Redwood Trust revved up its latest jumbo mortgage-backed security in a hurry with plans to issue a new deal that includes some loans that don’t meet standards for qualified mortgages. The deal also includes less than 100 percent due diligence. The weighted-average loan age on the $306.05 million Sequoia Mortgage Trust 2014-2 is 1.4 months, according to Kroll Bond Rating Agency. The latest issuance from JPMorgan Chase included mortgages that were ...
Industry reaction to the FHFA IG report on nonbank and small lender risk was swift. Maybe Fannie Mae is better off having Countrywide as its biggest customer again?
The characteristics of mortgages included in jumbo mortgage-backed securities remained strong in the second quarter of 2014, according to a new analysis by Inside Nonconforming Markets. However, the high quality of jumbo MBS has not attracted enough investors to make issuance more appealing for banks than retaining the loans in portfolio. Debt-to-income ratios on loans included in the $1.03 billion in jumbo MBS issued in the second quarter averaged ... [Includes one data chart]
A significantly bigger Ginnie Mae would be placed in charge of all MBS issued with a government backing while Fannie Mae and Freddie Mac would be wound down and stripped of their government sponsorship under a bill filed last week by House Democrats. The legislation – the Partnership to Strengthen Homeownership Act, H.R. 5055, sponsored by House Democrats John Delaney (MD), John Carney (DE) and Jim Himes (CT) – has zero chance of gaining traction this year. It would create a new Ginnie Mae MBS backed by conventional mortgages that would have the full faith and credit of the federal government while tapping private capital to absorb some of the risk. The new structure under the Delaney-Carney-Himes bill would create...
The Department of Justice this week announced a $7 billion settlement with Citigroup to resolve federal and state civil claims related to legacy residential MBS. Industry attorneys are warning that such gargantuan settlements might cause lenders to pull back further, making credit far less available to borrowers and causing economic recovery to falter further. The settlement includes...
After hearing from some market participants about certain unintended consequences, the Financial Industry Regulatory Authority decided to revise its earlier proposal to establish margin requirements for to-be-announced transactions to accommodate smaller players in the market. Last week, its board authorized FINRA to file with the Securities and Exchange Commission the revised amendments to FINRA Rule 4210 (Margin Requirements) to establish margin requirements for TBA transactions (including adjustable-rate mortgage transactions), specified pool transactions, and transactions in collateralized mortgage obligations, with forward settlement dates. The proposal is...
As the Securities and Exchange Commission continues to consider how to reform the rating process for structured finance transactions, including non-agency MBS, industry analysts affiliated with the Brookings Institution suggested that the fix doesn’t require altering the issuer-pay model that has been in place for more than 40 years. Instead, the SEC should help establish transparent, numerical benchmarks, according to two industry participants, shifting away from the current system of letter-based ratings that are also used for corporate debt and sovereign debt. Ann Rutledge, a founding principal at R&R Consulting, a credit rating service, and Robert Litan, a nonresident senior fellow at The Brookings Institution, detailed their proposal in an economic study recently published by Brookings. “Securities that are rated only in an ordinal fashion – in order of likelihood of default – can be...
The line of companies rolling out new loan menus for non-qualified mortgages is growing longer each week, but it remains to be seen which firm will be the first to issue a non-agency MBS. Citadel Servicing Corp., Irvine, CA, is working on a bond, but has been noncommittal about when it might come to market – and whether its first deal will be public or private. The privately-held nonbank is now funding more than $15 million a month in non-QM/nonprime products. Meanwhile, Impac Mortgage Holdings – an Alt A lender of yesteryear – has just entered...
The modest rebound in non-agency MBS issuance during the first three months of 2014 fizzled during the second quarter of the year, according to a new analysis and ranking by Inside MBS & ABS. A total of just $1.60 billion of non-agency MBS were issued during the second quarter, a 62.7 percent decline from the previous period. It was the lowest quarterly volume in new issuance since the financial crisis of 2008. On a year-to-date basis, new issuance was...
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