Nonconforming Securitization

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

January 20, 2017 - Inside Nonconforming Markets

Average Jumbo Mortgage Interest Rates and Mortgage Performance

A page of jumbo data and the performance of non-agency mortgage-backed securities.


January 20, 2017 - Inside Nonconforming Markets

News Briefs

The Department of Justice this week finalized previously announced settlements with Deutsche Bank and Credit Suisse regarding non-agency mortgage-backed security activities in the run-up to the financial crisis. The DOJ said the $7.20 billion settlement with Deutsche Bank was the single largest residential MBS resolution for the conduct of a single entity. The settlement with Credit Suisse was for $5.28 billion. Both of the settlements included civil penalties and ... [Includes two briefs]


January 20, 2017 - Inside Nonconforming Markets

Some Risks Seen with Shared-Equity Products

Shared-equity mortgage arrangements from for-profit investors offer help for borrowers that otherwise might not qualify for a mortgage while also introducing risks, according to analysts at the Urban Institute’s Housing Finance Policy Center. In a shared-equity transaction, a third party helps a mortgage borrower purchase a home in exchange for some of the home-price appreciation. The HFPC noted that shared-equity transactions reduce the amount of money required from ...


January 20, 2017 - Inside Nonconforming Markets

Banks Reiterate Calls for Portfolio QM Designation

With President-elect Donald Trump set to take office and Republicans in control of Congress, trade groups representing banks reiterated calls for revisions to standards for qualified mortgages. Banks are pushing for QM status to be applied to any mortgage held in portfolio, even if the loans have characteristics that would otherwise make them non-QMs subject to greater liability. In a letter this month to leaders of Congress, Rob Nichols, president and CEO of the American Bankers Association ...


January 20, 2017 - Inside Nonconforming Markets

NewLeaf Launches New Specialty Programs

NewLeaf Wholesale recently added four products to its “specialty” mortgage offerings with relatively lenient underwriting standards. The loans are aimed at borrowers who don’t qualify for conforming mortgages. The lender is now offering a jumbo mortgage that allows loan-to-value ratios up to 90.0 percent without private mortgage insurance, a residual-income product, an asset-depletion product and a product for foreign investors. The loans join NewLeaf’s other specialty products ...


January 20, 2017 - Inside Nonconforming Markets

Some Shifts for Loans in Prime Non-Agency MBS

The types of home loans included in prime non-agency mortgage-backed securities issued during the fourth quarter of 2016 varied somewhat compared with issuance from recent quarters, according to an analysis by Inside Nonconforming Markets. Some $907.8 million in prime non-agency MBS was issued during the fourth quarter. Collateral in the deals shifted more toward adjustable-rate mortgages, interest-only mortgages and refinances. ARMs ... [Includes one data chart]


January 20, 2017 - Inside Nonconforming Markets

MBS Investors Seek Legislative Reforms

Large swaths of investors will continue to avoid buying non-agency mortgage-backed securities unless Congress passes investor-friendly reforms, according to Chris Katopis, executive director of the Association of Mortgage Investors. “Private capital has virtually left the U.S. mortgage market,” he said. “The future is likely to reflect a similar situation unless Congress helps establish the necessary systems, structures and standards for private capital to return.” In a recent study published by ...


January 20, 2017 - Inside Nonconforming Markets

Investors Bid Up New Redwood Jumbo MBS Despite Partial Due Diligence

The jumbo mortgage-backed security Redwood Trust is set to issue on Jan. 20 received improved pricing compared with the company’s previous deal issued in October. The new MBS is fairly similar to the prior bond, indicating stronger demand from investors. The $343.28 million Sequoia Mortgage Trust 2017-1 priced last week. The super-senior tranche priced 1-20 back of Fannie 3.5s, which was four ticks tighter than Redwood’s previous offering, according to an analysis by Wells Fargo Securities ...


January 20, 2017 - Inside MBS & ABS

Ratings Services Optimistic on RMBS Sector, But Participants See Trump as Wild Card

The residential MBS market is expected to be healthy this year, according to some ratings service analysts. But the new president is the big unknown, market participants say. According to analysts at Fitch Ratings, the rating outlook for U.S. RMBS they rate is auspicious, as they expect asset performance trends to stay positive thanks to support from solid, if somewhat uneven, gains in home prices. “Although a number of legacy transactions continue to face negative rating pressure due to declining loan counts and tail risk, rating upgrades outnumbered...


