Nonconforming Securitization

Browse articles from all of our Newsletters related to Nonconforming Securitization.

May 29, 2015 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


May 29, 2015 - Inside Nonconforming Markets

News Briefs

Servicing on four non-agency mortgage-backed securities will be transferred from Ocwen Financial to Select Portfolio Servicing, according to Moody’s Investors Service. Investors in the MBS voted to transfer servicing on the 3,490 mortgages in the deals. The Securities and Exchange Commission is investigating Ocwen and potentially other servicers regarding the use of collection agents. In a quarterly report filed last week, Ocwen said it received a letter from ... [Includes five briefs]


May 29, 2015 - Inside Nonconforming Markets

GSE Privatization Proposal Seen as Costly

With little movement from Congress to reform the government-sponsored enterprises, some industry analysts have called on the Obama administration to re-capitalize the GSEs and end their conservatorships. While such an action appears unlikely, the move could help boost activity in the non-agency market. If Fannie Mae and Freddie Mac were privatized, they would likely have to increase their capital from current levels and face increased borrowing costs. Interest rates ...


May 29, 2015 - Inside Nonconforming Markets

Variation in Jumbo MBS from Chase, Credit Suisse

JPMorgan Chase and Credit Suisse are coming to market with separate jumbo mortgage-backed securities that have some sharp differences in terms of collateral. The $379.78 million JPMorgan Mortgage Trust 2015-3 includes some unique characteristics such as a handful of loans with combined loan-to-value ratios above 80.0 percent and some interest-only mortgages. While the average combined LTV ratio for mortgages to be included in the deal is 69.9 percent, 15 mortgages ...


May 29, 2015 - Inside Nonconforming Markets

Jumbo Lenders Look Beyond Credit Scores

The strong performance of jumbo mortgages originated in recent years is due to more than just focusing on borrowers with healthy credit scores, loan-to-value ratios and debt-to-income ratios, according to Moody’s Investors Service. The analysts said “soft” qualitative underwriting factors play a major role in jumbo performance. Qualitative factors considered by jumbo lenders include the absence of negative events in a borrower’s credit history, the number of unblemished lines of credit and ...


May 29, 2015 - Inside Nonconforming Markets

Not Much Breathing Room for Non-Agency

Real estate investment trusts and new investors in the mortgage business could provide funding for nonconforming lending, but securitization remains challenged, according to various experts at the recent secondary market conference sponsored by the Mortgage Bankers Association. The non-agency mortgage-backed securities market is very subdued, said Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute. Issuance has been running at about ...


May 29, 2015 - Inside Nonconforming Markets

Jumbo Lending in 1Q15 Up Sharply From A Year Ago, But Slight Gain Over 4Q14

Originations of jumbo mortgages continued strong in the first quarter of 2015, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $70.0 billion in jumbos was originated during the quarter, up 59.1 percent compared with the first quarter of 2014. A number of jumbo lenders more than doubled their production during that time. “Our jumbo pipelines are near record high, as the demand for jumbo mortgages remains healthy,” said ... [Includes one data chart]


May 29, 2015 - Inside MBS & ABS

Pilot MPF Direct Program Between FHLB of Chicago and Redwood Expands to Four Banks Total, More Expected

A pilot jumbo loan program between the Federal Home Loan Bank of Chicago and Redwood Trust has grown to include three more FHLBanks, with the potential to expand to more. Mortgage Partnership Finance Direct is specifically a high-balance loan product that connects the Mortgage Partnership Finance conduit program with Redwood Trust to offer access to private capital when selling fixed-rate mortgages in the secondary market. Eric Schambow, senior vice president and director of the Chicago FHLBank’s MPF Program, said...


May 29, 2015 - Inside MBS & ABS

Morningstar Rates Its First Re-REMIC, Firm Ready to Rate Non-Agency MBS

Morningstar Credit Ratings may increase its presence in the residential MBS market after rating its first re-securitization last week and revising its rating criteria for new non-agency MBS. The push follows Morningstar’s initial effort to rate non-agency MBS in 2012, which didn’t generate any business. The company has rated commercial MBS and single-family rental securities. Last week, the rating service published...


May 22, 2015 - Inside MBS & ABS

Nomura Considers Appeal of $805 Million Judgment, FHLBank Dismisses MBS Claims Against Some Banks

Nomura Holdings Inc. is mulling an appeal following last week’s court order that it, along with RBS Securities, pay Fannie Mae and Freddie Mac a total of $805.1 million to resolve claims arising from the pre-crisis sale of non-agency MBS to the government-sponsored enterprises. Judge Denise Cote of the U.S. District Court for the Southern District of New York rendered the judgment May 11 after a three-week bench trial in which she found Nomura and RBS liable for the claims brought by the Federal Housing Finance Agency. The MBS were backed by mortgages with an unpaid principal balance of about $2.05 billion at the time of purchase. Nomura and RBS, which underwrote four of the seven MBS deals at issue, provided...


