MBS Investors

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

April 29, 2016 - Inside MBS & ABS

Taco Bell Offers $2.1 Billion Whole-Business Securitization; $7.5 Billion Projected in 2015

Structured finance investors don’t have much of an appetite for new non-agency MBS, but they appear to be hungry for fast-food business securitizations. Taco Bell is the latest firm to enter the market, offering a $2.10 billion securitization. The planned Taco Bell Funding LLC Series 2016-1 received preliminary BBB ratings from Standard & Poor’s late last week. It’s the second whole-business securitization to price this year, following a $575.0 million deal involving Sonic Drive-In that also priced in April. The Taco Bell securitization is backed...

April 22, 2016 - Inside Nonconforming Markets

Non-Agency MBS Investors Seen as Fickle

New reports suggest that government-backed mortgage markets provide better stability for the economy, while investors in non-agency mortgage-backed securities were faulted for abandoning the market after the start of the financial crisis. A paper published last week by economists at the Federal Reserve found that areas with high levels of participation from the government-sponsored enterprises and FHA had relatively lower unemployment rates, higher home sales ...

April 22, 2016 - Inside Nonconforming Markets

TRID Issues Persist in Non-Agency Market; New MBS Avoids Liability Altogether

Relatively strong pricing for a jumbo mortgage-backed security issued at the end of March appears to have done little thus far to open the spigot for deals that include loans subject to the TRID mortgage disclosure rule. The $331.95 million Agate Bay Mortgage Trust 2016-2 was issued by Two Harbors Investment at the end of March. The deal included 43 mortgages subject to TRID, many of which had initial compliance exceptions. Analysts at Interactive Data said ...

April 22, 2016 - Inside MBS & ABS

Nation’s Largest MBS Investing REIT About to Expand Into MSR Market With Purchase of Pingora

Pingora Asset Management, one of the largest investors in “flow” mortgage servicing rights arrangements, is about to become the property of the nation’s largest real estate investment trust focused on the MBS market, Annaly Capital Management, New York. The purchase of Pingora’s parent, Hatteras Financial, Winston-Salem, NC – a deal valued at $1.5 billion – was unveiled last week, but one important facet regarding Hatteras garnered little in the way of press attention: that it just happens to own Pingora, which at last check laid claim to roughly $76 billion in MSR assets. However, not all of the servicing rights will become...

April 22, 2016 - Inside MBS & ABS

Velocity to Issue Non-Agency MBS Backed by Residential and Commercial Investment Properties

A lender that focuses on investment properties is preparing to issue a non-agency MBS backed by adjustable-rate mortgages on residential and commercial properties. The deal shares some characteristics with non-agency MBS backed by new loans, but it’s different in a lot of ways. The planned $358.60 million Velocity Commercial Capital 2016-1 received provisional AAA ratings this week from Kroll Bond Rating Agency. Residential properties account for 55.3 percent of the collateral, with small commercial properties making up the rest. All of the mortgages backing the planned MBS are for investment properties. Velocity Commercial Capital issued...

April 22, 2016 - Inside MBS & ABS

Agency MBS Trading Hits Low for the Year; Is Liquidity an Issue or Is This the ‘New Normal’?

The average daily trading volume in agency MBS fell to $189.4 billion in March, the lowest reading of the year, and a sign that liquidity may still be an issue, depending on which seat you’re in. According to figures compiled by the Securities Industry and Financial Markets Association, the trading numbers for 2016, so far, haven’t exactly lit the world on fire. In January and February, the readings were $195.1 billion and $201.4 billion, respectively. Last year, the best reading was...