January 20, 2017 - Inside MBS & ABS

Good News/Bad News on MBS Trading Volume: With MBS Prices Falling, No Place to Sell?

The average daily trading volume in agency MBS fell to $192.1 billion in December, the lowest reading of the year, according to the Securities Industry and Financial Markets Association. For the full year, however, average daily trading volume in agency product came to $206.6 billion, compared to $193.0 billion in 2015 and $178.0 billion in 2014. The last time trading volume was higher than in 2016 came three years earlier when $222.8 billion in agency product was traded on a daily basis. What the numbers actually mean is...


January 13, 2017 - Inside MBS & ABS

Basel Capital Requirements’ Impact on Non-Agency MBS Activities Uncertain, According to GAO

Capital requirements regarding bank holdings of non-agency MBS increased significantly after federal regulators implemented Basel III reforms in 2014. And while banks have largely been reluctant to re-enter the market for non-agency MBS issuance, a recent report by the Government Accountability Office suggests that the impact of bank involvement in the non-agency MBS market is unclear. The GAO was asked to explain how capital requirements for a mortgage depend on how the loan is financed and how the requirements have changed since the financial crisis. The report was requested by Sen. Richard Shelby, R-AL, who until recently was the chairman of the Senate Committee on Banking, Housing and Urban Affairs. The GAO noted...


January 13, 2017 - Inside MBS & ABS

Non-Agency MBS Production Tumbled Sharply In 2016; Nonprime Sector Showed Some Life

In 2016, a mere $42.93 billion of non-agency MBS were issued, down 32.5 percent from the previous year, according to a new Inside MBS & ABS ranking and analysis. It was the second-lowest annual output since 2012. The picture would look a bit brighter if Fannie Mae and Freddie Mac credit-risk transfer deals were included, as well as single-family rental securitizations, which both compete for the investors that might be interested in non-agency MBS. But the government-sponsored enterprise CRT deals are debt issues and they couldn’t be any more “agency,” while the SFR securitizations look a lot more like commercial MBS than residential MBS. The prime jumbo market hit...[Includes three data tables]


January 6, 2017 - Inside Nonconforming Markets

Average Jumbo Mortgage Interest Rates and Mortgage Performance

A page of jumbo data and the performance of non-agency mortgage-backed securities.


January 6, 2017 - Inside Nonconforming Markets

News Briefs

Redwood Trust is preparing to issue a $343.28 million jumbo mortgage-backed security, according to a presale report by Kroll Bond Rating Agency. Sequoia Mortgage Trust 2017-1 will include mortgages from 132 lenders, led by Quicken Loans with a 7.8 percent share. Servicing for loans in the MBS will mostly be handled by Shellpoint Mortgage Servicing. Redwood will retain 1.0 percent of the dollar volume of the MBS, according to KBRA. Three firms ... [Includes two briefs]


January 6, 2017 - Inside Nonconforming Markets

Fitch Assigns Subprime Servicer Rating to Citadel

Fitch Ratings assigned a subprime servicer rating to Citadel Servicing in late December, an indication that Citadel will be involved with rated nonprime mortgage-backed securities. Citadel received an RPS3- rating with a stable outlook. Such level 3 servicers demonstrate proficiency in overall servicing ability, according to Fitch. “The servicer rating and stable outlook reflect Citadel’s experienced management team, adequate risk management practices and moderate use of technology ...


January 6, 2017 - Inside Nonconforming Markets

New Penn CEO Launches Home-Equity Lender

Spring EQ recently launched operations, focusing on home-equity loans. The nonbank was co-founded by Jerry Schiano, president and CEO of New Penn Financial, a position he will also retain. HEL lending is dominated by banks and credit unions. However, Schiano said Spring EQ aims to compete with other types of lenders. “I want to help underserved borrowers who are currently relying on high-rate personal loans and credit cards or refinancing with large up-front fees,” he said ...


