MBS Investors

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

August 1, 2014 - Inside Nonconforming Markets

Two Harbors Set to Return to Jumbo MBS Issuance

Two Harbors Investment is preparing to issue a $267.67 million jumbo mortgage-backed security, according to a preliminary term sheet obtained by Inside Nonconforming Markets. The deal is scheduled to close Aug. 5, nearly a year after the only other jumbo MBS issued by Two Harbors. Agate Bay Mortgage Trust 2014-1 is backed by 30-year fixed-rate mortgages from a variety of lenders, led by RPM Mortgage with a 12.8 percent share, New York Community Bank ...


August 1, 2014 - Inside Nonconforming Markets

Plenty of Suggestions for Reform of Non- Agency Market; Revival a Long Way Off

Efforts to reform the non-agency market may be gathering momentum as the Structured Finance Industry Group is set to reveal its preliminary recommendations for changes to non-agency mortgage-backed securities and comments on the sector’s reform are due to the Treasury Department shortly. Industry participants have plenty of suggestions for how to fix the market, but any revival looks to be years away. On Aug. 4, the SFIG will release “green papers” as part of its Project RMBS 3.0 initiative ...


August 1, 2014 - Inside MBS & ABS

Non-Agency MBS Investors Continue to Complain About Loan Mods Provisions in Legal Settlements

A trade group representing non-agency MBS investors continues to raise concerns about settlements that give servicers credit for completing loan modifications on mortgages in non-agency MBS. Regulators and others counter that the settlements include protections for the investors, who ultimately benefit from loan mods completed under the settlements. The latest flare-up involves $4.0 billion in loss mitigation actions required of JPMorgan Chase under a recent settlement with federal and state regulators. Last week, the settlement’s monitor credited Chase with $6.31 million in consumer relief under the settlement, with 56 percent of the relief completed on Chase’s own holdings and the remainder completed on loans serviced for others, likely mortgages in non-agency MBS. The settlement prompted...


August 1, 2014 - Inside MBS & ABS

Commercial Mortgage REITs Show Promise As Long as Originations Continue to Improve

The immediate future is looking mostly bright for publicly-traded real estate investment trusts that toil in the commercial real estate sector – that is, as long as origination volumes remain healthy. Several high-profile commercial REITs – including Starwood Property Trust, Colony Financial and Ladder Capital – do not report second quarter results until next week, but hopes are high that earnings will be mostly positive. One commercial REIT that did report this week was...


July 24, 2014 - Inside MBS & ABS

Strong Investor Demand Seen for BlackRock’s Large Auctions of Vintage Non-Agency MBS

In the past two weeks, BlackRock has completed auctions of vintage non-agency MBS with a total unpaid principal balance of $8.1 billion. While the sales had the potential to push too much supply into the market, investor demand for the securities appears to have been strong. The market absorbed the first auction, for $3.7 billion in mostly subprime MBS from 2006, “without a hiccup,” according to analysts at Barclays Capital. Credit Suisse submitted winning bids on all of the non-agency MBS auctioned by BlackRock in the past two weeks, with most of the securities quickly being placed with other investors, indicating strong demand. Of the $3.7 billion in non-agency MBS auctioned last week, 96 percent of the balance was placed...


July 18, 2014 - Inside FHA Lending

House Democrats’ Bill Features Amped-Up GNMA

Ginnie Mae would play a greater role in a private-market partnership model envisioned in proposed housing finance reform legislation introduced recently by House Democrats. However, many in the industry doubt whether a Democrat-sponsored reform bill will pass in this Congress. Sponsored by Reps. John Delaney (MD), John Carney (DE) and Jim Himes (CT), the Partnership to Strengthen Homeownership Act would put Ginnie Mae in charge of all single- and multifamily mortgage-backed securities with government backing. Among other things, H.R. 5055 would create a new Ginnie Mae MBS for conventional mortgages backed by the full faith and credit of the federal government with minimum support from the private sector. Under the proposed model, private entities would assume up to 5 percent of the first-loss capital on the MBS. The remaining 95 percent would be shared between ...