April 21, 2016 - Inside Mortgage Finance

Servicing ‘Marks’ Vary Among the Megabanks in a Wild And Wooly 1Q16; BofA Values its MSR Asset at Just 58 BPs

When interest rates take an unexpected dive – as they did in the first quarter – it can wreak havoc on servicing assets as banks and nonbanks try to calculate a fair market value for their residential receivables. According to interviews conducted by Inside Mortgage Finance and based on a compilation of values by Piper Jaffray, certain megabanks assigned some of the lowest values in years to their portfolios during the first quarter of this year. Bank of America, for instance, which usually ranks third among all servicers, assigned...[Includes one data table]

April 21, 2016 - Inside Mortgage Finance

The TRID Drama Continues: Buyer Exits Jumbo Space; Industry Loses Hope on ‘Official Guidance’

For mortgage bankers, it was another trying week in TRID purgatory: A mid-sized nonbank exited the correspondent jumbo market because of concerns over legal liability and separately it appeared industry trade groups have given up hope that the Consumer Financial Protection Bureau will issue any type of formal guidance on cures. Meanwhile, the TRID scratch-and-dent market continues to hum along and the consumer watchdog agency has begun examining residential lenders for compliance with the integrated disclosure rule. “TRID exams have commenced...

April 18, 2016 - Inside the CFPB

GSE Credit-Risk Transfers Face Incremental Losses from TRID

Fannie Mae and Freddie Mac are not conducting loan-level reviews for compliance with the CFPB’s integrated disclosure, and that threatens investors in the pair’s future credit-risk transfer transactions with the possibility of some modest losses because of lender compliance violations, according to a recent report from Moody’s Investor Service. “We expect overall losses on these transactions owing to TRID violations to be fairly small, despite our expectations that the frequency of violations will be high, at least initially,” analysts at the rating service said. “Furthermore, lender representations and warranties and the government-sponsored enterprises’ ability to remove defective loans from the transactions will likely mitigate some of these losses.” Damages for TRID violations are less significant for a securitization transaction compared ...

April 18, 2016 - Inside the CFPB

Kroll May Not Rate Non-Agency MBS Subject to TRID Rule, For Now

Kroll Bond Rating Agency warned recently that it might refuse to rate certain non-agency mortgage- backed securities subject to the TRID mortgage disclosure rule until the CFPB issues formal guidance. The rating service said it’s currently unclear whether certain corrections of errors under the bureau’s integrated disclosure rule will subject non-agency MBS investors to assignee liability. This is an issue that the Structured Finance Industry Group continues to work on, with SFIG also stressing that formal guidance from the CFPB is necessary. “In instances where these violations go un-corrected by an originator, KBRA believes the risks associated with TRID-eligible loans, in material concentration, become more significant and that KBRA may consider additional credit enhancement, applying a rating cap, or declining ...

April 15, 2016 - Inside MBS & ABS

Big Merger of Mortgage REITs May Signal More Deals Are on the Way; Linked Firms May Be Top Candidates

The nation’s largest MBS-investing real estate investment trust, Annaly Capital Management, this week agreed to buy the third largest player in the market, setting off speculation among analysts and investors that the “mREIT” sector could be in for a healthy dose of consolidation. The New York-based Annaly said it would buy Hatteras Financial Corp., Winston-Salem, NC, for roughly $1.5 billion in cash and stock. At year end, Annaly ranked...

April 14, 2016 - Inside Mortgage Finance

Next Up for the Blackstone Group and Finance of America: Non-QM Investing. How Big Can It Get?

Over the past year, The Blackstone Group has been aggressively expanding into many facets of the mortgage business and is now ready to make what might be considered a bold move: investing and originating in residential loans that don’t meet the qualified-mortgage test. But just how big might Blackstone get? That’s hard to say at this point. A source inside the company, who spoke under the condition his name not be used, confirmed...

April 14, 2016 - Inside Mortgage Finance

New Disclosures by PHH Cast Doubt on Salability of the Nonbank Mortgage Giant

Over the past two years, PHH Corp. has lost $64 million on its mortgage business and now that Merrill Lynch has given notice that it wants to end some of its private-label contracts with PHH Mortgage, the nonbank’s future is beginning to look cloudier. Moreover, analysts and investors who follow the company wonder whether PHH’s private-label model – the bread and butter of its origination business – is fixable in the modern era of mortgage banking. Meanwhile, all of this is happening at a time when management hopes to sell the company, or at least field offers for some of its key assets, including a $226 billion servicing portfolio. The bad news for PHH started...

