Non-Agency MBS

Browse articles from all of our Newsletters related to Non-Agency MBS.

July 24, 2014 - Inside MBS & ABS

RMBS Liquidations Are Up for First Time in Two Years Due Partly to Growing Bank REO Properties

The conditional default rate, or annualized liquidations, of non-agency MBS loans rose 20 basis points to 4.92 percent in the second quarter, after declining for seven consecutive quarters from 9.76 percent in the second quarter of 2012, Fitch Ratings reported this week. “The recent turnaround in the trend can be partly attributed to a growing portion of bank-held real estate owned properties, which typically liquidate much faster than those that are still in the foreclosure process,” said Fitch. The rate of completed foreclosures to REO property has trended higher for four consecutive quarters. The previous decline in the CDR was driven...

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 Nonconforming Markets

News Briefs

CORRECTION: The jumbo mortgage-backed securities issuers and underwriters ranking published in the July 4, 2014, issue of Inside Nonconforming Markets has been revised due to a data error. The revised chart is available online. Citigroup agreed to a $7.0 billion settlement this week with federal regulators and certain states related to non-agency MBS activities prior to 2009. Associate Attorney General Tony West suggested that ... [Includes seven briefs]

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 18, 2014 - Inside MBS & ABS

Non-Agency MBS Market Sputters in 2Q14 As Jumbo and Servicing Advance Deals Slow

The modest rebound in non-agency MBS issuance during the first three months of 2014 fizzled during the second quarter of the year, according to a new analysis and ranking by Inside MBS & ABS. A total of just $1.60 billion of non-agency MBS were issued during the second quarter, a 62.7 percent decline from the previous period. It was the lowest quarterly volume in new issuance since the financial crisis of 2008. On a year-to-date basis, new issuance was...

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 3, 2014 - Inside MBS & ABS

Treasury Seeking to Revive Non-Agency MBS Market with New Practices and Standards

The Treasury Department announced late last week that it is working to develop market practices and standards that would be necessary “to support a safe and sustainable non-agency MBS housing finance channel of significant scale.” As part of the effort, the Treasury posed nine questions to industry participants and is accepting comments on the issue until Aug. 8. Michael Stegman, counselor to the Treasury for housing finance policy, said regulators have addressed most of the problems seen in the non-agency MBS market before the financial crisis. “The last remaining piece of the puzzle is putting in place standards and mechanisms to protect investors in residential MBS, while also clearly defining issuer responsibilities so that they have the confidence to return to the market at scale,” he said. Regulators may have “addressed”...

July 3, 2014 - Inside MBS & ABS

New Residential MBS Issuance Gathered Momentum During Second Quarter; Non-Agency Sector Faltered

Agency issuance of single-family MBS rallied during the second quarter of 2014, offsetting a slump in production of non-agency MBS and non-mortgage ABS, according to a new market analysis by Inside MBS & ABS. Fannie Mae, Freddie Mac and Ginnie Mae combined to produce $212.23 billion of single-family MBS during the April-to-June cycle. That was up 13.3 percent from the first three months of 2014, which was the weakest quarter for agency MBS production since the first quarter of 2001. On a year-to-date basis, agency MBS issuance was...[Includes two data charts]

July 3, 2014 - Inside Nonconforming Markets

News Briefs

The $261.01 million jumbo mortgage-backed security that Shellpoint Partners issued in June 2013 has had 14 loans go 30-days delinquent, four loans go 60-days delinquent, and one loan go 90-days delinquent, according to Kroll Bond Rating Agency. As of May, only three of the loans were 30-days delinquent, with the other once-delinquent mortgages having returned to current status or paid off. KBRA affirmed its ratings of ... [Includes four briefs]

July 3, 2014 - Inside Nonconforming Markets

Concerns About New Jumbo MBS Lenders

The new lenders contributing to jumbo mortgage-backed securities could pose risks to investors in the deals, according to Standard & Poor’s. The rating service said that due diligence and strong underwriting standards currently mitigate the risks, but there are concerns that the lenders with limited track records won’t be able to fulfill representation-and-warranty repurchase obligations. Jumbo MBS have seen contributions from a mix of lenders. The main contributors ...

