Securities

Browse articles from all of our Newsletters related to Securities.

March 29, 2017 - IMFnews

Fannie Mae’s Involvement in SFR Market Raises Questions of ‘Charter Creep’

A former Fannie executive said it was always his belief the GSE charter allowed for multifamily financing but the idea was to fund “vertical” homes and not “horizontal.”


March 28, 2017 - IMFnews

Prepayment Rate on Mortgages in Jumbo MBS Close to Rate on Conforming Loans

BAML suggested that one of the reasons prepayment speeds on jumbos have been relatively slow is the presence of self-employed borrowers…


March 27, 2017 - IMFnews

GSE Buybacks Fell to Record Low in Fourth Quarter, 2016

During the fourth quarter of 2016, lenders repurchased just $207.31 million of home loans, a 37.0 percent decline from the third quarter.


March 24, 2017 - IMFnews

What We’re Hearing: No GSE Capital in Nine Months / But Don’t Sweat It / Mel Knows / Fairholme’s Bad Bet on Sears / Impac Borrows Against Fannie Mae MSRs / Blend’s Clients Include Movement Mortgage

Not only does Fairholme own Fannie and Freddie shares, it has an investment in Sears, the troubled department store chain...


March 24, 2017 - Inside MBS & ABS

MBS & ABS Issuance at a Glance

One page of issuance data.


March 24, 2017 - Inside MBS & ABS

Student Loan ABS Strength Jumps from Last Year’s Level, Especially in the Refi Sector, Analysts Find

Last year was a decent enough year for the student loan sector, and so far this year, the space is looking dramatically more robust, according to analysts at the DBRS ratings service. New issuance so far in 2017 is more than twice that from the same period last year, with volume exceeding $4.5 billion, according to Jon Riber, a senior U.S. ABS ratings analyst at DBRS. “There are...


March 24, 2017 - Inside MBS & ABS

Banks to Settle Legacy MBS Case; Deutsche Bank’s Class Bid Rejected; Court Favors Collateral Manager

Wells Fargo, Deutsche Bank and the Royal Bank of Scotland have agreed to pay investors $165 million to resolve allegations of misrepresenting the quality of mortgage loans underlying securities issued by now-defunct subprime lender NovaStar Mortgage. The agreement was announced last week subject to approval by Judge Deborah Batts of the U.S. District Court for the Second District of New York, according to a report by Reuters. At issue is $7.7 billion in residential MBS delivered into various trusts and sold to investors, including pension funds, prior to the housing crash. A multi-employer union pension plan led by the New Jersey Carpenters Health Fund filed...


March 24, 2017 - Inside MBS & ABS

Moody’s Weighs Impact of Fannie, Freddie Reform Proposals on Private-Label MBS

Housing finance reform, especially if it weakens mortgage underwriting standards, could have a negative impact on private-label MBS as well as the government-sponsored enterprises’ credit risk-transfer transactions, according to a newly published report from Moody’s Investor Services. Analysts said that various reform proposals could reduce the influence that Fannie Mae and Freddie Mac have in the market and likely increase credit risk in new MBS in the short-term. Combined with a rising interest rate environment, such reform could have a credit-negative effect. Loan origination processes and the kinds of loans produced could become...


March 24, 2017 - Inside MBS & ABS

Delinquencies on Subprime Auto ABS Surpass Levels Of the Financial Crisis as Lenders Loosen Underwriting

Observers of the subprime auto ABS market are raising concerns as delinquencies rise above peaks seen during the financial crisis as lenders have loosened underwriting standards in search of market share. According to Fitch Ratings’ index of subprime auto ABS, 60+ day delinquencies on loans backing the securities hit 5.45 percent at the end of 2016. Delinquencies were up from 4.70 percent at the end of 2015 and 41 basis points higher than the peak for the sector in 2009. The index tracks an outstanding balance of $38.6 billion from 149 transactions. There were 21 active shelves in the index, up from 12 active issuers in 2010. “Smaller lenders along with recent new entrants are...


