Interest-only loans represent a growing share of collateral securitized by commercial MBS conduits over the past few years. Credit rating agencies are concerned because IO loans generally perform worse than amortizing mortgages.

Most of the major product categories had some slippage in the second quarter.

As GSE investor James Fenkner put it: “Yes, the U.S. Treasury will be cashing in again nicely next week.”

A handful of banks account for a large share of the loans in prime non-agency mortgage-backed securities issued since the start of 2017, according to a new ranking and analysis by Inside Nonconforming Markets. Banks were four of the top five originators of securitized prime mortgages between January 2017 and June 2018. More precisely, these banks ranked among the top known sources of collateral for these deals. In fact, the name of the originator was ... [Includes two data charts]

In a potentially significant shift, Wells Fargo has set aside $507.0 million in mortgages for inclusion in a non-agency mortgage-backed security. Wells is the top jumbo lender and some industry analysts suggest that the jumbo MBS market won’t rebound until banks like Wells stop retaining production in portfolio. Wells said loans designated as held-for-sale for a future MBS are nonconforming mortgages that would have otherwise been stored in its portfolio. Although no other details about ...

Annaly Capital Management plans to include a much higher share of non-qualified mortgages in its latest non-agency mortgage-backed security than the first deal issued by the real estate investment trust this year. Non-QMs will account for 45.4 percent of the $383.5 million issuance, according to presale reports by Fitch Ratings and Kroll Bond Rating Agency. Annaly’s first MBS was largely stocked with loans that had seasoned for at least 10 years – well before the QM rule came along ...

As for what might be in the Hensarling bill, the conservative from the Lone Star state wasn’t offering…

Moves by three issuers of prime non-agency mortgage-backed securities to allow for third-party due diligence reviews to be completed on fewer than 100 percent of the loans in an MBS could increase the risk of losses for MBS investors, according to Moody’s Investors Service. In a report released this week, Moody’s said narrower due diligence reviews increase the likelihood of defective loans appearing in non-agency MBS. The rating service added that representations ... [Includes five briefs]

IMA is working on two flow deals that could net the buyer upwards of $100 million a month in new product...

Chris Boyle, chief client officer at Freddie Mac: “I don’t know how half of you make money.”