The mortgage securitization rate through the first half of 2012 was down a few ticks from the record level reached in the first quarter of the year, but the market remained dominated by lending for Fannie Mae, Freddie Mac and Ginnie Mae MBS programs. A huge 91.5 percent of new mortgage originations were financed through the agency MBS programs during the first half of 2012, according to a new Inside MBS & ABS analysis. That’s down from the 95.8 percent securitization rate achieved in the first quarter, but it’s comfortably ahead of the securitization rates posted since the financial crisis of 2008. The sky-high securitization rate is partly due...[Includes one data chart]

Redwood Trust offered no surprises in its fourth jumbo MBS of the year, a $313.2 million deal that closely resembles the six previous transactions the firm has issued since pioneering the rebirth of the non-agency market back in 2010. With squeaky clean collateral and an investor-friendly securitization structure, Sequoia Mortgage Trust 2012-4 includes three triple-A classes totaling $290.4 million that will be supported by 7.30 percent credit enhancement. That’s the same level as in Redwood’s previous deal, significantly lower than the 8.25 percent enhancement on its first 2012 transaction and slightly above the 7.15 percent level on its second deal this year. In several areas, the latest Redwood MBS includes...

The Securities and Exchange Commission has decided to set aside efforts to standardize credit ratings due to serious concerns raised by credit rating agencies and other market participants. Instead, the SEC said it will focus on rulemaking under the Dodd-Frank Act to achieve transparency in credit rating performance and in the methods used to determine credit ratings. In a mandated report to Congress on the standardization of credit ratings, the SEC said...

A ruling last week regarding the purchase of $440,000 of non-agency MBS in late 2007 and mid 2008 appears to have significantly expanded liability for non-agency MBS issuers. The ruling expands liability beyond trusts specifically purchased by investors to potentially all trusts in an issuer’s shelf with mortgages originated by the same lenders. The decision by the U.S. Court of Appeals for the Second Circuit on NECA-IBEW Health & Welfare Fund v. Goldman Sachs overturned a 2010 ruling by the district court which had dismissed the case. “The Second Circuit’s decision in this case not only represents...

In a reversal apparently targeted at reducing criticism of its plan, Mortgage Resolution Partners late last week announced that it would include delinquent mortgages in its eminent domain scheme. The firm also strongly defended its proposal in a comment letter sent to the Federal Housing Finance Agency. “After discussions with local governments across the country, MRP will expand the services it provides to cover all loans [in non-agency MBS], not just those that are current,” said Graham Williams, CEO of MRP. “This will enable local governments to acquire and resolve the greatest number of loans, helping the greatest number of homeowners.” The expansion was announced the same day comments were due...

As unpalatable as it may sound to MBS investors, a hedge fund executive said it’s well past time for the mortgage industry to cut its losses by forgiving principal and re-underwriting troubled mortgages to more traditional criteria in order to revitalize the sector and the broader economy. Michael Corasaniti, chief executive officer of Tourmalet Advisors, a hedge fund in New York City, told attendees at the American Mortgage Conference sponsored by the North Carolina Bankers Association this week that old-fashioned manual underwriting is the way out. “Early in my career, I was...

A trio of industry trade groups is asking a federal appeals court to uphold a nearly century-old law that grants federal-court jurisdiction to civil lawsuits against any U.S. corporation in which claims arise from international banking or banking transactions in a U.S. territory. Last week, the Securities Industry and Financial Markets Association, New York Bankers Association and California Bankers Association filed an amicus brief with the U.S. Second Circuit Court of Appeals on behalf of Bank of America in its MBS lawsuit with American International Group. AIG filed...

Originations of non-agency jumbo mortgages through two quarters in 2012 were 35.8 percent above the pace set in 2011, according to affiliated publication Inside Mortgage Finance. Almost all of the major jumbo lenders are increasing production and the vast majority of originations continue to be held in portfolio. An estimated $37.0 billion in non-agency jumbos were originated during the second quarter of 2012, up 5.7 percent from the previous quarter and up 60.9 percent from the ... [Includes one data chart]

Redwood Trust is set to issue its fourth non-agency jumbo mortgage-backed security of the year, according to presale reports released this week. The $313.22 million non-agency jumbo MBS includes only slight changes to improve on securities previously issued by the real estate investment trust. Sequoia Mortgage Trust 2012-4 is set to receive triple-A ratings from Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service, with 7.30 percent credit enhancement on the highest-rated ... [Includes one data chart]

The government-sponsored enterprises’ guaranty fees will increase by an average of 10 basis points in the coming months as the Federal Housing Finance Agency works to align agency pricing with the private market. An increase earlier this year brought interest rates on agency mortgages slightly closer to the rates on non-agency jumbo mortgages but industry analysts suggest that the conforming loan limits have a greater impact on the market share for non-agency originations. “These increases will move [GSE] pricing ...