March 24, 2017 - Inside MBS & ABS

MBS Trading Volume Weak in February as Demand Declines; Market Nervous About Stocks, Trump’s Business Agenda

The average daily trading volume in agency MBS declined to $202.4 billion in February, one of the worst readings over the past six months, according to figures compiled by the Securities Industry and Financial Markets Association. In January, volume was a bit healthier at $229.8 billion, but that was before concerns began to mount about President Trump’s business agenda and how successful the new White House might be in rolling back regulations – financial and otherwise. As Inside MBS & ABS went to press this week, fears were...


March 24, 2017 - Inside MBS & ABS

FHFA Sets a Date to Launch Final Stage Of Single Security, Details Project Costs

Sometime during the second quarter of 2019, Fannie Mae and Freddie Mac will begin issuing the new uniform MBS, a completely fungible security that will replace the separate to-be-announced MBS currently issued by the two government-sponsored entities. The Federal Housing Finance Agency announced the deployment date for Release 2 of the single-security initiative this week. The new implementation date was moved back from the previous estimate of some time in 2018. The delay was...


March 24, 2017 - Inside MBS & ABS

Fitch Ends 2016 as Top Rating Service in Both Residential MBS and Non-Mortgage ABS

Fitch Ratings was the most active provider of credit ratings for non-mortgage ABS and non-agency MBS in 2016, a new Inside MBS & ABS analysis reveals. Fitch edged out Standard & Poor’s in a busy ABS market, garnering a 54.8 percent share of rated transactions last year. The company boosted its ABS ratings business by 4.6 percent compared to 2015, based on dollar volume, nudging its market share up 1.9 percentage points. Fitch’s deepest penetration was...[Includes two data tables]


March 24, 2017 - Inside MBS & ABS

Ratings Services Skeptical About Former S&P Official’s Proposal to Address Rating Shopping

A proposal from a former high-ranking official at S&P Global Ratings to reduce incentives for rating shopping has been met with skepticism and resistance from officials at other rating services. Howard Esaki, the former global head of securitization research at S&P Global Ratings, and Lawrence White, a professor of economics, NYU Stern School of Business, recently published a proposal to reform the process for how rating services are selected to grade MBS and ABS. They said...


March 24, 2017 - IMFnews

Proposal to Curb ‘Rating Shopping’ Met with Skepticism

Esaki and White propose allowing issuers to choose any number of rating services to submit credit support levels for a particular MBS or ABS, paying a bid-preparation fee for each estimate.


March 24, 2017 - IMFnews

Fitch the 2016 Rating Service King in Both Non-Agency MBS and Non-Mortgage ABS

S&P finished a close second with a 53.6 percent market share.


March 23, 2017 - IMFnews

Short Takes: GSE CSP Update: The UMBS will Arrive in 2Q19 / They Spent How Much on This Thing? / Cherry Hill REIT Taps the Equities Market / Freddie Mac Director Bolts for the Federal Reserve Bank of Atlanta

The CSP project comes with a cost: roughly $454 million has been spent so far...


March 23, 2017 - IMFnews

SFIG Plots Next Steps in Effort to Revive Non-Agency MBS Market

SFIG’s said its RMBS 3.0 task force will be holding calls during the next two weeks to discuss ongoing work in the latest areas of focus…


March 23, 2017 - IMFnews

VA Considering Stronger Measures to Stop Early Solicitation of Purchase Loans for Refis

There have been scattered reports that some lenders and brokers are still chasing quick-turn refis aided by secondary market investors offering to buy and securitize those loans.


March 22, 2017 - IMFnews

Wall Streeter Phillips to Play ‘Critical’ Role at Treasury on GSE Reform; GSE ‘Principles’ Coming Soon from Trump?

Calabria joined the Trump administration from the conservative Cato Institute and is no fan of the GSEs...


March 22, 2017 - IMFnews

Finance of America Commercial Makes Big Push Into Broker Market with ‘Fix & Flip’ Lending

CEO Mark Filler said FoAC is now offering fix-and-flip loans as cheaply as 6.99 percent…


March 21, 2017 - IMFnews

USDA Securitization Rose in 2016; Chase Led the Sector, but…

Although JPMorgan/Chase was the market leader, it is now mostly out of the sector…


March 20, 2017 - IMFnews

Bayview Packages Thousands of Vintage ‘Daily Simple Interest’ Mortgages into Non-Agency MBS

Bayview issued two similar MBS last year, totaling $467.18 million…


March 20, 2017 - IMFnews

Wholesale-Broker Channel Saw Big Gains in Agency Market Last Year

Mortgage brokers earned their biggest market share in the Ginnie Mae sector…


March 17, 2017 - IMFnews

Did QE Put the Fed in a Box from Which it Can’t Escape?

