Freddie Mac has begun pilot testing its new Dealer Direct system for swapping legacy participation certificates for new single securities with a select group of dealers, the government-sponsored enterprise said in an update issued this week. In transitioning to the single security, Freddie will give all investors in its existing MBS that have a 45-day payment cycle the option to exchange them for the new 55-day securities. That process will be transacted through the Dealer Direct electronic platform. Holders of legacy MBS will work...

Trade groups representing a broad spectrum of mortgage and securitization businesses generally support an effort by Fannie Mae and Freddie Mac to develop more credit-risk transfer options, but some cautioned that the government-sponsored enterprises should maintain a level playing field. In response to a Federal Housing Finance Agency request for comments on the CRT program, the Mortgage Bankers Association and U.S. Mortgage Insurers repeated their calls for programs to allow loan sellers to buy deeper private MI in exchange for reduced GSE guaranty fees. To date, the vast majority of Fannie and Freddie CRT deals have been...

Mortgage industry representatives are calling upon the Consumer Financial Protection Bureau to do more to facilitate the correction of errors made under the enhanced disclosure regime of the agency’s integrated disclosure rule, to reduce or eliminate disruptions in the secondary market as well as boost access to credit. The pleas were made in conjunction with the industry’s broader response to the CFPB’s proposed clarifying rulemaking related to its so-called TRID rule, issued under the authority of the Truth in Lending Act and the Real Estate Settlement Procedures Act. In a comment letter sent this week to the bureau, the Consumer Mortgage Coalition urged...

The average daily trading volume of agency MBS hit $223.2 billion in September, the strongest reading of the year and a sign that liquidity in the market has improved. According to figures compiled by the Securities Industry and Financial Markets Association, daily trading volume increased by 17.7 percent compared to the same month a year ago. But the year-to-date averages are much closer: $206.6 billion for 2016 compared to $199.9 billion last year. In the agency space there is...

In a class-action ruling that could have implications for legacy MBS lawsuits, a federal appeals court confirmed a recent U.S. Supreme Court landmark decision on standing and statutory damages. Ruling in Nicklaw v. CitiMortgage earlier this month, the U.S. Court of Appeals for the Eleventh Circuit held that to establish standing in order to bring a lawsuit alleging only a statutory violation, a plaintiff must allege a concrete harm or injury resulting from the violation. Relying on the alleged statutory violation alone would only result in a dismissal, the court warned. The 11th Circuit decision is...

Issuance of non-mortgage ABS increased by 25.5 percent from the second quarter of 2016 to the third, thanks to significant increases in several asset categories, according to a new Inside MBS & ABS analysis and ranking.

The jumbo market is dominated by retail lenders to a greater extent than either conventional-conforming production or government-insured lending, according to a new analysis by Inside Nonconforming Markets. A group of 19 top jumbo lenders reported $92.45 billion in jumbo originations through their retail operations during the first half of 2016. That represented 76.8 percent of the $120.37 billion in total jumbo production for the group. The 19 lenders accounted...[Includes one data table]

The latest jumbo mortgage-backed security from Redwood Trust includes some differences compared with the two jumbo MBS the firm issued earlier this year. The $343.16 million deal includes loans from many lenders and contributions from a Federal Home Loan Bank program. Sequoia Mortgage Trust 2016-3 received preliminary AAA ratings from Kroll Bond Rating Agency and Moody’s Investors Service. The MBS will include...

The underlying theme of portfolio lending is the ability to use compensating factors in underwriting a mortgage, said analysts at MIAC Analytics in a recent web posting. Portfolio lenders, many of them community bankers, have figured out to how to find profitable opportunities in the mortgage niches that don’t work in the agency market, MIAC said. Often, these are consumers who were left out of the housing recovery because of the sharp decline in capital available in the non-agency market, they added. Typically, they don’t...

Nonbanks crossed a threshold in the third quarter of 2016, posting a hefty 6.3 percent increase in their combined Ginnie Mae servicing portfolio, according to a new Inside FHA/VA Lending analysis. Nonbanks serviced $826.6 billion of Ginnie single-family mortgage-backed securities as of the end of September. That represented 51.3 percent of the total Ginnie market. The nonbank servicing total includes a small amount of Ginnie servicing held by state housing finance agencies, roughly 1.0 percent of the entire market. But it doesn’t include the significant amount of Ginnie servicing that nonbanks do as subservicers for both depository and nonbank clients. Interestingly, the biggest gain for nonbanks in percentage terms came in servicing VA loans, which rose 8.1 percent from the second quarter to $252.1 billion, or 51.0 percent of the market. The VA sector is one business from ... [4 charts ]