Bank and thrift holdings of first-lien mortgages increased by 3.6 percent in the third quarter of 2012 compared with the third quarter of 2011, according to a new ranking and analysis by Inside Nonconforming Markets. The growth, outpacing portfolio runoff and an overall decline in mortgage debt outstanding, is tied to non-agency mortgages as well as agency-eligible loans being retained by banks. Industry participants are divided on whether the first-lien holdings will ... [Includes one data chart]

Credit Suisse’s jumbo conduit is increasing its acquisitions and looking to issue more non-agency jumbo mortgage-backed securities, according to Luke Scolastico, a vice president at Credit Suisse. “We’re buying loans every day,” he said last week at a panel discussion hosted by the American Securitization Forum. “More last month than the month before, and more that month than the month before.” Credit Suisse has issued $1.50 billion in non-agency MBS so far in 2012. While the first deals ...

Look for increased volume of new non-agency mortgage-backed securities issuance – and more companies issuing these deals – in 2013, industry analysts say. Underwriting standards could loosen somewhat as investor demand strengthens. Through the beginning of December, $3.46 billion in non-agency jumbo MBS was issued in 2012, according to the Inside Mortgage Finance MBS Database. Redwood Trust accounted for 56.7 percent of that volume, with an affiliate of Credit Suisse Group accounting for the rest ...

Standard & Poor’s, Moody’s Investors Service and Fitch Ratings accounted for a combined 96 percent of all credit ratings across all five rating categories, according to the Securities and Exchange Commission’s annual report on nationally recognized statistical rating organizations (NRSROs). There were NRSROs registered with the SEC during the year ending in the second quarter of 2012. They were A.M. Best Co.; DBRS, Inc.; Egan-Jones Ratings Co. (EJR); Fitch; Japan Credit Rating Agency; Kroll Bond Rating Agency (KBRA); Moody’s; Morningstar Credit Ratings; and S&P. They provided ratings in five credit rating categories: asset-backed securities (including mortgages); corporate issuers; financial institutions; government securities; and insurance companies. The report showed...

A recession resulting from the federal government taking the U.S. economy over the fiscal cliff would leave Fannie Mae and Freddie Mac vulnerable to higher credit losses and make the two government-sponsored enterprises unprofitable again, according to Moody’s Investors Service. Moody’s this week warned that Washington’s failure to reach a tax and spending agreement would also force the GSEs to ride out the shockwaves of potential financial market disruptions on their derivatives trades. “In our current central economic scenario, both Fannie Mae and Freddie Mac are...

MBS analysts hold differing expectations as to what the potential replacement of the “temporary” head of the Federal Housing Finance Agency could mean to Fannie Mae, Freddie Mac and the mortgage securities sector. Recently reported Obama administration backchannel chatter suggests that the White House is actively seeking potential candidates to replace FHFA Acting Director Edward DeMarco, who has been the de facto agency chief since the departure of James Lockhart in September 2009. A report last week by Credit Suisse speculated...

Investors in non-agency MBS have numerous concerns about a loan modification program proposed by the Obama administration, according to Tom Deutsch, executive director of the American Securitization Forum. The so-called Market Rate Modification program would target borrowers with negative equity on a mortgage in a non-agency MBS. “For the many significantly underwater borrowers that would not default on their mortgage loans, the MRM proposal would ultimately represent a transfer of wealth from the pension fund and 401(k) investors who lent the mortgage principal through residential MBS to borrowers that have not demonstrated any material life changes that would impair their ability to make their monthly mortgage payments,” Deutsch said in a letter this week to the Treasury Department. He noted...

City councils on each end of the U.S. have responded to the foreclosure crisis by demonstrating an interest in controversial proposals to use eminent domain to seize underwater mortgages, refinance them into FHA loans at fair market value, and then sell them off to other investors. The Salinas (CA) City Council has gone the furthest of the two jurisdictions, choosing Mortgage Resolution Partners earlier this month to develop such a program for the benefit of the homeowners in its jurisdiction. At its Oct. 16, 2012, meeting, the council’s housing subcommittee directed staff to develop and circulate a request for proposals to determine the magnitude of the local residential foreclosure crisis and possible solutions. On Nov. 1, 2012, the RFP was circulated...

Merrill Lynch over the past few months has been in the market actively buying jumbo mortgages and is also looking for an executive to manage its correspondent purchases, secondary market officials told Inside MBS & ABS. These officials, who spoke under the condition their names not be used, said they anticipate that Merrill, a Bank of America company, is gathering product for an eventual jumbo security. A spokesman for Merrill declined to discuss the matter, saying, “We don’t comment on our plans.” Shellpoint Partners, a company affiliated with MBS market pioneer Lewis Ranieri, is...

The agency residential MBS market expanded for the third consecutive quarter during the three months ending in September, according to a new Inside MBS & ABS analysis. A total of $5.39 trillion of single-family MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae were outstanding as of the end of the third quarter of 2012. That was up by a scant 0.2 percent from the previous period, although it was still 0.4 percent below the level at the same time in 2011. Both Ginnie (2.1 percent) and Fannie (0.6 percent) posted...[Includes two data charts]