July 18, 2014 - Inside FHA Lending

Ginnie Mae Servicing Remains Flat in 2Q14

Ginnie Mae servicing remained flat in the second quarter of 2014, continuing a trend that began in the third quarter of last year as FHA refinancing fell and purchase activity slowed, according to Inside FHA Lending’s analysis of Ginnie Mae data. Servicing volume rose by only 0.7 percent from the first quarter, slightly lower from the 0.9 percent increase reported by Ginnie Mae servicers for the first three months of 2014. On the other hand, volume was up modestly by 5.9 percent year-over-year, data showed. Ginnie Mae servicers ended the second quarter with a total of $1.46 trillion in unpaid principal balance, up from $1.45 trillion in the prior quarter. Four out of the top five Ginnie Mae servicers were banks. Wells Fargo closed out the second quarter with $425.9 billion in servicing volume, a 0.2 percent decrease from the previous quarter but up 2.1 percent from a year ago. Its 29.2 percent market share put it ... [1 chart]


July 18, 2014 - Inside Nonconforming Markets

Loan Quality Remains Pristine in Jumbo MBS, But It’s Still Hard to Get Deals Done

The characteristics of mortgages included in jumbo mortgage-backed securities remained strong in the second quarter of 2014, according to a new analysis by Inside Nonconforming Markets. However, the high quality of jumbo MBS has not attracted enough investors to make issuance more appealing for banks than retaining the loans in portfolio. Debt-to-income ratios on loans included in the $1.03 billion in jumbo MBS issued in the second quarter averaged ... [Includes one data chart]


July 18, 2014 - Inside MBS & ABS

Single, Numerical Scale Suggested as the Fix For Structured Finance Transaction Ratings

As the Securities and Exchange Commission continues to consider how to reform the rating process for structured finance transactions, including non-agency MBS, industry analysts affiliated with the Brookings Institution suggested that the fix doesn’t require altering the issuer-pay model that has been in place for more than 40 years. Instead, the SEC should help establish transparent, numerical benchmarks, according to two industry participants, shifting away from the current system of letter-based ratings that are also used for corporate debt and sovereign debt. Ann Rutledge, a founding principal at R&R Consulting, a credit rating service, and Robert Litan, a nonresident senior fellow at The Brookings Institution, detailed their proposal in an economic study recently published by Brookings. “Securities that are rated only in an ordinal fashion – in order of likelihood of default – can be...


July 18, 2014 - Inside MBS & ABS

Issuance of Re-REMICs on the Rise in 2014, Deals Are Offering Enhanced Returns Compared with Vintage Non-Agency MBS

Re-securitization activity is above levels seen last year because of compressed yields on vintage non-agency MBS, according to industry analysts. Re-securitizations – all of which are privately placed and typically without a rating – can offer investors more credit risk and leverage than vintage non-agency MBS. In the first half of 2014, 20 re-securitizations of real estate mortgage investment conduits totaling $5.90 billion were issued, according to Bank of America Merrill Lynch. Activity is picking up: June alone accounted for 28.3 percent of the issuance. “In an environment where yields have compressed in the vintage non-agency space, subordinate re-REMIC classes can offer...


July 11, 2014 - Inside Mortgage Trends

Walter Moves Toward ‘Capital-Light’ Model

Walter Investment Management took steps last week to transition to a business model that requires less capital by funding Walter Capital Opportunity and completing an excess servicing spread sale with WCO. WCO is a real estate investment trust that Walter formed in November to hold mortgage servicing rights. Last week, WCO acquired 70 percent of the excess servicing spread from a pool of loans serviced by Green Tree Servicing ...


July 11, 2014 - Inside MBS & ABS

MBS Investing REITs Have Been Paying Hefty Dividends the Past Few Years, But How Long Can the Gravy Train Last?

Real estate investment trusts that have been gobbling up MBS the past few years – and paying hefty dividends in the process – may have some more room to run, especially if interest rates remain relatively benign. “Given the tailwinds of lower prepayment speeds and Fed purchases, we believe that payout levels should remain stable in the near term,” said one veteran analyst who works for a top five bank. This analyst, who tracks several large REITs that invest in agency securities, added...