April 8, 2016 - Inside FHA/VA Lending

GNMA Market Slumped in 1Q16, But Monthly Data Show Rebound

Ginnie Mae issued $93.41 billion of single-family mortgage-backed securities during the first three months of 2016, an 8.6 percent drop from the previous quarter, according to a new Inside FHA/VA Lending analysis of loan-level MBS data, excluding FHA reverse-mortgage activity. Early 2016 was the slowest market in a year for Ginnie MBS production, though it still was stronger than most of the agency’s pre-2015 business. And issuance in the first quarter of 2016 was 17.0 percent ahead of the volume produced during the same period last year. The soft spot in the first quarter was FHA lending, especially purchase-mortgage activity. Issuers delivered $54.44 billion of FHA loans into Ginnie MBS during the period, a 12.1 percent drop from the fourth quarter, including a 15.0 percent decline in FHA purchase mortgages. Securitization of VA loans fell by a ... [4 charts].

April 8, 2016 - Inside Nonconforming Markets

Four Prime Non-Agency MBS Issued in 1Q16, Led by Two Unprecedented Deals

The volume of prime non-agency mortgage-backed securities issued in the first quarter of 2016 reveals little about how the market is functioning, according to a new analysis and ranking by Inside Nonconforming Markets. Some $2.92 billion in prime non-agency MBS was issued in the first quarter of 2016, a 61.3 percent increase from the previous quarter but a 36.4 percent decline compared with the first quarter of 2015. Only four prime ... [Includes one data chart]

April 8, 2016 - Inside MBS & ABS

Blackstone Group May Take Its SFR Platform, Invitation Homes, Public

The Blackstone Group, which has several investments in mortgage finance and real estate, is contemplating taking its single-family rental business public. It’s just a matter of when. Late this week, a Blackstone media official declined to discuss the topic of an initial public offering of its SFR business, which was first reported by The Financial Times and mentioned in an investor note from Compass Point Research & Trading. The IPO has...

April 8, 2016 - Inside MBS & ABS

CA AG Sues Morgan Stanley Alleging False Claims, Securities Violations; Countrywide Payout is Closer

Litigation over legacy residential MBS deals that went sour in the run-up to the financial crisis continued last week, as California Attorney General Kamala Harris sued investment bank Morgan Stanley for alleged misrepresentations about RMBS investments, which she said contributed to huge losses by investors such as the state’s public pension funds. In what is just the second such use of the False Claims Act by a state, Harris’ complaint, filed in San Francisco Superior Court, alleges that Morgan Stanley violated the FCA, as well as California securities law and other state laws, by allegedly hiding or downplaying the risks of complex investments involving large numbers of underlying loans or other assets. Harris used...

April 8, 2016 - Inside MBS & ABS

MBS Investors Ask for Action from CFPB as TRID Is Seen as ‘Chilling’ Investment in the Mortgage Market

The Association of Mortgage Investors last week urged the Consumer Financial Protection Bureau to address ongoing issues raised by the so-called TRID mortgage disclosure rule. “The recent evidence is that the rule, while extremely well-intentioned, has resulted in a climate of legal uncertainty and is chilling private investment in the U.S. mortgage market,” Chris Katopis, executive director of the AMI, wrote to CFPB Director Richard Cordray. The rule took effect...

April 4, 2016 - Inside the CFPB

Want TRID Compliance? First Meet These 150 Requirements

A single mortgage would have to meet nearly 150 requirements to achieve compliance with the TRID integrated disclosure rule, according to a framework proposed last week by members of the Structured Finance Industry Group. Third-party due diligence firms will test loans for most of the rule’s requirements, according to a draft of the TRID compliance “review scope” obtained by Inside Nonconforming Markets, an affiliated publication. Since the integrated disclosure rule took effect in October, due diligence firms have found widespread violations on non-agency mortgages, limiting sales of loans with violations due to liability concerns. The SFIG proposal suggests that many of the TRID compliance violations could be cured after being uncovered by a due diligence firm, but violations of about ...