July 3, 2014 - Inside Nonconforming Markets

Chase Issues Jumbo MBS with 15-Year Loans

JPMorgan Chase issued a $303.75 million jumbo mortgage-backed security last week backed by 15-year fixed-rate mortgages. The deal suggests that there is some viability in securitization as the loans included in the deal were suitable to be held in bank portfolios and in fact were mostly originated by banks. First Republic Bank accounted for 55.1 percent of the contributions to J.P. Morgan Mortgage Trust 2014-2 followed by Chase itself with a ...

July 3, 2014 - Inside Nonconforming Markets

Jumbo MBS Issuance Falls in Second Quarter

A spike in issuance of jumbo mortgage-backed securities in the last days of the second quarter of 2014 wasn’t enough to boost issuance to the meager levels seen in the previous quarter, according to a new ranking and analysis by Inside Nonconforming Markets. Some $1.25 billion in jumbo MBS were issued in the second quarter, a 24.9 percent decline from the previous quarter. Four issuers brought deals to the market during the quarter ... [Includes one data chart]

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

RBS to Pay FHFA $99.5 Million to Settle Non-Agency MBS Lawsuit; MBIA Demands Documents from Credit Suisse

The Federal Housing Finance Agency late last week announced it reached a nearly $100 million settlement with RBS Securities to settle allegations tied to non-agency MBS bought by Freddie Mac from 2005 to 2007, but the deal represents just a fraction of the firm’s remaining exposure. The $99.5 million settlement only resolves claims against RBS in FHFA v. Ally Financial Inc. in the Southern District of New York. Ally Financial is the successor company to GMAC-RFC, a now defunct non-agency MBS issuer. Last week’s deal is...

June 27, 2014 - Inside MBS & ABS

Securitization Rate Slipped in Early 2014 Despite Backlog Pushing Through Fannie and Freddie

About $179.6 billion of newly-originated home mortgages were securitized during the first quarter of 2014, resulting in a securitization rate of 76.4 percent, according to a new Inside MBS & ABS market analysis. The securitization rate was down slightly from 78.5 percent for all of last year and 78.8 percent during the fourth quarter. Historically, the rate peaked in 2009, when 84.4 percent of new originations were securitized. In the conventional conforming market, Fannie Mae and Freddie Mac securitization volume ($126.4 billion) actually exceeded...[Includes one data chart]

June 27, 2014 - Inside MBS & ABS

Activity Heats Up in the Jumbo MBS Market, But Key Factors Likely to Suppress Issuance

The jumbo MBS market sprung to life this month, just before the close of the second quarter. Three firms are scheduled to issue jumbo MBS at the end of this week, and the market’s biggest player, Redwood Trust, is close to its first new issuance since pricing a deal at the end of March. While jumbo mortgage securitization is currently attractive to issuers, industry analysts suggest that volume will remain limited this year due to a number of factors, including a lack of strong demand from a wide range of investors, incentives for banks to hold jumbos in portfolio and continued dominance by the government-sponsored enterprises. “I think issuance will remain...

June 26, 2014 - Inside Mortgage Finance

Mortgage Servicing Market Shrank Again in Early 2014; Nonbanks Continue Building Market Share

The supply of mortgage debt outstanding declined again during the first quarter of 2014, slipping to its lowest level in eight years, according to new Federal Reserve data. There was a total of $9.851 trillion of home mortgages outstanding as of the end of March, down 0.4 percent from the previous quarter. The mortgage servicing market has been in almost constant decline since midway through 2008, with a modest bump higher in the third quarter of last year after a relatively strong rally in housing activity. Even the agency mortgage servicing market lost...[Includes two data charts]

June 20, 2014 - Inside Nonconforming Markets

News Briefs

AmeriHome Mortgage plans to offer non-agency correspondent mortgages with debt-to-income ratios as high as 55 percent beginning in the fourth quarter of 2014, according to officials at the nonbank. The lender was sold by Impac Mortgage Holdings earlier this year and is now headed by James Furash, the former head of the banking unit at Countrywide Financial. In July, AmeriHome plans to start offering a 5/1 adjustable-rate mortgage with ... [Includes five briefs]