January 6, 2017 - Inside Nonconforming Markets

Non-QM Originator LendSure Set for Growth

LendSure Mortgage, which originated its first loan in July 2015, contributed mortgages with a total unpaid principal balance of $14.62 million to a nonprime mortgage-backed security recently issued by an affiliate of Lone Star Funds. The lender focuses on non-qualified mortgages via the broker channel. LendSure, headquartered in San Diego, was founded by former executive managers from Accredited Home Lenders, a prominent subprime lender before the financial crisis ...


January 6, 2017 - Inside Nonconforming Markets

Bank First-Lien Holdings Up Again in 3Q16

The portfolio holdings of first-lien residential mortgages at banks and thrifts continued to increase during the third quarter of 2016, according to a ranking and analysis by Inside Nonconforming Markets. Banks and thrifts held $1.93 trillion in first liens at Sept. 30, up 1.6 percent from the previous quarter and a 3.9 percent increase compared with the third quarter of 2015. Originations and acquisitions of mortgages – both jumbos and non-jumbos ... [Includes one data chart]


January 6, 2017 - Inside Nonconforming Markets

Investors Push for Standardized Reps and Warrants

A number of large investors that purchased non-agency mortgage-backed securities before the financial crisis have indicated that they won’t be willing to invest in new issuance until issuers standardize representations and warranties. “Investors have lost confidence in the architecture of this market,” an investor said in December at the Structured Finance Industry Group’s RMBS Symposium, which was produced by Information Management Network. The investor was frustrated ...


January 6, 2017 - Inside Nonconforming Markets

Prime Non-Agency MBS Issuance Tumbles, Sector ‘in Limbo’ With Only 4 Active Issuers

Issuance of prime non-agency mortgage-backed securities fell sharply during 2016 from already low issuance levels, according to a new ranking and analysis by Inside Nonconforming Markets. Forecasts for issuance this year are largely subdued, with some industry analysts noting that the prime non-agency MBS market is “in limbo.” Some $9.32 billion in prime non-agency MBS were issued in 2016, a 22.8 percent decline from the previous year. Issuance volume ... [Includes one data chart]


January 6, 2017 - Inside MBS & ABS

Freddie Mac Issues Its First Risk-Sharing Security Backed by Seasoned Mortgages

In late December, Freddie Mac issued a $934.27 million security backed by seasoned mortgages. It was the first seasoned credit-risk transfer from the government-sponsored enterprise. While Freddie has issued fully guaranteed securitizations backed by seasoned mortgages, Freddie Mac Seasoned Credit Risk Transfer Trust, Series 2016-1 included tranches without a guarantee from the GSE, similar to a non-agency senior-sub MBS. The transaction included...


January 6, 2017 - Inside MBS & ABS

Angel Oak Gears Up for New Non-Agency MBS, While PIMCO and Citadel May Tap the Market Later in 2017

With two of the nation’s largest originators of nonprime and non-qualified mortgages hoping for a record production year in 2017, the mostly anemic securitization market for these types of credits could receive a real boost. But the big question remains: how much will the two firms – Angel Oak Mortgage Solutions and Citadel Servicing Corp. – tap the MBS market? In 2016, the Irvine, CA-based Citadel funded...


January 6, 2017 - Inside MBS & ABS

Heavy Agency MBS Production Lifted Total Asset Securitization to 3-Year High in 2016

Another record year for Ginnie Mae MBS issuance plus strong volume in the Fannie Mae and Freddie Mac programs helped push total securitization of residential mortgages and non-mortgage ABS to a three-year high of $1.698 trillion in 2016. A new Inside MBS & ABS analysis shows that total MBS and ABS issuance – not including commercial MBS – was up 13.3 percent from 2015. Agency production of single-family MBS totaled $1.481 trillion in 2016, up 17.5 percent from the previous year. Over a third of that came from Ginnie, which set a new annual record with $507.5 billion in single-family MBS issuance. The non-agency MBS market was...[Includes three data tables]


December 16, 2016 - Inside Nonconforming Markets

Average Jumbo Mortgage Interest Rates and Mortgage Performance

A page of jumbo data and the performance of non-agency mortgage-backed securities.