April 4, 2016 - Inside the CFPB

Investors Warn the CFPB About Chilling Effect of the TRID Rule

The Association of Mortgage Investors wrote to the CFPB last week for guidance on the integrated disclosure rule known as TRID, warning that the marketplace woes stemming from the new rule may extend to the conforming mortgage loan market. “The recent evidence is that the rule, while extremely well-intentioned, has resulted in a climate of legal uncertainty and is chilling private investment in the U.S. mortgage market,” said Chris Katopis, executive director of the AMI. Further, “We urge the bureau to open a new public comment period to address the concerns of mortgage investors,” he added. “We seek formal written guidance clarifying the liability for a violation of each individual TRID requirement, as well as the scope and applicability of ...

March 25, 2016 - Inside FHA/VA Lending

VA Jumbo Securitization Rises in 2015 Despite 4th Quarter Decline

Ginnie Mae securitization of jumbo mortgage loans with a VA guaranty rose significantly in 2015 despite a volume drop-off in the fourth quarter, according to Inside FHA/VA Lending’s analysis of agency data. Year-over-year results saw an almost 60 percent increase in Ginnie Mae mortgage securitization backed by VA jumbo loans. This was slightly dampened by 17.1 percent drop in VA MBS production in the fourth quarter from the previous quarter. All top-five VA jumbo securitizers – Wells Fargo, Freedom Mortgage Corp., PennyMac Corp., U.S. Bank, and Quicken Loans – reported significant drops quarter-over-quarter and year-over-year. Wells Fargo delivered a total of $5.0 billion in VA jumbo loans into Ginnie pools, making it the leading jumbo securitizer in that segment. This accounted for 17.7 percent of the market. Freedom Mortgage ended the year with $2.1 billion in ... [ Charts ]

March 25, 2016 - Inside Nonconforming Markets

News Briefs

CORRECTION: An update to a story in the March 11 issue of Inside Nonconforming Markets with the headline “Banks’ First-Lien Holdings Increase in 2015” is available at http://www.insidemortgagefinance.com. The story and accompanying ranking were revised because the ranking initially showed numbers from the second quarter of 2015 for the fourth quarter of 2014. Five Oaks Investment said it recently determined ... [Includes five briefs]

March 25, 2016 - Inside Nonconforming Markets

Jumbo MBS Remains Attractive, for Some

Issuance in the jumbo mortgage-backed securities market has nearly stopped in the first quarter of 2016, but not all issuers are ready to abandon the sector. “The securitization market has been slow to re-open but there’s a lot of optionality to that business to the extent that the banks’ lust for mortgages on their balance sheets changes in different interest rate environments,” said William Roth, CIO of Two Harbors Investment. “The ability for us to grow that business dramatically is there ...

March 25, 2016 - Inside MBS & ABS

When in Doubt, Buy Agency MBS. Bond Prices Continue to Rise in Wake of Bombings in Europe; Liquidity Improves

The average daily trading volume in agency MBS climbed to $201.4 billion in February, the best reading in nine months and a sign that investors will still flock to government-backed products in times of uncertainty, especially extreme uncertainty. Late this week, market watchers expressed their concerns about the terrorist bombings in Belgium as well as continued worries about China’s slowing economy and sagging oil prices. In short order, they piled into MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae. Barry Habib, who runs MBS Highway, a rate-lock service, told...