An interview this week with Peter Schiff, CEO of Euro Pacific Capital and a perennial critic of the Federal Reserve, suggests that the extraordinary level of support the U.S. central bank gave to the housing and mortgage markets in the wake of the financial crisis may mean the Fed is stuck between a rock and a hard place.


March 17, 2017 - IMFnews

Supply of MBS Outstanding Continued Growing in Late 2016

Thanks to strong growth in the agency market, the supply of single-family MBS outstanding continued to grow over the final three months of 2016, a new Inside MBS & ABS analysis reveals.


March 17, 2017 - Inside MBS & ABS

MBS & ABS Issuance at a Glance

One page of issuance data.


March 17, 2017 - Inside MBS & ABS

Government Must Turn Over Unprivileged Documents Relating to Treasury Sweep

In a prominent Fannie Mae and Freddie Mac shareholder case, the government was ordered to go back through thousands of documents related to the Treasury sweep to determine whether they fall under the executive privilege that has been more narrowly defined. In an attempt to make sure the government asserted privilege properly on the 11,000 documents it is withholding, Federal Claims Court Judge Margaret Sweeney asked it to reexamine the large batch and turn over any that don’t merit secrecy by April 17. This order follows...


March 17, 2017 - Inside MBS & ABS

Trump Administration Plan to Tackle Tax Reform Expected to Have an Impact on Housing Reform

Tax reform may have a significant impact on Fannie Mae and Freddie Mac, before federal policymakers get around to resolving the long-running conservatorships of the two government-sponsored enterprises. Reducing the corporate tax rate is a big component of the Trump administration’s tax reform plan, but it could force the GSEs to write down the value of their deferred tax assets. “It is...


March 17, 2017 - Inside MBS & ABS

HUD IG Calls for Changes in GNMA’s Structure, Monitoring to Reduce Risk Posed by Nonbanks

Ginnie Mae’s outdated organizational structure and staff levels have made it difficult for the agency to properly monitor and mitigate the risk posed by the increasing number of nonbanks participating in its MBS programs, according to the Department of Housing and Urban Development’s inspector general. In a recent briefing paper, HUD Inspector General David Montoya highlighted challenges Ginnie faces in monitoring nonbanks, adding that HUD is currently being audited by the IG to gauge its capacity to track and supervise nonbanks, said Montoya. Ginnie acknowledged...


March 17, 2017 - Inside MBS & ABS

New Residential, CarVal Bring New MBS Backed By RPLs; Plenty of Supply of Seasoned Mortgages

Affiliates of New Residential Investment and CarVal Investors packaged re-performing mortgages with a total unpaid principal balance of more than $1 billion for two separate MBS that will be issued this month. There’s plenty of supply of seasoned mortgages in the secondary market, but higher interest rates could weaken demand, according to industry analysts. An affiliate of CarVal Investors priced a $395.3 million non-agency MBS late last week with more variety in collateral than the typical MBS backed by seasoned mortgages. In addition to re-performing mortgages, Mill City Mortgage Loan Trust 2017-1 included some home-equity lines of credit and newly originated mortgages. Vintage HELOCs accounted...


March 17, 2017 - Inside MBS & ABS

Former SEC Official Warns Some Horizontal Risk- Retention Practices Won’t Fly With Regulators

Industry practices that are developing around risk-retention requirements for MBS and ABS might be rejected by federal regulators, according to a former special counsel at the Securities and Exchange Commission. The Dodd-Frank Act established risk-retention requirements for various types of MBS and ABS. The rule generally requires sponsors of a security to retain at least 5.0 percent of the issuance, in an effort to align the interests of issuers with the interests of investors. Among the options to comply with risk-retention requirements, sponsors can retain...


March 17, 2017 - Inside MBS & ABS

Federal Reserve Chooses to Raise Fed Funds Rate, Defers Talk About Its Huge Agency Portfolio

For the third time in as many years, the U.S. Federal Reserve decided to raise the federal funds rate by 25 basis points this week, as widely expected – only this time, the Fed didn’t wait until the very end of the year. The FOMC’s revised projections are for two additional quarter-point rate hikes later this year, three next year and three or four the year after. World stock indexes rallied...


