MBS Investors

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

December 12, 2014 - Inside MBS & ABS

San Francisco Puts Eminent-Domain Talks on Hold Pending Results of a Study of ‘Joint Powers Authority’

The City of San Francisco has delayed a proposed partnership with Richmond, CA, to use eminent-domain authority to forcibly acquire distressed mortgages out of non-agency securitization trusts, opting instead to study the impact of such an agreement as well as other alternatives to assist underwater homeowners. Opposition by the San Francisco City Controller and the mortgage banking industry has forced John Avalos, a member of the city’s Board of Supervisors, to scale back his partnership proposal. Avalos laid out...

December 12, 2014 - Inside MBS & ABS

Secondary Market Reps Discuss Reg AB II Concerns With SEC Officials, Work Projects Moving Forward

Structured Finance Industry Group staff and some investor members met recently with the Securities and Exchange Commission’s Office of Structured Finance to talk about the initial reaction that investors had to the final Regulation AB II rule. Among topics addressed were market trends, operational aspects and scope of applicability of the final rule, according to an update SFIG provided its members recently. Meanwhile, the SFIG is...

December 12, 2014 - Inside MBS & ABS

Treasury’s Office of Financial Research Voices Anxiety On Single-Family Rental Securitizations, REITs and Repos

By some measurements, the market for commercial MBS backed by single-family rental units has been successful, drawing investors from Wall Street, the hedge fund community and overseas. But that success, to some degree, is beginning to worry the Treasury Department’s Office of Financial Research. Moreover, the OFR also is expressing anxieties about mortgage real estate investment trusts and repurchase agreements. As of September 2014, roughly $5 billion of single-family rental MBS had been issued...

December 12, 2014 - Inside MBS & ABS

Mortgage REITs Report Decline in MBS Holdings During 3Q14; Analysts Not Ready to Give Up Yet

Naysayers have been predicting the demise of publicly traded mortgage real estate investment trusts for two years now and have been consistently disappointed. It’s hard to say whether things will be different this time around. According to figures compiled by Inside MBS & ABS, it appears that most REITs have been intentionally reducing their MBS holdings over the past several quarters, preparing for the day when bond prices finally fall. At Sept. 30, 16 publicly traded REITs held...[Includes one data chart]

December 5, 2014 - Inside FHA Lending

FHA to Share in Landmark BofA Settlement

The FHA and Ginnie Mae will share in the record-setting $16.7 billion settlement between Bank of America, the Department of Justice and certain other federal agencies and six states to resolve claims related to mortgage fraud and toxic mortgage-backed securities. The FHA will receive approximately $800 million and an undisclosed amount for consumer relief from BofA. The bank was accused of falsely certifying poorly underwritten loans for FHA insurance, resulting in huge losses for the agency. It is unclear how much Ginnie Mae’s share would be from the settlement. “As a direct endorser of FHA-insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta Lynch for the Eastern District of New York during the announcement of the global settlement in August. “In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not ...

December 5, 2014 - Inside Nonconforming Markets

Jumbo MBS Loses Allure for Chimera

Chimera Investment emerged from years of accounting issues with an ability to return to the new-issue jumbo mortgage-backed security market. However, the real estate investment trust has focused its new investment strategy on agency MBS as well as multifamily activity and a unique restructuring of vintage non-agency MBS. Matthew Lambiase, president and CEO of the real estate investment trust, said the returns offered by new jumbo MBS aren’t currently attractive. “The economics are ...

December 5, 2014 - Inside Nonconforming Markets

MBS Investors Eye Transferring Risk More Fairly

One of the chief concerns among some top institutional investors in the non-agency residential mortgage-backed securities market is coming up with a way to price the risks of poorly underwritten or serviced mortgages more effectively. The objective is to price deals so the costs associated with an origination or servicing failure will be more appropriately assigned to those responsible for the defect. During a recent industry conference, a managing director at ...

