A memo issued by the Internal Revenue Service this year regarding the tax treatment for certain real estate mortgage investment conduits has been a boon for investors in nonperforming loans, according to William Cejudo, a partner at the law firm of Clifford Chance. At the recent ABS East conference sponsored by Information Management Network in Miami, Cejudo provided some background on Technical Advice Memorandum 2015-17007, which was issued by the IRS in May. The memo covered a life insurance company’s formation of a REMIC that held impaired non-agency MBS. “It’s...

Issuance of ABS backed by leases on small/mid-ticket equipment has rebounded since the financial crisis to levels last seen 15 years ago. However, industry participants suggest that loan-level disclosure requirements and mandatory risk-retention could limit activity in the sector going forward. At the recent ABS East conference produced by Information Management Network in Miami, Du Trieu, a senior director at Fitch Ratings, said issuance is increasing due to the improving economy and investor demand. “The collateral is business critical and income producing,” he added. Nearly $12.0 billion in small/mid-ticket ABS was issued...

Real estate investment trusts that have gained access to Federal Home Loan Bank advances don’t seem particularly worried that they will be kicked out of the system, at least not anytime soon. As for when the Federal Housing Finance Agency will issue a final membership rule that addresses the thorny topic, that’s a different matter. The FHFA formally proposed changes a year ago that would ban captive insurance companies, the vehicle through which all REITs have gained membership. Even though public comments were taken, no final rule has appeared. In some circles, the “no action” stance is being read...

Failure to deposit borrowers’ escrow amounts into custodial accounts at the time of securitization or pool transfer is the most common fault committed by Ginnie Mae issuers, according to compliance experts. In particular, such oversights accounted for 24.7 percent of findings of compliance reviews conducted between Sept. 3, 2013, and Aug. 17, 2015. Ginnie requires that borrower escrow amounts be deposited in a “timely” manner, which is defined as within 48 hours of pool securitization, explained experts at the recent Ginnie Mae Summit conference in Arlington, VA. Approved Ginnie Mae issuers undergo...

Some have suggested that it’s no wonder that several mortgage company owners – including those who control specialty servicers – are contemplating selling their companies.

The volume of jumbo mortgage-backed securities issued in the third quarter of 2015 fell 17.7 percent compared with the previous quarter, according to a new ranking and analysis by Inside Nonconforming Markets. It was the second consecutive quarterly decline for jumbo MBS issuance after production hit $4.60 billion in the first three months of the year. Five issuers combined to issue $2.56 billion in jumbo MBS in the third quarter. Two of them increased ... [Includes one data chart]

The recent ABS East conference prompted another round of introspection among participants in the non-agency mortgage-backed security market. While efforts to address concerns raised by potential investors are progressing, a multitude of issues continues to hamper non-agency MBS issuance. Issuers continue to focus on finding investors willing to buy AAA tranches of non-agency MBS. “Some of the AAA investors will come back when the pricing gets a little more ...

Moves by two players in the jumbo market demonstrate that competition for originations of jumbo mortgages remains strong. Officials at Titan Capital Solutions have confirmed that the firm will cease its correspondent funding operation for jumbos. “We made the decision as the space was becoming really crowded and those entering the space have much bigger, deeper pockets than Titan,” said Ruth Lee, the lender’s executive vice president. “It was a great channel ...

The inclusion of a deal agent or transaction manager in new non-agency mortgage-backed securities would significantly increase investors’ confidence in the sector, according to industry participants. Alessandro Pagani, a portfolio manager and head of securitized assets at Loomis Sayles, said a large number of institutional investors have pushed for a deal agent and the hope is that if non-agency MBS includes the feature, investors will buy into the deals ...

Add loan-originator compensation rules to the list of things hindering the origination of loans that fall outside the qualified-mortgage standard. Bob Magee, chief investment officer at Shellpoint Partners, said many loan officers and brokers are reluctant to work on non-QMs because the loans take more time to originate, often get rejected and yet tend to offer the same compensation as an agency mortgage. “If I have loan officers who are paid on a commission for ...