Analysts at Wells Fargo Securities worry that the post-election rate shock is not a positive omen for bank and overseas investors in MBS. “Since the U.S. presidential election, the 10-year yield has sold off by 55 basis points in a matter of two weeks,” they said in a recent client note. “Although banks and overseas investors are typically looking to buy on dips, large selloffs do not bode well for demand from these investors right after a rate shock. For banks, a large rate shock results in a hit on their regulatory capital.” According to their calculations, during the week ending Nov. 9, 2016, the net realized gains on bank portfolios declined...
Several pending mortgage lawsuits spawned by the housing crisis are inching closer to closure, including an apparent victory for Bank of America. The Department of Justice let the deadline pass to appeal a ruling from May in which BofA, defending practices of Countrywide Financial, escaped having to pay more than $1 billion in penalties to the Federal Housing Finance Agency. In 2014, a federal judge ordered...
Securitization of residential and commercial loans with Property Assessed Clean Energy (PACE) assessments has been growing over the last few years despite having only a few market players, prompting analysts to predict continued growth for the PACE securities market. Residential PACE financing has increased to $2.9 billion with 130,000 home upgrades since 2010, according to second quarter 2016 data from industry group PACE Nation. Commercial PACE financing, meanwhile, has grown to $304 million with 820 commercial projects over the same period. Three programs accounted...
Standards proposed by the Structured Finance Industry Group for disclosures of representations and warranties on new non-agency mortgage-backed securities are likely to put a burden on conduits and other aggregators that pool mortgages from scores of originators. The Wall Street group recently released the fourth edition of its RMBS 3.0 “green papers,” which aim to revive issuance of non-agency MBS by making reforms that will attract investors. The latest green paper focused on ...
Moody’s Investors Service published a warning this week regarding mortgage programs that use bank statements and letters from accountants to verify borrowers’ income. The rating service said that type of underwriting – especially when relying on fewer than 24 months of statements – yields loans that are more risky than mortgages that have traditional income verification. Bank-statement mortgages have gained some prominence in the non-agency market this year as Lone Star Funds ...
American International Group is preparing to resume issuing non-agency mortgage-backed securities, according to officials at the insurance company. The planned issuance differs significantly from the subprime MBS AIG issued before the financial crisis. Douglas Dachille, an executive vice president and CIO, said the firm is working to “rebalance its exposure to residential mortgages” after AIG’s sale of United Guaranty, a private mortgage insurer. During a recent presentation to investors ...
Lone Star Funds is set to issue a mortgage-backed security backed by new nonprime mortgages, according to documents filed with the Securities and Exchange Commission this week. It will be the third MBS from the COLT shelf this year. AMC Diligence said it reviewed 486 mortgages with a total unpaid principal balance of $235.40 million for the planned MBS. The mortgages were originated by Caliber Home Loans, LendSure Mortgage and Sterling Bank & Trust ... [Includes two briefs]
Total FHA and VA originations increased during the first nine months of 2016 compared to the same period last year, although VA was more active, posting a double-digit production increase, according to an analysis of Ginnie Mae data. Lenders delivered $201.0 billion of FHA loans to Ginnie single-family mortgage pools over the last three quarters, up 4.8 percent from the previous year. Approximately 65.4 percent and 29.3 percent of FHA loans securitized were purchase loans and refinances, respectively. The remainder was loan modifications. VA originations totaled $143.2 billion over the same period, up 22.3 percent from last year. Refinances accounted for 51.9 percent of volume and purchase loans comprised 47.0 percent. The share of FHA loans in agency mortgage-backed securities for the nine-month period was 19.5 percent and 13.9 percent for VA. FHA loans accounted for ...
The Department of Housing and Urban Development has expressed concern about the inspector general’s decision to withhold its opinion on the results of FY 2016 audits of HUD and Ginnie Mae. In its audit report, the HUD inspector general said it has issued a disclaimer of opinion on HUD’s fiscal years 2016 and 2015 (restated) consolidated financial statements because of the agency’s failure to deliver both statements and their accompanying notes in a timely manner. In addition, there were several unresolved audit matters from past audits that prevented the IG from completing an examination of HUD’s and Ginnie Mae’s accounts and rendering an opinion. These unresolved matters related to a number of things, including the Office of General Counsel’s refusal to sign a management representation letter, HUD’s improper use of budgetary accounting methods, and the $4.2 billion in ...
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