December 5, 2014 - Inside MBS & ABS

Multiple Negative Factors Contributing to Lack Of Demand Among Non-Agency RMBS Investors

Seven years after the financial crisis, market demand for non-agency residential MBS remains feeble, at best – mostly because of higher yields elsewhere, convexity risk concerns, bond liquidity and pricing and missing structural reforms, industry participants say. “Even with the modest amounts of RMBS issuance that we’re seeing, the market is still struggling to digest those securities. We saw that last year and in the beginning of this year. So the question is: what’s driving that lack of demand?” said Rui Pereira, managing director at Fitch Ratings, during a panel discussion at a residential MBS reform symposium sponsored by the Structured Finance Industry Group and Information Management Network in New York City last month. In advance of the public discussion, Pereira queried...

December 5, 2014 - Inside MBS & ABS

SFIG to FHFA: Implementation of Single GSE Security Should Proceed Ahead of Congress, Transparency a Must

The Federal Housing Finance Agency should not wait for Congressional reform and should instead move at a deliberate pace to implement a single government-sponsored enterprise MBS, according to the Structured Finance Industry Group. SFIG staff and several members met with FHFA officials this week to discuss the potential transition to a single, common security between Fannie Mae and Freddie Mac. In August, the FHFA proposed...

November 26, 2014 - Inside MBS & ABS

Court Victories for Homeowner Associations May Heighten Risk in Non-Agency MBS, Provide More Legal Clarity

Recent court rulings in Washington, DC, and Nevada allowed foreclosures brought by homeowner associations over unpaid dues to extinguish mortgage liens, increasing the risk of loss for investors in non-agency MBS and single-family rental securitizations, according to Moody’s Investors Service. Although both jurisdictions are relatively small in the grand scheme of things, other courts could adopt the same interpretations, the rating service said. Nevada has already seen some 1,000 similar cases, and more homeowner and condo associations are like to bring similar lawsuits. In Nevada, the court decided...

November 26, 2014 - Inside MBS & ABS

MBA: Regulatory Hurdles, No Single Dominant MBS Purchaser Mark Uncertain Secondary Market Future

In the wake of the Federal Reserve’s announced end to its multi-part quantitative easing program, look for private investors to face a number of challenges when it comes to increasing their share of the MBS market, concluded a white paper by the Mortgage Bankers Association. The MBA paper, issued late last week, noted there is no single player waiting in the wings able to pick up the slack when the Fed relinquishes its role as the dominant purchaser of agency MBS. “Many of the potential private investors face...

November 26, 2014 - Inside MBS & ABS

A Handful of Critical Impediments Block Return To Healthy U.S. RMBS Market, Sector Experts Say

The most significant blockages to the return of a healthy and sustainable non-agency residential MBS market in the United States are low volume issuance, regulation, weak AAA demand and missing structural reforms, according to top market professionals. “What’s holding back the recovery?” asked Rui Pereira, managing director at Fitch Ratings, during a panel discussion at a residential MBS reform symposium sponsored by the Structured Finance Industry Group and Information Management Network in New York City earlier this month. “Other sectors have rebounded and we’re starting to see new asset classes emerge. And yet, we’re seeing very little momentum in our market. So the question is, what’s stalling the RMBS recovery?” In the run-up to the discussion, Pereira polled...

November 26, 2014 - Inside MBS & ABS

Bank Holdings of Non-Mortgage ABS Spike Higher In 3Q14 as TD Bank Makes Big Buy in Card ABS

Bank and thrift holdings of non-mortgage ABS hit a record $184.16 billion at the end of September, according to a new Inside MBS & ABS ranking and analysis. That represented a significant 7.6 percent increase in bank ABS investment in just one quarter. But the sharp increase in industry holdings was fueled by a massive acquisition of credit card ABS by TD Bank, the U.S. operation of the Canadian-based Toronto-Dominion Bank. TD Bank reported...[Includes one data chart]

November 21, 2014 - Inside FHA Lending

GNMA Eyes Stronger Oversight of Nonbank Issuers

Ginnie Mae is seeking comment on several proposed data collections, including those that would strengthen the agency’s ability to monitor participants in its mortgage-backed securities programs. Due to its growing concern over the influx of non-depository issuers into the single-family MBS program, Ginnie has proposed to collect more loan-level data to supplement the information already being collected and reported on a monthly basis. The proposed data collection consists of bankruptcy-related information (action type, case identifier, chapter type, bar date) as well as borrower-related information (borrower bankruptcy indicator, classification type, total mortgaged properties, counseling initiated indicator and credit score date). Other proposed new data include document custodian ID, type of insurance claim coverage, investor unpaid principal balance (UPB), adjustment to ...

