Attendees at the ABS East conference sponsored by Information Management Network this week in Miami were more optimistic about the MBS and ABS markets than they have been in some time. So optimistic, in fact, that some industry participants are already concerned about bubbles forming in the still recovering securities markets. “If this conference is any indicator, it looks like everybody feels there’s real vitality,” said Lewis Ranieri, chairman and founding partner of Ranieri Partners. “I haven’t seen a conference like this in quite a while.” Close to 3,000 people attended the event. Jay Steiner, a managing director at Deutsche Bank, noted...

Investors are still a major hurdle for industry efforts to put Fannie Mae and Freddie Mac MBS on a more level playing field, while Ginnie Mae is beginning to weigh its options to address a major shift in the profile of its MBS business. Freddie’s share of new MBS production by the two government-sponsored enterprises has dropped significantly over the past few years. The company typically accounted for 42 percent to 45 percent of GSE issuance up until 2008, when it fell to 39.8 percent. Last year, Freddie captured just 35.4 percent of the GSE market, and in the first nine months of 2012 it’s down to 34.2 percent. Steven Abrahams, a managing director at Deutsche Bank, said...

Rep. David Schweikert, R-AZ, said this week that in the coming months he will introduce bipartisan legislation to establish a regulatory framework for prime non-agency MBS. “I’ve spent the last two years trying to figure out what the box will look like,” he said. Non-agency MBS participants continue to debate whether reform of the government-sponsored enterprises is necessary before the non-agency MBS market can return in a meaningful manner. At the ABS East conference sponsored by Information Management Network this week in Miami, Schweikert said a functioning non-agency MBS market is necessary before members of Congress can be convinced to move forward with GSE reform. “I need to have...

New issuance of non-agency MBS fell to an all-time low of $1.77 billion in the third quarter of 2012 as re-securitization activity nearly fell off the cliff, a new Inside MBS & ABS analysis reveals. The previous record low for non-agency MBS was $1.79 billion, set in the fourth quarter of last year. Issuance dropped 49.0 percent from the second to the third quarter, bringing year-to-date production to just $10.28 billion – off 60.1 percent from the first nine months of 2011. When it’s over, 2012 will likely represent...[Incluldes three data charts]

Springleaf Financial Services is ramping up to issue its third non-agency MBS this year, a nearly $900 million transaction backed primarily by vintage performing subprime loans. Springleaf Mortgage Loan Trust 2012-3 features a hefty 47.75 percent credit enhancement supporting its one AAA-rated tranche, according to a presale report from Standard & Poor’s. “Total credit enhancement comprises subordination, an interest shortfall reserve fund, excess interest, and overcollateralization,” noted the report. S&P said...

Supporters of a controversial plan to use eminent domain to seize underwater mortgages from non-agency MBS pools, write down their balances, refinance them into the FHA program and repackage them for sale to other investors are facing fresh challenges. In California, where the eminent domain plan was first introduced, the Joint Powers Authority formed by the County of San Bernardino and two of its cities, Ontario and Fontana, announced that its next meeting, which was scheduled for Thursday, Oct. 25, 2012, had been cancelled. The only business before the JPA is...

The continued use of certain features of shifting-interest structures in MBS will keep risk of loss high for senior bond holders and even erode senior credit enhancement, although senior bonds in relatively new shifting-interest deals appear better protected from late-stage defaults, according to an analysis by Moody’s Investors Service. Moody’s said senior bonds in shifting-interest transactions it rated since 2010 have better armor against defaults in the late stages of the loan because they all have a hard credit enhancement floor. In a shifting-interest structure, the securitization sponsor may cover...

Regulatory uncertainty continues to frustrate mortgage bankers who can see the outlines of major pending changes in consumer protection, securitization rules and capital requirements that remain largely enshrouded in bureaucratic fog. “We have these new concepts, qualified mortgages and qualified residential mortgages, but we don’t know what their exact definitions are,” said Michael Heid, president of Wells Fargo Home Mortgage, during a panel session at this week’s annual convention of the Mortgage Bankers Association in Chicago. “We are in a gray state; the concepts are there, but the rules aren’t. At the same time we’re having to clean up issues from the past.” Debra Still, president and CEO of Pulte Mortgage, said...

New production of non-mortgage ABS during the third quarter held to the strong pace set so far in 2012 despite a softening in student loan securitization. A new Inside MBS & ABS market analysis and ranking shows that $48.72 billion of non-mortgage ABS were issued in U.S. markets during the third quarter, up 1.1 percent from the previous quarter. That brought year-to-date production to $136.90 billion, a hefty 37.3 percent increase over the first nine months of 2011. The biggest improvement in 2012 has been...[Includes two data charts]

No matter how bad mortgage market watchers believe this week’s headline-grabbing lawsuit against Morgan Stanley by the American Civil Liberties Union is, it could be much, much worse for a swath of new potential defendants throughout the securitization pipeline and for the industry as a whole, according to one legal expert. The ACLU headed a group that filed suit in the U.S. District Court in New York on behalf of five Detroit residents. The lawsuit claims that Morgan Stanley pushed a unit of now-bankrupt New Century Financial Corp. to target minority borrowers for high-risk subprime mortgages. Between 2004 and 2007, Morgan Stanley “ramped up”...