May 22, 2015 - Inside MBS & ABS

Changes to Servicing Among the Many Reforms Sought By Investors Before Returning to Non-Agency MBS

Industry participants, both on their own and with help from the Treasury Department, continue to work on reforms to attract investors to buy new non-agency MBS. Servicing standards will likely play a key role in the reforms, though progress has been slow. The Structured Finance Industry Group published its first RMBS 3.0 “green paper” in August 2014 with a follow-up in November. The Treasury Department has been working with industry participants toward the issuance of a benchmark non-agency MBS since at least September 2014. Analysts at Fitch Ratings stressed...


May 22, 2015 - Inside MBS & ABS

Banks Show Preference for Ginnie Securities As They Increase MBS Holdings in Early 2015

Commercial banks and thrifts reported robust growth in their MBS portfolios during early 2015, including a special appetite for Ginnie Mae MBS, according to a new Inside MBS & ABS analysis of call-report data. Commercial banks and thrifts held $1.579 trillion of residential MBS at the end of March, a 2.6 percent increase from the previous quarter. It was the industry’s biggest MBS portfolio since the third quarter of 2012, when banks and thrifts held a record $1.617 trillion of mortgage securities. The biggest gain was...[Includes two data tables]


May 15, 2015 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


May 15, 2015 - Inside Nonconforming Markets

Shared Appreciation Seen as Helpful to Borrowers

Two types of shared-appreciation transactions are being touted as beneficial to borrowers, either allowing them to buy homes at below-market prices or receive advanced payment for expected appreciation. Analysts at the Urban Institute note that nonprofit housing associations and municipalities offer shared-appreciation programs that can make homes more affordable for first-time buyers, people with bad credit or buyers who lack the necessary downpayment or income to ...


May 15, 2015 - Inside Nonconforming Markets

No ‘Going Concern’ Qualification for Ocwen

Ocwen Financial filed its annual report for 2014 this week and noted that its auditors decided against requiring a “going concern” qualification for the nonbank. “We believe the filing of our annual report, without a qualification as to our ability to operate as a going concern, is additional evidence that our strategy to strengthen our compliance management system, strengthen the service we provide to our customers and improve our financial stability is working and that confidence ...


May 15, 2015 - Inside Nonconforming Markets

Ellington Set to Start Acquiring Non-QMs

Ellington Financial plans to start acquiring non-qualified mortgages by early summer, according to officials at the nonbank. While Ellington has always seen value in the non-agency market, to this point the company has largely focused its non-agency investments on mortgage-backed securities and other structured-finance products. Laurence Penn, Ellington’s president and CEO, said the nonbank signed its first flow agreement for non-QMs at the end of the first quarter. “Consistent with ...


May 15, 2015 - Inside Nonconforming Markets

Shelby Bill Includes Support for Portfolio Loans

A draft of legislation unveiled this week by Sen. Richard Shelby, R-AL, includes provisions that would support portfolio lenders and real estate investments trusts, among a myriad of other issues. Support from Democrats for some of the provisions in the draft has been tepid, and it’s not clear that President Obama would sign a bill without changes. The Financial Regulatory Improvement Act of 2015 aims to “improve access to credit and reduce the level of risk in our financial system,” ...


May 15, 2015 - Inside Nonconforming Markets

Nonbanks Face Jumbo Pricing Issues, But Remain Optimistic About MBS Issuance

Interest rate volatility and other issues caused a reduction in jumbo-related profitability at some nonbanks in the first quarter of 2015. However, many nonbank conduits remain optimistic that the jumbo business will pay off, particularly via issuance of mortgage-backed securities. Redwood Trust reported $2.0 million in income from residential mortgage banking activities in the first quarter of 2015, down 80 percent from the previous quarter. The decline was primarily due to lower margins on ...


May 15, 2015 - Inside MBS & ABS

New Residential Controls Clean-Up Call Rights On One-Third of Outstanding Non-Agency MBS

With the April acquisition of Home Loan Servicing Solutions’ assets and liabilities, New Residential gained a significant portion of the clean-up call rights for outstanding non-agency MBS. Officials at the real estate investment trust said New Residential plans to execute the call rights and acquire more rights as the MBS feature presents strong profit potential. New Residential owns the clean-up call rights on more than 2,100 non-agency MBS with an outstanding balance of about $235 billion. That’s about 34 percent of the non-agency MBS market. “This should be...


