really That Bad? Some Believe the Sector May Be Oversold

With bond prices expected to fall further and interest rates headed north, analysts who cover mortgage-investing real estate investment trusts are sharpening their knives on the sector. The general consensus is that share prices are going nowhere fast and returns are no longer attractive. A new report on mortgage REITs from Keefe, Bruyette & Woods doesn’t mince words: “Sentiment on the mREIT sector remains pretty poor, and we don’t anticipate 2Q15 results to do much to improve that. We’re not expecting a horrible quarter, but we anticipate slight disappointment along more or less all relevant dimensions.” Although many mortgage REITs have yet to report second-quarter earnings, the early expectations are...

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 23, 2015 - Inside Mortgage Finance

AIG to Issue $300 Million in Mortgage Bonds Backed by Policies Written by United Guaranty

American International Group is reportedly bringing to market $300 million in securitized notes backed by mortgage insurance written by its private MI subsidiary United Guaranty Corp., but the global insurance company is playing it close to the vest. AIG and United Guaranty are keeping details of the risk-transfer transaction under wraps and a spokesperson for UG declined to comment. Credit Suisse is the seller of the notes. Citing company marketing documents, Bloomberg reported...

July 23, 2015 - Inside Mortgage Finance

A Sign of Looser Credit: Nonbanks Make Mortgages To Foreclosed Borrowers, Sell the Loans to Banks

A handful of nonbank lenders are stepping up to the plate, offering mortgages to borrowers who are just one day removed from a foreclosure or short sale. But there’s a catch: many of the lenders willing to extend such credit want at least 20 percent down. Also, as it turns out, the trend is being funded by commercial banks that are serving as the end investors in the product. Two banks – one in California and one in New York – were identified...

July 23, 2015 - Inside Mortgage Finance

M&A Roundup: More MSR Deals Hit the Market; Sale Of RoundPoint Mortgage Uncertain; Deal or No Deal?

Several large servicing portfolios of $1 billion or more hit the market in the past few weeks, but dealmakers and investors continue to wonder about the largest prize of them all: RoundPoint Mortgage, Charlotte, NC, which owns roughly $52.18 billion of receivables and ranks among the top 25. Investment banking officials who claim to have knowledge of the RoundPoint situation maintain that its owner, The Tavistock Group, is hell-bent on selling the nonbank, but as far as coming to final terms with a buyer, any buyer, that’s a different matter. It’s...


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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