July 11, 2014 - Inside MBS & ABS

‘Flood of Litigation’ Expected Against Non-Agency MBS Trustees for Failing to Pursue Buyback Claims

The six lawsuits filed in June by institutional investors against non-agency MBS trustees are just the beginning of actions against trustees, according to an attorney who has pursued representation-and-warranty claims against non-agency MBS issuers. “We are likely to see a flood of litigation against trustees alleging that the banks sat on their hands and blew the statute of limitations on valuable putback claims,” according to Isaac Gradman, an attorney at Perry Johnson Anderson Miller & Moskowitz. The June lawsuits by BlackRock, PIMCO and other institutional investors targeted...


July 10, 2014 - Inside Mortgage Finance

Although the MSR Market for ‘Legacy’ Product Remains Weak, ‘Flow’ Deals Rule the Roost

Thanks to lousy origination profits posted over the past six months, mortgage bankers increasingly are boosting earnings through servicing-released arrangements, causing a mini-boom in flow transactions. “You might say we’re back to a normal operating environment where originations are cash-flow negative,” which is forcing lenders to book profits through MSR sales, said Jeff Levine, managing director of Houlihan Lokey, an investment banking firm. But Levine is...


July 3, 2014 - Inside MBS & ABS

MBS Prices Continue to Hover Near Their Highs for the Year; How Long Can it Last?

MBS prices have been hovering around their highs for the year and could stay that way through the fall with minor corrections occurring along the way. “Prices have risen even on the good economic news,” said Joe Farr, director of sales and marketing for MBSQuoteline. “But they fell by about 1 percent over the past week.” Recently, when the Consumer Price Index rose, there was...


July 3, 2014 - Inside Mortgage Finance

Struggling Origination Market Causes Another Market To Stall: Initial Public Offerings of Mortgage Companies

Mortgage companies that were hoping to launch initial public offerings this year are putting their plans on hold these days thanks to a weak origination market, according to investment bankers and stock analysts who follow the industry. “It’s deader than a doornail,” said Paul Miller, a senior analyst with FBR Capital Markets. According to Miller, who tracks publicly traded mortgage companies such as Nationstar Mortgage, PHH Corp., and Walter Investment Management, the origination market has...


July 3, 2014 - Inside Nonconforming Markets

Treasury Seeks Feedback in Effort To Boost Non-Agency MBS Issuance

The Treasury Department issued a wide-ranging request for comments last week as part of an effort to increase issuance of non-agency mortgage-backed securities. Treasury officials said they are working toward developing standards and practices for the non-agency MBS market. “The private-label securities market has been dormant since the financial crisis,” said Treasury Secretary Jacob Lew. “The fact is, we need to attract more private capital to the housing market ...


June 27, 2014 - Inside MBS & ABS

Bank ABS Holdings Drop Sharply in Early 2014 As Most of the Top Tier of Investors Pull Back

Commercial banks and thrifts held $172.6 billion of non-mortgage ABS as of the end of the first quarter, a 10.2 percent drop from December 2013, according to a new Inside MBS & ABS analysis of call report data. The industry’s top ABS investor, TD Bank, increased...[Includes one data chart]


June 27, 2014 - Inside MBS & ABS

Wells Fargo: Fannie, Freddie Risk-Sharing Deals on Track To Exceed 2014 Goal, Tightening Spreads Blunt Upside

Even though the risk-sharing targets set for Fannie Mae and Freddie Mac have been all but met this year, expect the two government-sponsored enterprises to come to market with risk-sharing transactions at least once a quarter, with the likely result of both firms exceeding the 2014 target “by at least” $20 billion, predicted an analysis by Wells Fargo Securities. The FHFA’s 2014 Conservatorship Scorecard directs the GSEs to reduce taxpayers’ risks by increasing the role of private capital in the market via several strategies, including tripling the credit risk transfer goals to $90 billion in 2014 from $30 billion in 2013. Year-to-date, Fannie Mae’s Connecticut Avenue Securities program has already achieved...