June 20, 2014 - Inside Nonconforming Markets

Transfer Prompts Delinquencies on Redwood Deal

Delinquencies on the $347 million jumbo mortgage-backed security Redwood Trust issued in April spiked recently to 3.37 percent. That’s the highest delinquency rate seen on any jumbo MBS issued since 2010. However, Fitch Ratings said the spike was an aberration, caused by a servicing transfer, not sudden poor performance by pristine jumbo borrowers. “Early delinquency related to servicing transfers in recent residential MBS is typically due to ...

June 20, 2014 - Inside Nonconforming Markets

Mixed Outlook for Non-Agency MBS Market

Two firms plan to issue jumbo mortgage-backed securities next week, breaking a seven-week lull in issuance. However, jumbo MBS activity is expected to remain suppressed due to a number of factors, including dominance by the government-sponsored enterprises. “The idea that reform of the GSEs could pave the way for the private market’s return seems to have faded,” according to analysts at Standard & Poor’s. The rating service pointed to moves by ...

June 20, 2014 - Inside Nonconforming Markets

Citi Taps Brokers for its Latest Jumbo MBS

CitiMortgage is preparing to issue its first jumbo mortgage-backed security of the year, a $217.99 million deal largely backed by mortgages originated by brokers. The top contributors to Citigroup Mortgage Loan Trust 2014-J1 are Stearns Lending (33.5 percent), Nationstar Mortgage (30.3 percent) and Freedom Mortgage (11.3 percent). The deal is set to receive AAA ratings from DBRS and Fitch Ratings with credit enhancement of 9.525 percent on the super-senior tranche ...

June 20, 2014 - Inside Nonconforming Markets

WinWater to Issue Its First Jumbo MBS

WinWater Home Mortgage, a relatively new jumbo conduit, is preparing to issue a $249.47 million jumbo mortgage-backed security. The deal is set to receive AAA ratings from DBRS, Kroll Bond Rating Agency and Standard & Poor’s despite concerns about the lack of performance data for WinWater and the firm’s “limited financial capacity.” WinWater is partly owned by principals of Premium Point Investments, a residential mortgage investment advisor ...

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

Morningstar Announces Revised MBS Rating Criteria in Bid to Break Into Non-Agency MBS

Morningstar Credit Ratings late last week published new rating criteria for non-agency MBS. While the firm has been active in the commercial MBS sector, the non-agency MBS rating criteria Morningstar released in 2012 never caught on with issuers. “We have taken a fresh, holistic approach to the residential MBS rating process to help investors gauge the relative default risk of a security against its peers,” said Vickie Tillman, president of Morningstar. Tillman joined the rating service in August after more than 30 years at Standard & Poor’s. Morningstar said...

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

Single-Family MBS Market Shrinks in Early 2014 As Growth Slows in Agency Market

The supply of single-family MBS outstanding fell modestly during the first quarter of 2014, reversing three consecutive quarters of modest growth, according to a new Inside MBS & ABS analysis. As of the end of March there was $6.371 trillion of single-family MBS outstanding, down 0.3 percent from the end of 2013. The supply of single-family MBS had been drifting lower since peaking at $7.007 trillion at the end of 2009 as refinance activity – which adds little to outstanding supply – dominated the agency market and non-agency MBS issuance gained little traction. For the last nine months of 2013, the MBS market finally began...[Includes two data charts]

June 19, 2014 - Inside Mortgage Finance

Are Fannie Mae and Freddie Mac Being Engineered to Be Barely Profitable?

In a few weeks, Fannie Mae and Freddie Mac will release second quarter results, likely posting positive earnings, but the revenue figures will not include any major boost from legal settlements or the recapture of previously set-aside loan loss reserves. In short, what the two government-sponsored enterprises report in earnings for the second quarter should reflect what their operating profits might look like going forward, given normal market conditions. However, over the past six months, the CEOs of Fannie and Freddie and top officials at the Treasury Department – the owner of its senior preferred shares – have consistently argued...


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