International Value Advisors recently cut its stake in Annaly Capital Management – the nation’s largest mortgage real estate investment trust – by roughly half, a development that could be repeated by other investors as rising rates cause new concerns about MBS prices. At year-end, International owned 4.55 percent of Annaly compared to 9.60 percent a year earlier. Annaly’s largest investment is in agency MBS, of which it owned $73.5 billion at Sept. 30. The publicly traded REIT is...
Freddie Mac has begun talking with the Internal Revenue Service and the Securities and Exchange Commission about issues that are likely to crop up as the two government-sponsored enterprises implement the new Single Security, according to a summary of the most recent meeting of the Industry Advisory Group in December. One issue is the tax treatment of compensation that MBS investors receive for converting legacy Freddie participation certificates for the new uniform MBS, which will have a longer payment delay. “Although it is not definitive, we believe the IRS will ultimately view the float compensation as well as any incentive payment that is paid as part of the exchanges as taxable income when received,” the meeting summary states. Freddie provided...
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...
Moody’s Investors Service agreed to a $863.79 million settlement with the Department of Justice, 21 states and Washington, DC, late last week. The settlement focused on rating activities between 2004 and 2010 involving residential MBS and collateralized debt obligations. According to the settlement, Moody’s used an internal ratings model for most tranches of certain residential MBS that was more lenient than its published guidelines, allowing for lower credit enhancement levels than what the published guidelines required. The internal model was based...
A soft fourth quarter resulted in a modest uptick in non-mortgage ABS in 2016, according to a new Inside MBS & ABS ranking and analysis. A few sectors posted solid gains, however. The market produced $174.71 billion of new ABS last year, up just 0.6 percent from the total for 2015. New issuance turned decidedly soft in the fourth quarter with only $34.24 billion in volume. That was down 36.7 percent from the previous period and represented the second-lowest quarterly output since the third quarter of 2012. All the major components of the ABS market saw...[Includes two data tables]
The nation’s largest banks revealed better-than-expected residential origination figures (for some) and mouth-watering markups on the value of their servicing portfolios. That’s the good news. But it wasn’t all wine and roses. On the servicing front, BOK Financial revealed that fourth quarter income was reduced by $17.4 million because it left servicing-related hedges on the books for too long, betting that rates would stay low for an extended period of time. PNC Bank saw...[Includes one data table]
Thanks to stellar fourth quarter MBS issuance – coupled with higher interest rates at Dec. 31 – Fannie Mae and Freddie Mac are likely to report their best quarterly earnings of 2016, money that will go directly into the U.S. Treasury. According to interviews conducted by Inside Mortgage Finance this week, the general consensus among observers is that the two government-sponsored enterprises will post a combined profit north of $5.5 billion. In 2016, the two guaranteed...
RSS