November 21, 2014 - Inside Nonconforming Markets

REITs Tout Non-Agency Benefit of FHLBanks

Prohibiting real estate investment trusts from joining the Federal Home Loan Bank system would hurt efforts to revive the non-agency market, according to two REITs that have gained access to FHLBank financing. Officials at both Two Harbors Investment and Redwood Trust said FHLBank advances helped the REITs fund originations of jumbo mortgages in the third quarter of 2014. Both companies recently gained access to FHLBank advances via captive insurance entities ...

November 21, 2014 - Inside Nonconforming Markets

SFIG Works on Due-Diligence Disclosure Issues

The latest “green papers” in the Structured Finance Industry Group’s RMBS 3.0 standards-setting project focus on due-diligence disclosures for investors in non-agency mortgage-backed securities. The SFIG noted that potential investors in non-agency MBS are particularly interested in findings conducted by third-party due-diligence firms before a security is issued. The SFIG proposed a model form that would disclose an “extract” of due-diligence findings to investors ...

November 21, 2014 - Inside Nonconforming Markets

MBS Investors Seek Protection, Transparency

As leading figures in the secondary market continue their efforts to reboot the non-agency mortgage-backed securities sector, attracting private capital remains the single most critical factor in the equation. However, during a recent industry conference, institutional investors made it clear that in order for them to return, the market’s infrastructure will need to provide stronger protections, enhanced transparency and an improved ability to respond when a deal starts to go sour ...

November 21, 2014 - Inside Nonconforming Markets

Treasury Sees Multiple Sponsors, SFIG Standards in ‘Benchmark’ Jumbo MBS

The benchmark non-agency mortgage-backed security that the Treasury Department is organizing will vary significantly from recent non-agency MBS. Michael Stegman, counselor on housing finance policy to the Treasury, revealed new details about the planned transaction last week in New York City at the Private-Label RMBS Symposium hosted by the Structured Finance Industry Group and Information Management Network. Stegman said the benchmark non-agency MBS will ideally be ...

November 21, 2014 - Inside MBS & ABS

Banks Report Modest Increase in MBS Holdings During 3Q14, Biggest Jump in Non-Agency MBS

Banks and thrifts held a combined $1.535 trillion of residential MBS at the end of September, a modest 0.6 percent increase from the previous quarter, according to a new Inside MBS & ABS analysis of bank call reports. Bank MBS holdings had spiked higher in the first quarter of this year, only to fall back in the following period. Compared to a year ago, the industry’s aggregate MBS portfolio was up 1.4 percent. Bank and thrift MBS holdings first crossed...[Includes two data charts]

November 14, 2014 - Inside MBS & ABS

Benchmark Transaction Could Integrate With RMBS 3.0 To Help Attract Private Capital, Treasury Official Says

A top Obama administration official told secondary market participants this week that the concept of a “benchmark transaction” could help the non-agency RMBS market overcome its feeble condition. Used in conjunction with the industry’s RMBS 3.0 project, such a mechanism could help clear away the rubble from the market’s collapse and attract big institutional investors that have largely refused to come back in from the sidelines. “The now widely recognized structural deficiencies in the legacy private-label securitizations that came to light during the financial crisis truly shattered the trust of market participants, with the result that almost seven years now after the collapse, this market is barely clinging to life,” said Michael Stegman, special counselor to the U.S Treasury for housing finance policy. “Concrete reforms are clearly needed to rebuild confidence and establish a resilient, sustainable architecture to bring back significant private capital to the U.S. housing market.” Stegman delivered...

