Non-Agency MBS

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

May 5, 2016 - Inside Mortgage Finance

Second-Tier Servicers and Nonbanks Continue Claiming Bigger Slice of Mortgage Servicing Market

Although several high-profile, publicly traded nonbank servicers are having a tough time turning a profit, non-depository institutions continued to build market share in mortgage servicing during the first quarter of 2016, a new Inside Mortgage Finance ranking reveals. On the whole, mortgage servicing is somewhat stagnant. The top 50 servicers as of the end of March managed a combined portfolio of $7.266 trillion, down very slightly from the previous quarter. Servicing tied to Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities managed a humble 0.2 percent gain in the first quarter, and the non-agency MBS market is still in the doldrums. It remains...[Includes two data tables]

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 29, 2016 - Inside MBS & ABS

As SFIG Members Continue to Work on TRID Standards, Rating Services Line Up to Rate New Non-Agency MBS

A lack of formal guidance from the Consumer Financial Protection Bureau regarding TRID mortgage disclosures won’t prevent rating services from placing ratings on new non-agency MBS. The rating services are even willing to rate new deals before the Structured Finance Industry Group releases standards for the handling of TRID issues by third-party due diligence firms. However, issuers and investors appear to be less comfortable with liability from the rule the CFPB implemented in October combining the disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act. Save for a $331.95 million jumbo MBS issued by Two Harbors Investment at the end of March, no firm has issued a deal that includes loans subject to TRID. On March 18, SFIG proposed...

April 29, 2016 - Inside MBS & ABS

Commercial Mortgage Securitization Down in Early 2016 as Both Non-Agency and Agency Sectors Slump

New MBS issuance backed by income-property mortgages fell in the first quarter of 2016 as all sectors of the market got off to a weak start in the new year, according to a new Inside MBS & ABS analysis. A total of $44.78 billion of commercial mortgages were securitized in the first three months of the year, down 11.8 percent from the fourth quarter. It marked the lowest three-month output since the second quarter of 2014, when $37.61 billion of commercial mortgages were securitized. Both sides of the industry saw...[Includes one data table]

April 28, 2016 - Inside Mortgage Finance

Delinquency Rates Continue to Decline though Long Foreclosure Timelines Persist for Pre-Crisis Mortgages

The performance of mortgages originated in recent years remains strong, pushing down delinquency rates across loan types. However, liquidation timelines for certain loans have hit new highs recently as servicers continue to work on foreclosing mortgages that went into default years ago. As of the end of March, the overall delinquency rate on mortgages declined to 4.08 percent, according to Black Knight Financial Services. The delinquency rate declined by 12.4 percent compared with March 2015 and is at its lowest point since March 2007. The foreclosure pre-sale inventory rate was...

April 22, 2016 - Inside Nonconforming Markets

News Briefs

First Republic Bank announced this week that it increased its minimum wage to $20 per hour. The bank, which focuses on originating jumbo mortgages, also introduced a purchase-mortgage product for borrowers in underserved minority neighborhoods. Officials at First Republic were unwilling to elaborate on the new initiatives beyond details provided in a press release. “First Republic has an active and significant commitment to building ... [Includes nine briefs]

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 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

Goldman Sachs Settles Pre-Crisis Non-Agency MBS Issues with DOJ, States for $5.06 Billion

The Department of Justice helped lead other federal and state entities in a $5.06 billion settlement with Goldman Sachs. The settlement announced this week involves non-agency MBS underwritten by Goldman between 2005 and 2007. The charges were centered on representations made by Goldman to investors in about 530 non-agency MBS. The offering documents for the MBS stated that mortgages in the deals were originated “generally in accordance with the loan originator’s underwriting guidelines,” other than possible situations where “when the originator identified ‘compensating factors’ at the time of origination.” Findings by third-party due diligence firms helped...

April 15, 2016 - Inside MBS & ABS

Rating Services Ready to Rate MBS With TRID Loans Even Without Formal Guidance from CFPB

Two rating services published reports in recent days stressing that non-agency MBS with loans subject to TRID mortgage disclosures can be rated, even when the loans have TRID violations. The reports are part of an industry effort to deal with the rule that combines disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act that was promulgated by the Consumer Financial Protection Bureau and took effect in October. Kroll Bond Rating Agency and Morningstar Credit Ratings published separate reports in the past week stating expectations that TRID will have a “limited” impact on non-agency MBS investors. A number of other rating services have made similar statements since TRID took effect, though that has done little to spur issuance. Only one non-agency MBS with TRID loans has been issued...