March 17, 2017 - Inside MBS & ABS

Banks Help Pick Up Some of the Slack as Overseas Investors, GSEs Shed MBS Holdings in Late 2016

Thanks to strong growth in the agency market, the supply of single-family MBS outstanding continued to grow over the final three months of 2016, a new Inside MBS & ABS analysis reveals. Agency MBS outstanding pushed to a new record, $6.034 trillion, as of the end of last year. The biggest gainer continued to be Ginnie Mae, which reported a 2.2 percent increase in the fourth quarter and a 7.7 percent gain for the year. Freddie Mac matched Ginnie’s fourth-quarter increase, but its year-to-date gain was smaller, 4.2 percent. Fannie Mae had...[Includes two data tables]


March 15, 2017 - IMFnews

Short Takes: Mortgage Apps Up/Moody's Upgrades a Wells MBS/Quicken Finds Appraisal Disconnect/the FOMC Concludes its Meeting

Mortgage applications rose 3.1 percent, on a seasonally adjusted basis, for the week ending March 10, 2017, versus the week before, the Mortgage Bankers Association announced Wednesday morning. The MBA's Refinance Index rose 4 percent, and its Purchase Index was up 2 percent…


March 14, 2017 - IMFnews

New Penn Packages Mortgages Sourced through Bank of America into New Jumbo MBS

Bank of America initially acquired the mortgages through the bank’s jumbo whole loan purchase program.


March 13, 2017 - IMFnews

Short Takes: New Risk-Sharing Deal from Fannie / Lender Settles Discrimination Claims with HUD / New Residential Issues Non-Agency MBS / Fitch Affirms Ocwen's Ratings

Fannie Mae is preparing to issue a Connecticut Avenue Securities risk-sharing transaction relating to mortgages with an unpaid principal balance of $39.99 billion.


March 13, 2017 - IMFnews

CarVal Investors Includes Unique Mix of Loans in $395 Million Non-Agency MBS

In addition to re-performing mortgages, Mill City Mortgage Loan Trust 2017-1 included some home-equity lines of credit and newly originated mortgages.


March 10, 2017 - Inside MBS & ABS

MBS & ABS Issuance at a Glance

One page of issuance data.


March 10, 2017 - Inside MBS & ABS

GSE Reform Proposals Have Different Takes On What Will Become of Fannie, Freddie

A common theme among housing finance reform proposals is to infuse more private capital into the system while not disrupting the market. Beyond that, the plans take significantly different approaches about what to do with Fannie Mae and Freddie Mac. Jim Parrott, senior fellow at the Urban Institute and the co-author of one of those proposals, released a paper this week comparing his plan with the revised proposal from the Mortgage Bankers Association and a blueprint described by the Milken Institute. The MBA proposed...


March 10, 2017 - Inside MBS & ABS

Credit Card Loan Balances Reach Post-Crisis High; Analysts Expect ‘Healthy’ Consumer Balance Sheets

Contrarians may suspect a bubble, but analysts at DBRS said in a new report this week that credit card loan balances in the U.S. reached a new post-financial-crisis high in December 2016, which they characterized as a reflection of consumers’ “gradual inclination to judiciously undertake incremental credit card debt.” According to their analysis, credit card debt accelerated last year. “After steadily increasing over the past five years, growth in credit card debt accelerated in 2016 at an average monthly, year-over-year growth rate of 6.1 percent, compared to 4.2 percent in 2015, and 2.9 percent in 2014,” DBRS said. Citing the Federal Reserve data for December 2016, the analysts found...


March 10, 2017 - Inside MBS & ABS

Prosper Marketplace Strikes $5 Billion Loan Deal With Investors; Moody’s Says It’s Credit Positive

Online consumer lender Prosper Marketplace, based in San Francisco, recently finalized a deal with a consortium of institutional investors to purchase as much as $5 billion of the lending platform’s unsecured consumer loans during the next two years. The consortium comprises investment bank Jefferies Group LLC and three asset managers: affiliates of New Residential Investment Corp., Third Point LLC, and an unnamed entity of which Soros Fund Management LLC serves as principal investment manager. Under the terms of the deal, the consortium will earn...


