Originations of adjustable-rate mortgages increased by 9.4 percent in the third quarter of 2016, according to a new ranking and analysis by Inside Nonconforming Markets. With an increase to interest rates on mortgages seen this quarter and even higher rates expected, ARMs appear likely to gain market share. An estimated $58.0 billion in ARMs were originated in the third quarter, accounting for 9.9 percent of first-lien originations, according to Inside Mortgage Finance ... [Includes one data chart]
Real estate investment trusts that invest in agency MBS could be in for some turbulence on their book values in the coming quarters if rates continue to rise – as they have since the November election. As Inside MBS & ABS went to press, most analysts had come to the same conclusion: that publicly traded mortgage REITs have underperformed most financial stocks, including nonbank lender-servicers such as Ocwen Financial, PHH Corp. and Walter Investment Management Corp. Then again, investing in so-called mREITs has never been...
This week, for only the first time this year and only the second time in the last decade, the Federal Reserve raised interest rates by 25 basis points, a move widely expected by market participants. What captured more attention was an upward adjustment of the Federal Open Market Committee’s so-called “dot plot,” suggesting that the U.S. central bank anticipates possibly raising rates three times during each of the next three years. Last year at this time, the FOMC raised...
In the past few years, efforts facilitated by the Treasury Department and the Structured Finance Industry Group have helped develop standards for a deal agent in non-agency MBS. The concept took a major step forward last week when SFIG published a draft deal-agent agreement. However, the agreement didn’t delve into the specifics about how a deal agent would be compensated and industry participants have a wide range of opinions on the issue. A lawyer involved with the creation of the deal agent standards said...
The mortgage securitization rate jumped significantly higher during the third quarter of 2016, spurred by a bigger market share for Fannie Mae and Freddie Mac. A total of $416.5 billion of relatively newly-originated mortgages were included in single-family MBS issued during the third quarter, according to a new Inside MBS & ABS analysis. That figure, which excludes modified loans and most mortgages aged more than three months, represented 71.2 percent of the $585.0 billion of first-lien mortgages originated during the period. During the second quarter, the securitization rate was...[Includes one data table]
Jim Parrott, a senior fellow at the Urban Institute and owner of Falling Creek Advisors, last week outlined three steps industry participants and federal regulators could take to boost issuance of non-agency MBS. The proposal involves the establishment of a self-regulatory organization, regulatory relief for MBS that meet standards set by the SRO, and allowing non-agency MBS to be issued through the common securitization platform being developed by Fannie Mae and Freddie Mac. Parrott detailed...
Fannie Mae and Freddie Mac are expected to launch a study of mortgage servicing in 2017 and research ways to reach underserved borrower groups, but the new “scorecard” for the government-sponsored enterprises doesn’t portend big changes in their credit-risk transfer programs or the emerging common securitization platform. The most significant new initiative in the 2017 scorecard released by the Federal Housing Finance Agency this week is a new project to assess the mortgage servicing business model. The language is somewhat vague and broad-reaching: “initiate a multiyear assessment of both the challenges facing the mortgage servicing market and potential solutions for identified issues.” The new game plan specifically mentions...
Commercial banks reduced their securitized servicing by 1.9 percent during the third quarter, though they still accounted for 52.5 percent of that market.
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