MBS Investors
Browse articles from all of our Newsletters related to MBS Investors.
May 23, 2013 - Inside Mortgage Finance
CashCall Chief Says He’s Open to a Deal, Are Other Call Center Lenders Eyeing the Exit?
Mortgage lenders that specialize in refinance lending have made a killing the past few years, especially call center operations with state-of-the-art technology. But is now the time for these firms to take their chips off the table or ponder a merger with more traditional lenders that have ties to real estate brokers and homebuilders? Paul Reddam, founder and president of CashCall, a top 30 lender, told Inside Mortgage Finance that he would be open to selling the company. “We would entertain an offer at any time,” said Reddam, who first made a name for himself in mortgages with Ditech Lending early last decade. Reddam noted...
May 17, 2013 - Inside Nonconforming Markets
GSEs Set to Sell Some Non-Agency MBS Holdings
After years of holding onto investments in non-agency mortgage-backed securities even as prices declined significantly, the government-sponsored enterprises are preparing to sell some of their $101.5 billion in non-agency MBS holdings. Freddie Mac is offering $1.0 billion in non-agency MBS for sale with plans to unload as much as $5.0 billion this year, if pricing for the securities remains strong. A spokesman for the GSE said the sales are part of an effort to meet goals set by ... [Includes one data chart]
May 17, 2013 - Inside Nonconforming Markets
Strong Returns from Subordinate Tranches of MBS
Investors in subordinate tranches of recently issued non-agency jumbo mortgage-backed securities have seen strong returns on the investments. Real estate investment trusts have focused on the assets, which are likely to be subject to risk-retention requirements going forward. “We like the loan assets and the ability to diversify our funding in this manner where we don’t have a duration gap, there is no margin risk, and the assets and liabilities amortize and prepay at the same rate, eliminating the need for ...
May 17, 2013 - Inside Nonconforming Markets
Disclosure Sought for MBS Rating Shopping
Issuers of non-agency mortgage-backed securities should disclose when they seek a rating from a firm and ultimately decide not to hire the firm, according to a variety of non-agency participants. “If one rating is 7 percent subordination and the other is 15 percent, we don’t need to accept the 15 percent subordination, but we do need to disclose the 15 percent subordination opinion to investors,” Martin Hughes, CEO of Redwood Trust, said this week at a roundtable hosted by the Securities and Exchange Commission ...
May 17, 2013 - Inside Nonconforming Markets
Separate R&W Regimes Possible for Jumbo MBS
Although Redwood Trust’s soup-to-nuts approach to representations and warranties has dominated the fledgling recovery in jumbo mortgage-backed securities issuance, some experts think a shorter term alternative may gain popularity among issuers. It’s important for investors and rating services to anticipate putbacks in jumbo MBS, Peter Sack, a managing director at Credit Suisse, said during a panel session at the recent secondary market conference sponsored by the Mortgage Bankers Association ...
May 17, 2013 - Inside MBS & ABS
REITs See Modest Decline in MBS Holdings in 2013, Officials Look Forward to Sector’s Modernization
Real estate investment trusts that specialize in the MBS market saw another decline in the industry’s aggregate holdings during the first quarter, although the trends varied considerably among different institutions, according to a new Inside MBS & ABS analysis of REIT earnings reports. A group of 16 publicly traded mortgage REITs held a combined portfolio of $345.9 billion of MBS as of the end of March, down 3.8 percent from the previous quarter. That was still 16.3 percent higher than year-ago levels, but REIT MBS holdings peaked in the third quarter of last year, just as the Federal Reserve launched the third round of its quantitative easing program. The vast majority of REIT mortgage securities holdings, 95.4 percent, were...[Includes one data chart]
May 10, 2013 - Inside Mortgage Trends
Investor Rental Recovery Has New Beneficiaries
One of the things that is unusual about this housing recovery is the extent to which it has been supported by investors – and not just individuals looking for rental property. Institutional investors have jumped into the rental home market in a way not seen before, and that is benefitting some industries you might not expect, or in ways you may not have anticipated. “In traditional housing recoveries, individuals and households provide the bulk of the demand the market needs to rebound,” said ...