November 13, 2014 - Inside Mortgage Finance

Arvest Working on MSR Sale with Subservicing Option; First Transaction in Quite Some Time

For several months now, Arvest Bank has been working on a roughly $28 billion servicing sale with a subservicing component extended to the eventual buyer, but so far a deal has been allusive, according to investment banking sources familiar with the situation. “From what I can tell, the package is still out there,” said one source who was briefed on the situation. Arvest Bank services...

November 13, 2014 - Inside Mortgage Finance

Mixed Results for Publicly Traded Nonbanks: Ocwen, Walter, PHH in the Dog House; PennyMac and Redwood Show Promise

Although residential lenders are coming off a better than expected production quarter – and enjoying a decent last three months of the year – analysts and investors seem undecided on whether there’s opportunity in the market or it’s time to stay on the sidelines. Several high profile publicly traded shops that are considered “high touch” specialists – Nationstar Mortgage, Ocwen Financial and Walter Investment – continue to trade at steep discounts to their 52-week highs with all three facing possible class-action lawsuits from angry investors who’ve seen billions of dollars in stock equity evaporate over the past year. And then there’s...

November 7, 2014 - Inside Nonconforming Markets

Chase Tops Bank Holders of Non-Agency MBS

JPMorgan Chase had the largest amount of holdings of non-agency mortgage-backed securities – by far – among banks and thrifts at the end of the second quarter of 2014, according to a new ranking and analysis by Inside Nonconforming Markets. Chase held $44.53 billion in non-agency MBS at the end of June, accounting for 34.5 percent of all non-agency MBS held by banks and thrifts. TD Bank, the second-ranked holder of non-agency MBS, had a ... [Includes one data chart]

November 7, 2014 - Inside Nonconforming Markets

Two Harbors Sees Promise in Non-Agency Lending

Two Harbors Investment is working to increase its non-agency conduit activity, launching a nonprime product along with a low-downpayment jumbo for high-quality borrowers. Officials at the real estate investment trust said Two Harbors also plans to be a regular issuer of non-agency mortgage-backed securities. “It has been clear to us for some time that the market has a need for products like this, and we are excited to be able to extend our reach as a capital provider to these segments ...

November 7, 2014 - Inside Nonconforming Markets

Strong Demand for Jumbo Originations From Both Banks and MBS Investors

Pricing for jumbo mortgage-backed securities has improved in recent months, prompting an increase in issuance from some firms, but bank demand remains robust. “Although the difference has narrowed, our whole-loan sale execution for most jumbo loans continues to be more attractive than our securitization execution as a result of strong demand from banks,” Brett Nicholas, president of Redwood Trust, said this week during a call with investors. In the third quarter of 2014, Redwood issued ...

November 7, 2014 - Inside MBS & ABS

Investors Optimistic About U.S. Economy, Expect No Big Changes in MBS, Housing Markets, Survey Finds

Professional money managers see the U.S. economy on a sounder footing over the next 12 months, with expectations of little or no gain among mortgage-related assets over the next year, according to a new Fitch Ratings survey of fixed-income investors. Opinions about the credit conditions of mortgage investment vehicles in the near term mostly focused on modest, rather than severe, deterioration. In this segment, investors were mostly optimistic about prime mortgage-backed bonds. Overall, the survey found...

November 7, 2014 - Inside MBS & ABS

Clean-Up Call Activity on Non-Agency MBS Increases, Ocwen Set to Issue More Calls

Servicers are increasingly executing their clean-up call options on vintage non-agency MBS, paying off investors at par and realizing profits by liquidating real estate owned properties. This year has been the most active year for clean-up calls on non-agency MBS since 2007, according to analysts at Bank of America Merrill Lynch. And that’s before the largest servicer of subprime MBS has taken any significant action on clean-up calls. In August, Ocwen Financial announced...


What will Fannie Mae’s and Freddie Mac’s new 97 LTV programs mean for your business?

It will give our business a big boost as there is a lot of pent up demand for the product.
It will have only a minor impact on our overall business as we already are doing high LTV business through FHA and some of our high LTV FHA business is likely to shift to Fannie and Freddie.
It won’t have any impact on our business as we plan to steer clear of all high LTV business – particularly in the GSE market.

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