December 16, 2016 - Inside Nonconforming Markets

News Brief

Royce Goldman, a marketing lead generator, noted that as interest rates rise, the firm can help connect lenders that originate non-qualified mortgages with borrowers. “As private capital and securitization continue to expand under a more favorable regulatory climate, we will continue to see liquidity expansion but it will require a data driven approach to sourcing the client profile this investor community will lend to,” said John Royce, CEO of Royce Goldman.


December 16, 2016 - Inside Nonconforming Markets

IO Originations Falter for Some in 3Q

Lenders originating interest-only mortgages showed divergent trends in the third quarter, with some posting significant declines on a quarterly basis while others continued to increase production. A group of 12 lenders tracked by Inside Nonconforming Markets originated a total of $9.64 billion in IOs during the third quarter, down 23.7 percent from the previous quarter. The decline was driven by PHH Mortgage, whose IO originations through three quarters this year ... [Includes one data chart]


December 16, 2016 - Inside Nonconforming Markets

ARM Originations Increase in 3Q, More Expected

Originations of adjustable-rate mortgages increased by 9.4 percent in the third quarter of 2016, according to a new ranking and analysis by Inside Nonconforming Markets. With an increase to interest rates on mortgages seen this quarter and even higher rates expected, ARMs appear likely to gain market share. An estimated $58.0 billion in ARMs were originated in the third quarter, accounting for 9.9 percent of first-lien originations, according to Inside Mortgage Finance ... [Includes one data chart]


December 16, 2016 - Inside Nonconforming Markets

Proposals Not Enough to Revive Non-Agency MBS

Proposals aimed at reviving the issuance of non-agency mortgage-backed securities have done little thus far to get volumes anywhere near the levels seen before the financial crisis. Industry participants suggest that there are a number of factors beyond proposed standards from trade groups that are limiting issuance. The American Securitization Forum started its effort to revive the non-agency mortgage-backed security market in 2009. The first post-crisis jumbo MBS backed by newly originated ...


December 16, 2016 - Inside Nonconforming Markets

SFIG Proposes More Non-Agency MBS Reforms

The Structured Finance Industry Group released the fifth edition of its RMBS 3.0 green papers last week, featuring a draft deal-agent agreement and proposed bondholder-communication protocols. The green paper effort to revive the non-agency mortgage-backed securities market started in 2013 and now totals 400 pages. “That’s a lot of work for an industry that apparently doesn’t exist,” Richard Johns, SFIG’s executive director, said last week at the trade group’s annual ...


December 16, 2016 - Inside Nonconforming Markets

Nonprime MBS from Lone Star Sets Precedents

A new nonprime MBS from an affiliate of Lone Star Funds has two significant distinctions: it’s the first post-crisis nonprime MBS backed by new originations to receive a AAA rating and it’s the largest post-crisis nonprime MBS backed by new originations. COLT 2016-3 Mortgage Loan Trust received AAA ratings from DBRS and Fitch Ratings. “Over the past year, Fitch has become more comfortable with the operational risk of the issuer through extensive due diligence results, multiple ...


December 16, 2016 - Inside Nonconforming Markets

SoFi Joins Jumbo MBS Market with Strong Underwriting; Chase Preps Another Deal

Social Finance, a nonbank that started offering mortgages in 2014, is preparing to issue a $168.79 million jumbo mortgage-backed security, according to presale reports. It will be the first jumbo MBS from SoFi, which originated all of the mortgages backing the deal. While SoFi started operations in 2011 as a peer-to-peer or marketplace lender, Fitch Ratings noted that its funding strategy has evolved to more traditional sources, such as banks and other large financial institutions ...