April 15, 2016 - Inside MBS & ABS

Non-Agency MBS Market Off at a Dreary Pace In Early 2016, Unique Chase Deal in the Spotlight

New production of non-agency MBS fell sharply in the first quarter of 2016 despite an anomalous rebound in the prime mortgage sector. A mere $8.38 billion of non-agency MBS was issued in the first three months of this year, down 40.8 percent from the fourth quarter and off 64.5 percent from a year ago, according to a new Inside MBS & ABS analysis and ranking. It was the slowest quarter for new issuance since the end of 2013, when just $6.11 billion of new non-agency MBS came to market. The non-agency MBS market remains...[Includes three data tables]

April 8, 2016 - Inside Nonconforming Markets

Fitch Adjusts Criteria to Rate Nonprime MBS

Fitch Ratings revised its criteria for rating non-agency mortgage-backed securities backed by non-qualified mortgages last week. The new standards set the stage for Fitch to rate nonprime non-QM MBS. The new non-QM criteria from Fitch include expanded product assumptions for rating nonprime mortgages and loans to self-employed or non-wage-earning borrowers. When determining litigation liability, Fitch said it will make a distinction between non-QMs for “very high ...

April 8, 2016 - Inside Nonconforming Markets

SFIG Plots TRID Compliance; Lenders Take Hits

A single mortgage must meet nearly 150 requirements to achieve compliance with the TRID disclosure rule, according to a framework proposed by members of the Structured Finance Industry Group. Third-party due diligence firms will test loans for most of the TRID requirements, according to a draft of the TRID compliance review scope obtained by Inside Nonconforming Markets. Since the TRID rule took effect in October, due diligence firms have found widespread violations ...

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

Mortgage and Asset Securitization Slowed in Early 2016 Despite Uptick in Mortgage Refinance Activity

Falling mortgage rates helped spur a modest increase in refinance activity during the first quarter of 2016, but not enough to offset a slowdown in other parts of the securitization market, according to a new Inside MBS & ABS analysis and ranking. A total of $318.34 billion of residential MBS and non-mortgage ABS were issued during the first three months of the year, a 3.6 percent decline from the fourth quarter of 2015. It was the lowest amount of new issuance since the second quarter of 2014 and put the market 8.1 percent behind the level reached in the first quarter of last year. Non-mortgage ABS issuance was...[Includes three data tables]

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 Nonconforming Markets

Chase Prepares to Issue Unique Non-Agency MBS

JPMorgan Chase is set to issue a $1.89 billion non-agency mortgage-backed security stocked with prime conforming mortgages and jumbo loans. The deal will allow Chase to sell credit risk on some of the mortgages the bank has originated and retained even though the loans were eligible for sale to the government-sponsored enterprises. Chase Mortgage Trust 2016-1 received preliminary AAA ratings from Fitch Ratings and Moody’s Investors Service last week ...

March 25, 2016 - Inside Nonconforming Markets

Private Sector Works on Solution for TRID Issues; CFPB Is Watching

Proposed standards drafted by due diligence providers for how to handle TRID mortgage disclosure issues could be finalized as soon as next week, according to the Structured Finance Industry Group. TRID compliance violations uncovered by third-party due diligence firms are seen as a major contributor to the slowdown in non-agency mortgage-backed security issuance since the Consumer Financial Protection Bureau’s TRID rule took effect in October. And some have suggested ...

March 25, 2016 - Inside MBS & ABS

DBRS Tops in Rating Non-Agency MBS, S&P Wins Non-Mortgage ABS Ratings Ranking

Standard & Poor’s kept its position as the top provider of ratings for newly issued non-mortgage ABS last year, although the volume of deals the company rated fell 10.1 percent from 2014, according to a new Inside MBS & ABS analysis. S&P rated ABS bonds totaling $106.86 billion in new issuance in 2015, or 61.5 percent of deals for which rating information was available. That was down slightly from its league-leading 64.1 percent share of the rated 2014 ABS market. The company’s strong suits were credit card ABS and deals backed by vehicle loans and leases. Fitch Ratings finished...[Includes two data tables]

March 25, 2016 - Inside MBS & ABS

Securitization Rate Nudged Higher in 2015, Still Well Below Post-Crisis Norm

Mortgage securitization made a small comeback in 2015, but softness in the non-agency MBS sector and higher guaranty fees required by Fannie Mae and Freddie Mac still played a huge influence in the market, according to a new Inside MBS & ABS analysis. An estimated $1.210 trillion of newly-originated home loans were pooled in mortgage securities last year, representing 69.7 percent of the $1.735 trillion in new first-lien originations. That was up slightly from the 67.8 percent back in 2014, which ranked as the lowest securitization rate since 2004, when just 62.6 percent of new originations were securitized. One issue is...[Includes one data table]

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

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...


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