March 10, 2017 - Inside MBS & ABS

Curtailment of Fed Reinvestments Could Hurt MBS As Agency Moves to Thin Balance Sheet, Analyst Says

MBS are likely to be hurt when the Federal Reserve stops its reinvestments to shrink its balance sheet over the next few years, according to an analysis by Desjardins, Canada’s largest cooperative financial group. Even though the agency plans to withdraw gradually, its $1.75 trillion in MBS holdings account for approximately 20 percent of all U.S. MBS outstanding, noted Mathieu D’Anjou, senior economist with the Desjardins Group. “An increase in rate spreads between MBS and U.S. bonds, [which is] currently low, could be required...


March 10, 2017 - Inside MBS & ABS

Little Utility Seen in Dodd-Frank Mandates on Reps-and-Warrants Reports by Rating Services

A transparency feature included in the Dodd-Frank Act aimed at helping MBS and ABS investors understand the representations and warranties on a transaction has created a significant amount of work for rating services with little benefit for investors, according to officials at ratings firms. Since June 2015, rating services have been required by the DFA to compare the reps and warrants on a transaction they’re rating with a benchmark set of reps and warrants for that asset class. These 17g-7 reports often span hundreds of pages, detailing similarities and differences between the reps and warrants on a specific transaction compared with a set of benchmarks established by the rating services. Claire Mezzanotte, a group managing director and head of global structured finance at DBRS, said...


March 10, 2017 - Inside MBS & ABS

Non-Agency MBS Participants See a Deal Agent As Adding a ‘Brain’ to Deals to Protect Investors

The deal-agent role that some investors are pushing for in new non-agency MBS will complete or oversee many of the tasks that are already present in transactions with one important caveat: the deal agent has a responsibility to protect investors. A deal agent will oversee various participants in an MBS, oversee enforcement of representations and warranties, and have a fiduciary duty to investors. Yehudah Forster, a vice president and senior credit officer at Moody’s Investors Service, said...


March 10, 2017 - Inside MBS & ABS

Bank ABS Portfolios Continued to Shrink in 2016 as ABS Outstanding Barely Treads Water

The U.S. banking industry is a steady, but not a huge, supporter of the non-mortgage-ABS market, accounting for 17.4 percent of the supply of ABS outstanding at the end of 2016, according to a new call-report analysis by Inside MBS & ABS. By comparison, banks and thrifts held about 26.5 percent of MBS outstanding at yearend. Although ABS issuance since the financial crisis has dwarfed production of non-agency MBS, the market still hasn’t fully recovered. The Securities Industry and Financial Markets Association reports that total ABS outstanding – not including collateralized debt obligations – declined by 0.3 percent during the fourth quarter to $712.1 billion. That’s still well below the total outstanding at the end of 2007, $899.8 billion. Commercial banks and thrifts reported...[Includes two data tables]


March 10, 2017 - IMFnews

Bank ABS Portfolios Continued to Shrink in 2016…

Commercial banks and thrifts reported a combined $123.8 billion of ABS on their balance sheets at the end of last year, a 3.7 percent drop from the third quarter…


March 10, 2017 - IMFnews

Non-Agency MBS Participants See a Deal Agent as Adding a ‘Brain’ to Transactions

Clayton Holdings was the first firm to receive an assessment from rating services as a deal agent…


March 10, 2017 - IMFnews

Industry Bands Together to Fight G-Fee Usage for Unrelated Funding

According to an Inside Mortgage Finance analysis, Fannie and Freddie have passed along some $9.6 billion of MBS fees under the provisions of the 2011 Temporary Payroll Tax Cut Continuation Act.


March 9, 2017 - IMFnews

Jumbo MBS Market Looking Relatively Strong as Shellpoint Prepares Another Deal

Yet another new jumbo MBS deal is hitting the market. This time from an affiliate of Shellpoint…


March 9, 2017 - IMFnews

Agencies Nipped More Jumbo Share in 2016

The agency share of total jumbo production reached its highest level in 2009 and 2010, immediately after “emergency” high-cost loan limits were put in place…


Poll

With the spring homebuying season in full swing, what percentage of your March 2017 application volume has been for “purchase” loans?

75% or higher
50% to 74%
30% to 49%
Under 30%

vote to see results