June 27, 2014 - Inside MBS & ABS

SEC Moves Its Structured Finance Emphasis Beyond Financial Crisis, Focusing on Commercial MBS, CLOs

The Securities and Exchange Commission has largely wrapped up its enforcement on structured finance issues related to the financial crisis, according to current and former officials at the federal regulator. The SEC’s Complex Financial Instruments Unit is now focusing on more recent issues in the structured finance sector. “The unit has now shifted its attention to the next frontier, and I expect it to zero in on the structuring, rating, valuation, sale, and use of other types of complex financial products, such as commercial MBS, structured notes and credit default swaps,” Andrew Ceresney, the director of the SEC’s division of enforcement, said in May. Stephen Crimmins, a partner at the law firm of K&L Gates who previously worked at the SEC for 14 years, said...


June 20, 2014 - Inside MBS & ABS

ATR/QM Rule, Better Diligence, Higher Appraisal Standards Will Improve Credit Quality of Future MBS

Major post-crisis changes in the mortgage market should boost new issuance of residential MBS and have a long-lasting, positive impact on credit, according to Moody’s Investors Service. The rating service cites three key developments that will continue to support a strong credit environment for new MBS issuance, starting with the final rule on ability to repay and qualified mortgages. Moody’s believes the rule will help MBS performance by improving the reliability and accuracy of data lenders use to underwrite loans. Under the ATR rules, lenders are required...


June 20, 2014 - Inside MBS & ABS

With Funding From Leon Black, AmeriHome Targets Jumbo And Non-Agency Sector; Its Ultimate Goal is to Securitize

Six months ago, AmeriHome Mortgage of California was a little known subsidiary of Impac Mortgage Holdings. But not anymore. Now controlled by Athene Holding Ltd., an insurance company owned by Wall Street veteran Leon Black, the nonbank lender is gearing up to make a splash in the jumbo and non-agency market as a correspondent buyer of mortgages. “They’re...


June 20, 2014 - Inside MBS & ABS

Redwood Partners with FHLBank MPF Program to Source Jumbos from Banks

Redwood Trust late last week struck a deal with the Federal Home Loan Bank of Chicago to purchase fixed-rate jumbo mortgages from FHLBank members participating in the Mortgage Partnership Finance Program. Redwood will be the sole investor in “high balance” mortgages from the new MPF Direct program for three years. The program is subject to final approval from the Federal Housing Finance Agency. Officials at Redwood said the real estate investment trust plans to start investing in MPF Direct loans during the second half of this year. The loan limit for the MPF Direct program is...


June 20, 2014 - Inside MBS & ABS

Blackrock, PIMCO Sue Banks For Failure to Oversee $2T In MBS; Judge Approves NCUA Lawsuit Against UBS

A group of institutional investors – including BlackRock and Pacific Investment Management Co. – filed suit this week against six banks for their alleged failure as mortgage-bond trustees for over $2 trillion worth of mortgage securities. The suits against the banks – U.S. Bancorp, Citigroup, Deutsche Bank, The Bank of New York Mellon, HSBC Holdings, and Wells Fargo – were filed in New York State Supreme Court, New York County. The plaintiffs seek unspecified damages for losses exceeding $250 billion on nearly 2,220 non-agency MBS trusts issued between 2004 and 2008. The suits allege...


June 20, 2014 - Inside MBS & ABS

Fed Continues ‘Taper’ But Unlikely to Sell MBS, Yellen Concedes Banks Reluctant to Lend to Some

This week, the Federal Reserve, as expected, maintained the current pace of its reduction of support of the housing and mortgage markets, reducing its net purchases of agency MBS to $15 billion per month (down from $20 billion), beginning in July. The Fed Open Market Committee also maintained its forward guidance regarding the federal funds rate target of between zero and 0.25 percent and reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. “Even after today’s action takes effect, we will continue...


Poll

Home-equity lending is beginning to show new life. My company (pick one):

Plans to enter this market over the next 12 months.
Is already making home equity loans and hopes to increase the offerings.
Is in the market but don’t expect much growth.
Is not making second liens and has no plans to do so.

vote to see results
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