May 10, 2013 - Inside MBS & ABS
Although the Jumbo MBS Market is Picking Up Steam, Pitfalls Await Including Rising Swap Prices
As more firms contemplate issuing jumbo MBS, there are growing concerns that there could be a few speed bumps along the way, namely rising whole loan prices, and an increase in the cost of money for investors that use swaps to fund their purchases of the AAA-rated tranches. The increase in whole loan prices is less of a concern, because it was somewhat anticipated given the “hot” nature of the market. Over the past few months, prices for jumbo whole loans have risen to as high as 103, compared to 101 and 102 last year. Craig Cole, a jumbo consultant and a former top production manager at Union Bank, San Francisco, told...
May 10, 2013 - Inside MBS & ABS
Spreads Widened as Supply of New Non-Agency MBS Coming to Market Has Outpaced Demand
Officials at Redwood Trust suggest that the change in pricing for AAA tranches on new non-agency MBS in recent months has been driven by supply and demand, not concerns about the quality of issuance. “The market had come too far, too fast, and the supply and demand imbalance initiated a correction,” Redwood said. The premium on Redwood’s latest transaction was about 1.75 percentage points above an interest rate benchmark, resulting in a 2.59 percent premium for investors. Redwood said deals it issued in January sold with premiums as low as 97 basis points with yields of less than 200 bps for investors. The real estate investment trust said...
May 10, 2013 - Inside MBS & ABS
Number of Interests Jockey for Position In Coming GSE Risk-Sharing Derby
There appeared to be considerable enthusiasm at the Mortgage Bankers Association secondary market conference this week about the highly anticipated risk-sharing experiments by the government-sponsored enterprises – and some lobbying about the most suitable structures and participants. The first transaction is likely to be a senior-subordinate structure and be issued as a credit-linked note, rather than a conventional cash securitization, said Richard King, chief executive officer of Invesco Mortgage Capital. He said the deal will likely be syndicated...
May 3, 2013 - Inside FHA Lending
HUD Closes Offices, Restructures Multifamily Hubs
The Department of Housing and Urban Development has announced plans to consolidate multifamily hubs nationwide and close a number of its smaller field offices. The plan would result in an estimated $61.9 million in annual costs savings for HUD after completion and affect approximately 900 of the department’s 9,300 employees. No employee will be laid off as a result of the restructuring, according to HUD Secretary Shaun Donovan. Donovan said the changes are part of a broader, long-term effort that will allow HUD to continue to deliver high-quality services by adapting modern best practices. The decision to ...
May 3, 2013 - Inside FHA Lending
ASF Calls for Reduced FHA/GSE Loan Limits
Wall Street has unveiled policy proposals calling for premium and guaranty fee adjustments and reduced loan limits for FHA and the government-sponsored enterprises to jump start the return of private capital to the U.S. housing market. The American Securitization Forum said the current level of government activity in the mortgage market is neither sustainable nor advisable. The government, through FHA, Fannie Mae and Freddie Mac, directly or indirectly guarantees 90 to 95 percent of new mortgage originations in the country, the trade association said. While everyone agrees the government’s role in housing should be reduced over the long term, there is ...
May 3, 2013 - Inside FHA Lending
HUD Issues Detailed Guidance on LI Final Rule
The Department of Housing and Urban Development this week issued more detailed guidance to changes in the FHA Lender Insurance Program based on a final rule published in the Federal Register in January 2012. Under the LI program, high-performing direct endorsement lenders have the authority to conduct pre-endorsement reviews and endorse loans. Mortgagee Letter 2013-12 supersedes guidance HUD issued last month and provides additional details on initial and continuing eligibility for Lender Insurance. It also talks about HUD monitoring of program participants as well indemnification procedures, which were discussed in ...
May 3, 2013 - Inside Nonconforming Markets
Investor Demands Key to Non-Agency Activity
“It’s not a money problem, there’s plenty of money out there,” Martin Hughes, president and CEO of Redwood Trust, said last week at a hearing by the House Financial Services Committee. “The difficulty now is the uncertainty of investors that need to be waved back into the water.” Hughes said non-agency mortgage-backed security issuers need to make adjustments for investors. “I believe we need to first address investors’ demands for better risk mitigation, transparency, and alignment of interests ...