March 25, 2016 - Inside MBS & ABS

Payments on a Re-Performing Non-Agency MBS from Credit Suisse Misdirected Due to Reporting, Communication Issues

Payments were improperly allocated among tranches of a $644.12 million non-agency MBS issued in November 2014 for about a year before being addressed, according to the firms that placed ratings on the deal. RPMLT 2014-1 Trust was issued by Credit Suisse’s DLJ Mortgage Capital and backed by re-performing mortgages. The payment problems appear to be tied to improper reporting by Rushmore Loan Management Services, the servicer of the MBS, and Wells Fargo Bank, the securities administrator for the deal. Fitch Ratings said...

March 25, 2016 - Inside MBS & ABS

Watt Says New GSE High-LTV Refinance Program Will Not Be an Option for Existing HARP Borrowers

The new refinance program being developed for Fannie Mae and Freddie Mac borrowers with high loan-to-value ratios will not be available for homeowners who have already used the Home Affordable Refinance Program, according to the regulator of the two government-sponsored enterprises. The Federal Housing Finance Agency this year directed Fannie and Freddie to develop a replacement program for HARP, which will sunset at the end of 2016. MBS investors have been concerned...[Includes one data table]

March 25, 2016 - Inside MBS & ABS

Due Diligence Firms Working to Standardize Reviews for TRID Compliance, Helping Non-Agency MBS Issuance

Due diligence firms led an effort to issue a draft proposal late last week that would establish a standardized approach for reviewing compliance with the TRID mortgage-disclosure rule. The effort organized by the Structured Finance Industry Group was met with praise by industry participants. “The draft proposal represents a significant step forward for developing an industry standard treatment of errors related to the new residential mortgage disclosure requirements,” Fitch Ratings said. TRID is industry shorthand for a new integrated disclosure rule that covers requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act. Third-party due diligence providers have identified...

March 18, 2016 - Inside MBS & ABS

Issuers Cite Difficulties and Delays to Issuance Due to Reg AB2; Investors Appreciate Enhanced Protections

Issuers of publicly-registered ABS are adjusting to so-called Regulation AB2 requirements established by the Securities and Exchange Commission, but observers say the pro-investor rules have increased issuer costs and slowed issuance. One of the biggest challenges for issuers from Reg AB2 has been the requirement for an asset-representations reviewer. The rule requires publicly-registered MBS and ABS to include an asset-representation reviewer whose work can be triggered by a certain level of delinquent assets in a pool or by an investor vote. Susan Thomas, the associate general counsel of Ford Motor Credit Company, said...

March 18, 2016 - Inside MBS & ABS

‘Marketplace’ Lender SoFi is Exploring Its Options in the Secondary Mortgage Market, Including a REIT Structure

Social Finance, the fledgling “marketplace” lender, is funding enough home mortgages on a monthly basis that it’s now scouting for opportunities in the secondary market, according to lending officials who have met with the firm’s management team. Among the options being considered is raising money to form a real estate investment trust, a vehicle that would provide a balance sheet where whole loans could reside. However, it’s unclear at this point if Social Finance, or “SoFi” as it is known, has any plans for securitizing residential product. Company officials including Michael Tannenbaum, who serves as vice president of mortgages for the startup, and William Jarve, in the firm’s capital markets group, declined...

March 18, 2016 - Inside MBS & ABS

MBS Outstanding Balance Continued Creeping Higher in Late 2015, No Shortage of Investors

After starting 2015 with a net decline in supply of outstanding single-family mortgage securities, the market began to rally and ended the year with a modest gain. A new analysis by Inside MBS & ABS reveals that total residential MBS in the market reached $6.412 trillion at the end of last year, an 0.5 percent increase from the third quarter and up 1.0 percent from yearend 2014. The growing supply of residential MBS slightly outpaced the 0.3 percent increase in home mortgage debt outstanding, resulting in a 64.2 percent securitization rate in the fourth quarter. There are...[Includes two data tables]


Does your lending shop have any plans to make non-jumbo, non-QM loans this year? These would be loans similar to "Alt A" and subprime products made BEFORE standards were loosened severely in the 2004 to 2007 era.





It’s under consideration, maybe by 3Q or 4Q.


We were going to until the TRID "error" mess hit.


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