Standard and Poor’s Rating Services has corrected its long-term issuer credit rating on the Federal Home Loan Bank of Seattle by lowering it from ‘AA+’ to ‘AA,’ S&P announced last week. “The rating reflects FHLB Seattle’s unchanged stand-alone credit profile of ‘A+’, plus two notches of uplift to reflect expected extraordinary government support if needed, according to our government-related entity criteria,” said the rating agency. “The S&P outlook on the bank remains negative and this correction did not affect the Seattle bank’s short-term ‘A-1+’ rating or the ratings on the consolidated obligations of the Federal Home Loan Bank System.”

A number of nonbanks have increased their correspondent originations recently with plans to take more market share as the big banks focus on retail lending. Redwood Trust, PennyMac Mortgage Investment Trust, Homeward Residential and others have all touted their recent correspondent efforts, both for agency mortgages and non-agency originations. Since 2010, Redwood has used its conduit platform to supply...

Sales and purchases of vintage non-agency MBS have been well above average levels in recent weeks as investors see value in the sector with the housing market recovering. The purchases are being made by traditional buyers such as money managers and insurance companies as well as by banks, according to industry analysts. Daily trading volume of non-agency MBS has averaged about $3.0 billion in recent weeks, based on an analysis of TRACE data by Barclays Capital. During the past six to 12 months, daily non-agency MBS trading averaged $1.7 billion to $2.0 billion. Some $1.09 trillion in non-agency MBS was...

Springleaf Financial Services is gearing up to issue its second non-agency MBS of the year, a $970.0 million deal backed by seasoned subprime mortgages. The company, formerly known as American General Finance, stopped new residential mortgage originations in January of this year. Now owned by Fortress Investment, Springleaf issued a $473.1 million MBS backed by seasoned subprime loans in early April. At the end of the first quarter, the company said it had $9.7 billion of real-estate finance receivables on its books, most of which were classified as nonprime or subprime. Springleaf Mortgage Loan Trust 2012-2 features...

Chicago, Suffolk County, NY, and Berkley, CA, have joined the ranks of local governments considering the controversial notion of using eminent domain to seize performing underwater mortgages, restructure their terms and repackage them for sale to other private investors. “Given the size of the foreclosure epidemic in Chicago, the city should explore every possible avenue to keep families in their homes and reduce the number of vacant properties that breed crime and erode the stability of our neighborhoods,” Alderman Edward Burke, chairman of the city’s finance committee, said last week. In March 2012, nearly 667,000 Chicago-area homeowners were...

Moody’s Investors Service was the most active rating service in the growing non-mortgage ABS market during the first half of 2012, but a new Inside MBS & ABS analysis shows that the company followed a somewhat unusual path to get there. Auto loan ABS has been the dominant sector in the market this year, accounting for 47.3 percent of new issuance through the first six months of 2012. But Moody’s share of auto ABS ratings has slipped from 79.0 percent in 2011 to 77.2 percent this year – although that’s still higher than any of its competitors. Moody’s also boosted its share of business loan ABS ratings, a large number of which are vehicle dealer floorplan transactions. Credit card ABS have made...[Includes two data charts]

Bank of America appears to be moving slower than some industry analysts had expected in fulfilling some of its obligations under the proposed $8.5 billion settlement over Countrywide MBS reached last year with Bank of New York Mellon as trustee for a group of institutional investors. Although the settlement is far from finalized, BofA said it would move distressed loans to subservicers regardless of the outcome. The bank has moved approximately 38,000 mortgages to Specialized Loan Servicing, Select Portfolio Servicing and Green Tree, as of June 26, 2012, according to analysts at Barclays. Of this amount, 73 percent were shipped to SLS, SPS got 21 percent, and Green Tree received 6 percent. “Of the 38,000 loans, mortgage servicing rights have been transferred...

Stop advance rates by servicers of non-agency MBS are more than double industry estimates, based on new data from CoreLogic’s LoanPerformance. Analysts at Barclays Capital said the data also allow calculation of loan-level stop advance rates on non-amortizing loans for the first time. LoanPerformance recently started reporting loan-level stop advance data on approximately 700 non-agency MBS, about 13.0 percent of active deals, according to Barclays. While CoreLogic said the trustee-submitted data will be reported without reference to the specific servicer, Barclays determined that the data are primarily limited to deals by Countrywide Financial and Washington Mutual. Stop advance rates in recent months on the Countrywide-serviced deals range...

The top priority in any effort to revamp, reform or otherwise reduce risk in the $1.8 trillion tri-party repurchase or repo market should be to clearly determine “who’s in charge from a federal perspective,” according to a top Senate Democrat. In holding this week’s hearing of the Senate Banking Subcommittee on Securities, Insurance and Investment, Chairman Jack Reed, D-RI, said the government needs to defuse potential risk to the tri-party repo credit market for funding as an act of emergency preparedness rather than allow another financial crisis, such as what crippled the market in 2008. “One of the lessons we learned...

Redwood Trust turned profits on the three non-agency jumbo mortgage-backed securities it issued thus far this year, with “strong investor demand.” Meanwhile, Springleaf Financial is set to issue another subprime MBS backed by seasoned loans. Officials at Redwood said they plan to issue another non-agency jumbo MBS before the end of the third quarter of 2012 and they are optimistic about future non-agency activity. “We are a long way from declaring victory, but we like our steady progress, the way the playing field is ... [Includes one chart]