May 15, 2015 - Inside MBS & ABS

Nomura Found Liable, MBS Suit v. Goldman Revived, Put-Back Claims Argued, CMBS Payments Protected

The Federal Housing Finance Agency is trying to put a dollar amount on damages it believes Nomura Holdings and RBS Securities should pay after a federal judge found the companies liable in connection with Fannie Mae’s and Freddie Mac’s pre-crisis investments in non-agency MBS. Judge Denise Cote of the U.S. District Court for the Southern District of New York said the complex case boiled down to whether the defendants accurately described in the offering documents the mortgages that underlie the securities sold to the government-sponsored enterprises. It was...


May 15, 2015 - Inside MBS & ABS

Shelby Bill Would Open Access to Emerging GSE Securitization Platform, Expand Risk Transfers

A new regulatory relief bill drafted by Sen. Richard Shelby, R-AL, would guarantee that the common securitization platform project managed by Fannie Mae and Freddie Mac would be open to all MBS issuers “as soon as practicable,” and structured as a nonprofit utility. The legislation, which also expands the risk-transfer activities of the two government-sponsored enterprises, lays the groundwork for the CSP being transferred away from the GSEs and managed by a third-party provider. But that doesn’t mean...


May 8, 2015 - Inside MBS & ABS

CMBS Delinquencies Hit Post-Recession Low, but Sector Not Out of the Woods Yet; REO Dispositions Take Longer

Delinquencies on commercial MBS hit a post-recession low in January before inching up 10 basis points to 4.72 percent the next month, according to figures compiled by Fitch Ratings Service. Then again, Fitch appears to be mostly bullish on the sector, noting that the uptick in late payments was caused by a change in its methodology and that under the old rules delinquencies would have fallen to 4.55 percent. The ratings change excluded deals backed by wireless towers, outdoor advertising and what it calls “certain other non-traditional transactions.” Hotel collateral has...


May 8, 2015 - Inside MBS & ABS

GSEs Focus on ‘Less-Liquid’ Assets in Trimming Retained Portfolios During First Quarter of 2015

Fannie Mae and Freddie Mac continued to follow orders and prune their retained investment portfolios – and potential future income – during the first quarter of 2015. But the government-sponsored enterprises ended the period holding more of their own MBS than when it started. The combined Fannie/Freddie mortgage investment portfolio fell 0.5 percent during the first quarter of 2015. Under their conservatorship agreement, each GSE is required to reduce its mortgage portfolio to $250 billion by the end of 2018. They each have a little over $150 billion more to go and, as of the end of March, 15 quarters to do it. The Federal Housing Finance Agency has directed...[Includes one data chart]


May 8, 2015 - Inside MBS & ABS

Strong Support from AAA Investors for New Stop- Advance Feature in Redwood’s Latest Jumbo MBS

A unique stop-advance feature included in the jumbo MBS issued by Redwood Trust late last week was viewed favorably by investors, according to officials at the real estate investment trust. “We are pleased not only with the pricing execution on this transaction, but also with the level and depth of AAA investor interest,” Marty Hughes, Redwood’s CEO, said this week. The $356.45 million Sequoia Mortgage Trust 2015-2 included...


May 7, 2015 - Inside Mortgage Finance

Nonbanks Continue Expanding Footprint in Mortgage Servicing Market, Further Deconsolidation in 1Q15

The overall size of the single-family mortgage servicing market isn’t changing much, but the dynamics of the business continued to shift in early 2015, according to a new Inside Mortgage Finance analysis and ranking. The Federal Reserve won’t provide an official reading on single-family mortgage debt outstanding as of the end of the first quarter for another month or so, but the data point to little or no growth in the market during early 2015. Mortgage originations were...[Includes two data charts]


May 1, 2015 - Inside Nonconforming Markets

Subprime Volume Indicators and Performance

A page of subprime and jumbo data.


May 1, 2015 - Inside Nonconforming Markets

Ocwen Sees Higher Margins in Non-Agency Market

Ocwen Financial’s renewed focus on the non-agency market includes plans for much higher margins than what the nonbank produced servicing and originating agency mortgages. However, officials at Ocwen stressed this week that the nonbank is not completely exiting the agency servicing market. Michael Bourque, an executive vice president and CFO at Ocwen, reported that the nonbank had a pre-tax income margin of 33 percent in 2012. By 2014, Ocwen’s margin had declined to ...


May 1, 2015 - Inside Nonconforming Markets

Two Largest Issuers Deliver Latest Jumbo MBS

Credit Suisse and Redwood Trust, the two dominant jumbo mortgage-backed securities issuers since 2010, continue to differ in terms of jumbo MBS offerings. While their latest deals include a number of similarities involving credit characteristics, the Redwood deal includes a relatively high share of non-qualified mortgages. The $356.45 million Sequoia Mortgage Trust 2015-2 received AAA ratings with credit enhancement of 5.00 percent on the senior tranche. That’s the lowest ...