December 16, 2016 - Inside MBS & ABS

Fitch Ranked Tops in Rating Non-Mortgage ABS and Non-Agency MBS During First 9 Months of 2016

Fitch Ratings edged out Standard & Poor’s as the most active rating services in the non-mortgage ABS market during the first nine months of 2016, a new Inside MBS & ABS analysis and ranking reveals. Fitch also was the top rating service in the more subdued non-agency MBS market. The company rated some $10.80 billion of non-agency MBS, or 64.8 percent of the total market, which includes a substantial volume of unrated private deals. DBRS (37.2 percent market share) and Moody’s Investors Service (34.5 percent) were...[Includes two data tables]


December 16, 2016 - Inside MBS & ABS

Securitization Rates Jumped Higher in 3Q16, Possibly Aided by Growing GSE Share of Big-Ticket Mortgages

The mortgage securitization rate jumped significantly higher during the third quarter of 2016, spurred by a bigger market share for Fannie Mae and Freddie Mac. A total of $416.5 billion of relatively newly-originated mortgages were included in single-family MBS issued during the third quarter, according to a new Inside MBS & ABS analysis. That figure, which excludes modified loans and most mortgages aged more than three months, represented 71.2 percent of the $585.0 billion of first-lien mortgages originated during the period. During the second quarter, the securitization rate was...[Includes one data table]


December 16, 2016 - Inside MBS & ABS

No Consensus Among Non-Agency Market Participants on How to Pay for a Deal Agent

In the past few years, efforts facilitated by the Treasury Department and the Structured Finance Industry Group have helped develop standards for a deal agent in non-agency MBS. The concept took a major step forward last week when SFIG published a draft deal-agent agreement. However, the agreement didn’t delve into the specifics about how a deal agent would be compensated and industry participants have a wide range of opinions on the issue. A lawyer involved with the creation of the deal agent standards said...


December 16, 2016 - Inside MBS & ABS

Non-Agency Participants Cool on Parrott’s Proposal to Revive Non-Agency MBS Market

Jim Parrott, a senior fellow at the Urban Institute and owner of Falling Creek Advisors, last week outlined three steps industry participants and federal regulators could take to boost issuance of non-agency MBS. The proposal involves the establishment of a self-regulatory organization, regulatory relief for MBS that meet standards set by the SRO, and allowing non-agency MBS to be issued through the common securitization platform being developed by Fannie Mae and Freddie Mac. Parrott detailed...


December 9, 2016 - Inside MBS & ABS

RMBS Market Will Keep Evolving in 2017 With More Varied Collateral, New Structures

New non-agency MBS issued in 2017 will likely include more diversified collateral and feature some structural changes, analysts at Moody’s Investors Service said in a new report this week. The rating service projected that non-agency prime jumbo volume will remain steady in 2017, while issuers will continue to explore non-traditional asset types, such as re-performing and non-performing loans, reverse mortgages, non-qualified mortgages and nonprime transactions. “Although prime jumbo deals will start to include loans with slightly lower FICOs and higher loan-to-value ratios than those loans included in 2016 transactions, collateral quality will remain...


December 9, 2016 - Inside MBS & ABS

SFIG Unveils Sample Deal-Agent Agreement and Bondholder Communications Plan in 5th Edition of RMBS 3.0 Green Paper

The Structured Finance Industry Group this week put more flesh on the bones of its proposed deal-agent role in future non-agency MBS and introduced a plan for improved communications among MBS investors. The fifth edition of SFIG’s RMBS 3.0 Green Paper adds recommendations on data standardization, enforcement mechanisms for breaches of deal terms and materiality standards. The new proposal on bondholder communications was drafted...


December 9, 2016 - Inside MBS & ABS

Solid Growth in Outstanding 1-Family MBS During 3Q16 Aided by Strong Overseas, Fund Investors

The supply of outstanding single-family MBS grew by 1.0 percent during the third quarter of 2016, with strong demand from several key investor groups soaking up new issuance, according to a new analysis by Inside MBS & ABS. The agency MBS market grew by 1.4 percent from the end of June, reaching $5.948 trillion. Ginnie Mae continued to be the fastest-growing program, with total MBS outstanding climbing 2.2 percent during the third quarter to $1.631 trillion. Fannie Mae saw...[Includes two data tables]


Poll

HUD has announced a 25 basis point cut in FHA premiums, which is slated to take effect in late January. Is your lending shop for or against a cut in FHA premiums?

For. It should help lending volumes.
Against. The private MI sector should take on this risk, not the government.
Too early to say.
I believe the new White House may scuttle the idea so it doesn’t matter.

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