May 3, 2013 - Inside MBS & ABS
Despite Concerns, Repos Continue to be a Good Funding Source for MBS, Other Asset Classes
Repurchase agreements remain an important source of funding for agency MBS, collateralized mortgage obligations and other asset classes despite continued concerns about liquidity and regulatory risks, according to a Fitch Ratings analysis. As of March 2013, an estimated $1.83 million in assets were financed by the U.S. tri-party repurchase market, according to Fitch analysts Martin Hansen, Robert Grossman and Kevin D’Albert. The analysts noted...
May 3, 2013 - Inside MBS & ABS
Servicer Advance Securitization Is Growing, But Unconventional Features Seen as Risky for Investors
Issuance of securities backed by servicer advance receivables has increased significantly recently and is expected to continue to grow, fueled by nonbank servicers and demand from investors. However, analysts at Standard & Poor’s warn that servicers are increasing their use of unconventional features and product types, which could increase risks for investors. S&P rated $7.8 billion in servicer advance securities from the second quarter of 2012 through the end of the first quarter of 2013, up from $7.7 billion from the two-year period ending in the first quarter of 2012. S&P said issuance is expected to increase as more and more servicing assets trade hands and servicers use securitization to fund their collateral acquisitions. Recent issuance has been driven...
May 3, 2013 - Inside MBS & ABS
S&P Settles Ratings Fraud Lawsuit to Avoid Trial, Loses Bid to Move CT Case to Federal Court
Standard & Poor’s, along with Moody’s Investors Service, last week settled a lawsuit involving their pre-financial crisis securities ratings before it got to a jury trial, but S&P suffered a setback with another ratings challenge lawsuit brought by Connecticut state officials. Experts predict a pickup in MBS litigation ahead of pending filing deadlines for legal challenges. S&P and Moody’s reached the confidential settlement with a group of 14 plantiffs led by Abu Dhabi Commercial Bank and King County, WA. Abu Dhabi and the over investors filed suit in 2008 and 2009 in Manhattan federal court claiming that the defendants misled them by allegedly inflating ratings on two structured investment vehicles they purchased. By settling the investors’ lawsuit, which claimed $638 million in losses, S&P and Moody’s were able...
May 2, 2013 - Inside Mortgage Finance
Nonbanks Continue Assault on Mortgage Servicing Market, Three Claim Top-10 Rankings in Early 2013
Nonbank mortgage servicers continued surging into the top ranks of servicers during early 2013, more than doubling the size of their stake in the market compared to a year ago, according to a new market analysis and ranking by Inside Mortgage Finance. The seven largest nonbank servicers accounted for $1.40 trillion in mortgage servicing at the end of the first quarter, an increase of 68.9 percent in just three months. Compared to a year ago, the combined portfolio of these companies was up 144.3 percent. Ocwen Financial rose...[Includes one data chart]
April 26, 2013 - Inside Mortgage Trends
Owner-Occupants Driving Home Price Increases
Owner-occupants are driving increases in home prices and purchase activity, not institutional investors, according to Oliver Chang. The somewhat surprising conclusions from the founder and managing director of Sylvan Road Capital suggest that institutional investors are “along for the ride,” not propelling the current housing recovery. “The housing recovery appears to be broad-based and here to stay, although not because of the entrance of institutional investors into the space,” Chang said. He completed...
April 26, 2013 - Inside Mortgage Trends
Agency REITs Warned of Interest Rate Risk
The Financial Stability Oversight Council issued a warning this week regarding the prolonged period of low interest rates, singling out real estate investment trusts that invest in agency mortgage-backed securities. “Agency REITs, a sector that how grown considerably in recent years, are highly exposed to a rise in interest rates,” said Trent Reasons, a senior policy advisor at the Treasury Department. An analysis of 16 REITs by Inside MBS & ABS, an affiliated publication, determined...
April 25, 2013 - Inside MBS & ABS
A Publicly Traded Mutual Fund is Buying Whole Loans, But Will it Securitize Them?