May 1, 2015 - Inside Nonconforming Markets

First Republic Remains Top Jumbo MBS Lender

First Republic Bank maintained its lead as the top contributor to jumbo mortgage-backed securities issued in the first quarter of 2015, according to a ranking by Inside Nonconforming Markets. First Republic was identified as contributing $1.43 billion to jumbo MBS issued during the quarter, accounting for 31.0 percent of all jumbo MBS activity. The bank was also the top jumbo MBS contributor for all of 2014, with $1.46 billion in identified contributions ... [Includes one data chart]


May 1, 2015 - Inside Nonconforming Markets

Five Oaks Issues Its First Jumbo MBS

Five Oaks Investment this week issued its first jumbo mortgage-backed security, although the real estate investment trust has contributed to jumbo MBS issued by others. The $267.19 million Oaks Mortgage Trust Series 2015-1 received largely favorable reviews from the rating services, though Five Oaks’ lack of a track record in the jumbo MBS market helped prompt credit enhancement of 8.45 percent on the senior tranche. Both Fitch Ratings and Moody’s Investors Service said they found that ...


May 1, 2015 - Inside Nonconforming Markets

Hatteras Builds Holdings of Jumbo ARMs

Hatteras Financial has started to acquire jumbo adjustable-rate mortgages that offer more attractive returns than agency mortgages. Officials at the real estate investment trust note that while Hatteras started operations in 2007, the REIT did not start investing in individual loans until December. “I’m not sure that we know 100 percent what the extent of the opportunity is going to be,” Michael Hough, Hatteras’ chairman and CEO, said during a recent call with investors. “It is something ...


May 1, 2015 - Inside Nonconforming Markets

Treasury Making Progress Convincing Investors to Buy New Non-Agency MBS

The Treasury Department is making progress corralling various participants in the non-agency mortgage-backed security market, slowly prompting changes aimed at attracting large investors. The effort started nearly a year ago, when Michael Stegman, counselor to the Treasury on housing finance policy, first proposed the issuance of a benchmark transaction in November. “The benchmark transaction process has reset relationships among transaction parties and is ...


May 1, 2015 - Inside MBS & ABS

SFIG Concerned About Foreclosure Case Involving Non-Agency MBS PSA; California AG Supports It

A foreclosure case involving a mortgage pooled in a 2007 non-agency MBS has prompted competing amicus briefs from the Structured Finance Industry Group and California’s attorney general, among others. Yvanova v. New Century Mortgage is under consideration by California’s Supreme Court. The case hinges on whether a borrower can challenge a foreclosure based on a pooling and servicing agreement. The lower court previously ruled in favor of the lender, New Century Mortgage. “SFIG is...


May 1, 2015 - Inside MBS & ABS

Treasury Sees Deal Agent Position for New Non-Agency MBS as Having a Duty of Care and Loyalty for Investors

To attract large investors, the Treasury Department suggests that non-agency MBS include a deal agent with a fiduciary duty. “Under corporate law, directors must discharge two primary fiduciary duties: duty of care and duty of loyalty,” said Michael Stegman, counselor to the Treasury on housing finance policy, in a speech late last week. “In the context of private-label securitizations, these duties seemed sensible and logical to us.” He used...


May 1, 2015 - Inside MBS & ABS

Income-Property Securitization Holds Steady in Early 2015 Thanks to Surge in Non-Agency CMBS Issuance

A total of $49.55 billion of commercial mortgages were securitized during the first quarter of 2015, virtually unchanged from the fourth quarter of last year, according to a new Inside MBS & ABS analysis. But the private CMBS market recorded a significant increase in new issuance. Non-agency CMBS production climbed 31.3 percent from the fourth quarter to hit $30.91 billion, the second-highest three-month output since the financial crisis shut down new issuance in the second quarter of 2008. Compared to the first quarter of 2014, new issuance was up 74.3 percent. The jump in private CMBS issuance helped offset...[Includes one data chart]


April 24, 2015 - Inside MBS & ABS

BofA’s $8.5 Billion Non-Agency MBS Settlement Moves Closer to Payout; Morgan Stanley Under Scrutiny

The judicial process for Bank of America’s long-pending $8.5 billion settlement involving non-agency MBS issued by Countrywide Financial is near its conclusion and investors could see payouts as soon as August, according to analysts at Barclays Capital. The settlement was announced in 2011, and after years of legal maneuvering, approved by the Appellate Division of the New York Supreme Court in March. Bank of New York Mellon is the trustee on the 530 non-agency MBS covered by the settlement. “The trustee’s approval application to the New York Supreme Court suggests...


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