Freddie Mac had a difficult time keeping up with Fannie Mae and Ginnie Mae in mortgage pass-through production last year, but the government-sponsored enterprise continued to out-produce the other agencies in structured mortgage securitizations. Freddie issued a total of $154.7 billion in single-family real estate mortgage investment conduits in 2011, which represented 41.0 percent of the agency REMIC market. While the overall market was down 17.8 percent from the previous year, Freddie increased its REMIC issuance by 24.7 percent. Fannie managed a modest 1.6 percent increase from the...

Redwood Trust is getting ready to issue its first jumbo MBS of 2012 backed by a more diverse pool of prime mortgages than the company’s previous transaction. Fitch Ratings said it plans to give AAAsf ratings to the senior bonds in Sequoia Mortgage Trust 2012-1, which will enjoy 8.25 percent credit enhancement from subordinate classes. That’s a stiffer credit enhancement level than on Redwood’s two jumbo deals from last year, which had 7.40 percent and 7.50 percent support levels at issuance. Two factors appeared to play the biggest part in the higher credit support levels: more diverse collateral and more...

Agency single-family MBS issuance ended 2011 with a bang as the three agencies jostled for market share, a new Inside MBS & ABS analysis reveals. Ginnie Mae and Freddie Mac ended the year with nearly identical total issuance, with Freddie seeing a slightly larger decline from 2010 levels. Fannie Mae, however, recorded a much smaller drop in total production last year, boosting its share of the agency market. Freddie could not keep pace with Fannie’s surging MBS issuance volume during the fourth quarter. In December, Freddie accounted for just 22.7 percent of combined production by the two...

It started last week with an unsolicited white paper outlining “a framework for thinking about certain issues and tradeoffs that policymakers might consider” and blossomed into a coordinated assault by the Federal Reserve on the housing slump that won’t go away. Having purchased over $1 trillion in mortgage securities in an effort to drive mortgage interest rates to all-time lows, the Fed appears to be using its speechmaking and paper-writing powers to try to get the rest of Washington moving on housing. In addition to the policy paper, Fed officials in the past week have made three speeches on...

The number of FHA endorsements grew by a whisper in November, up 0.2 percent to 88,206 from 88,060 in October, and down a screaming 32.8 percent from last year, according to Inside FHA Lending’s analysis of agency data. Endorsements for the month totaled $14.5 billion, with purchases and first-time homebuyers leading the way. Approved lenders accounted for the bulk of originations during the month, 79.8 percent. Purchase transactions comprised 64.8 percent of total originations for the month. An estimated 96.1 percent of loans insured by FHA were fixed-rate mortgages. Purchase loans with FHA...

Loan modifications with principal reduction have significantly increased in the past year, with servicers seeing improved performance compared with other types of mods. The mods remain concentrated on securitized non-agency mortgages as well as portfolio loans, but performance varies considerably. After falling to a 2.7 percent share in the fourth quarter of 2010, principal reduction mods have accounted for a growing share of bank and thrift mod activity, according to the Office of the Comptroller of the Currency. Principal reduction was used in 7.8 percent of the mods completed by nine major bank and thrift servicers in the third quarter of 2011. ...

In 2011, high-touch subprime servicer Carrington Mortgage Services significantly decreased its delinquency processing timelines and had its servicer rating confirmed at the end of the year. The servicer also made adjustments after facing criticism from non-agency mortgage-backed security investors who claimed that Carrington’s practices improperly favored investments made by the hedge fund that also owns the servicer. Carrington serviced $11.73 billion in subprime mortgages as of the end of the third quarter of 2011, according to estimates by Inside Nonconforming Markets. The servicer received a mid-range rating for subprime and special servicing from Fitch Ratings, with the rating service recently confirming that Carrington “demonstrates proficiency in overall servicing ability.” ...

The group of institutional investors that negotiated a potential $8.5 billion settlement with Bank of America has recently targeted other non-agency mortgage-backed security issuers. The move is the latest development in a number of ongoing claims regarding non-agency MBS. This week, the group led by the law firm of Gibbs & Bruns asked trustees to open investigations on more than $19.0 billion of non-agency MBS issued by Wells Fargo. The investors said they hold more than 25 percent of the voting rights in 48 trusts that issued the non-agency securities between 2005 and 2007. ...

The Congressionally-mandated increase in the guarantee fees charged by the government-sponsored enterprises and the FHA will not be enough to significantly shift activity to the non-agency market, according to industry analysts. One option for increasing non-agency activity has been an increase in GSE guarantee fees, but the 10 basis point increase approved by Congress in December does not appear to be enough for most products. “The argument that it will encourage homeowners to look for non-GSE/FHA loans is pretty silly and hides the foolishness of using housing to pay for payroll tax cuts,” said Adam Levitin, an associate professor of law at Georgetown University. ...

Issuance of non-agency mortgage-backed securities supported by newly originated mortgages will remain muted in 2012, according to industry analysts. A number of factors have combined to limit non-agency MBS issuance, including economic issues, regulatory issues and uncertainty regarding reform of the government-sponsored enterprises. Only two non-agency securities backed by new loans were issued last year – a total of $665.2 million in jumbo MBS from Redwood Trust. “The trickle of deals should continue into 2012,” according to analysts ...