The Vertical Capital Income Fund is a publicly traded mutual fund whose stated goal is to buy whole loans from banks and nonbanks, providing an attractive yield to its investors. But will it ever get around to securitizing its holdings? For now, the answer to that question appears to be no, but it’s something the fund is looking into. “Let’s put it this way; we’ve discussed the possibility,” said Richard Mason, vice president of secondary marketing for the company. Part of Vertical’s problem is...
April 19, 2013 - Inside FHA Lending
GNMA Seeks Input on Future of Ginnie I & II
Ginnie Mae is seeking feedback from dealers, issuers and investors about whether to continue to maintain two separate mortgage-backed securities programs or to consolidate them under a single security. Comments are also being sought on other possible options. Bloomberg.com recently reported that Ginnie Mae sent out questionnaires to Wall Street broker-dealers for their input on the future of both the Ginnie Mae I and Ginnie Mae II MBS programs. The agency has been considering whether it should merge the programs for some time. The Ginnie Mae I single-issuer pool program with stringent pooling requirements began in ...
April 19, 2013 - Inside Nonconforming Markets
BofA Agrees to Record Non-Agency Settlement
Bank of America agreed this week to pay $500 million to settle lawsuits from investors in non-agency mortgage-backed securities issued by Countrywide Financial in 2005 through 2007. If it receives judicial approval, the settlement on about $15.0 billion in non-agency MBS will be the largest-ever non-agency MBS class-action recovery. “After five years of hard-fought litigation, this record-breaking recovery is a tremendous result for MBS investors misled by Countrywide and ...
April 18, 2013 - Inside Mortgage Finance
Wells Fargo Steps Up Plans to Sell MSRs, Unloads Big Reverse Package and Scouts for Project Manager
No one is suggesting that Wells Fargo will begin lopping off large chunks of its $1.9 trillion residential servicing portfolio in a fashion similar to what Bank of America has done the past two years, but clearly selling mortgage servicing rights is on its to-do list. The big question is how much Wells Fargo is willing to part with. The bank declined to discuss the matter with Inside Mortgage Finance, but confirmed that it seeks to hire what it calls a “project manager” to oversee the effort. A spokeswoman for Wells downplayed the significance of the hire, saying the person who eventually joins the staff will be a “non-executive.” At least four servicing professionals said...
April 12, 2013 - Inside The GSEs
Judges Reject Motions to Dismiss in Two GSE Suits
UBS Americas failed in its bid to shut down a lawsuit brought by the Federal Housing Finance Agency in connection with non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac, while in another case three former Freddie executives lost their own bid to dismiss a Securities and Exchange Commission securities fraud case against them. The Second Circuit Court of Appeals last week upheld a lower court’s ruling that denied UBS’ motion to dismiss the FHFA’s suit as time barred. In the summer of 2011, the FHFA filed 18 lawsuits in Manhattan federal court against UBS and other big banks on behalf of the GSEs, alleging violations of the federal Securities Act of 1933 for approximately $200 billion in non-agency MBS sold to Fannie and Freddie.
April 12, 2013 - Inside MBS & ABS
Regulatory Actions Seen as Perpetuating Dominance of Agency MBS Issuance
Decisions by federal regulators have combined to promote issuance of agency MBS over non-agency MBS, a trend that is expected to continue for years to come, according to industry analysts. Panelists at a talk this week sponsored by the American Enterprise Institute cited rules from the Consumer Financial Protection Bureau along with pending rules to set requirements for risk retention on MBS issuance and capital requirements for originations and securitization. “Until you know what the rules of the game are going to be...
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- Caliber Enters the Correspondent Channel, Taps PennyMac Executive
- Springleaf Readies Latest Non-Agency MBS, S&P Notes Lower Default Risk, Weak Enforcement Mechanism
- Home-Equity Market Still in Doldrums Despite Small Climb in Bank Unfunded Commitments
- No Private Right of Action Under HAMP, Appellate Court Rules
- What We’re Hearing: The Great GSE Preferred Stock Crapshoot / CBO Gives a Nod to Fannie and Freddie / The Buyback War is Not Over, Not By a Long Shot / Are Call Center Lenders In Play? / The QRM Rule May Get a Makeover / Goodman Going Part-Time at Amherst
