New issuance of non-agency commercial MBS fell dramatically during the second quarter of 2016, more than offsetting a modest uptick in the production of agency multifamily MBS, according to a new Inside MBS & ABS analysis. Non-agency CMBS issuance fell to just $12.87 billion in the second quarter, a 29.5 percent drop from the first three months of the year. It was the lowest quarterly output of new CMBS since the second quarter of 2012, when just $10.63 billion of new securities were issued and the market was still finding its legs after the financial meltdown. New CMBS issuance has been...[Includes one data table]

Two Harbors Investment and Five Oaks Investment separately announced plans to end their jumbo mortgage conduit operations due to profitability issues. “We believe that current and expected mortgage market conditions and competitive pressures will prevent us from growing this business to a scale that meets our long-term goals and financial expectations,” said Thomas Siering, Two Harbors’ president and CEO. The Two Harbors announcement came...

When rates plunge at the end of a given quarter – as they did in June – it usually translates into large hedging losses for Fannie Mae and Freddie Mac. But this time around, there seems to be less chatter about the topic – and a reduced level of anxiety. Next week, both government-sponsored enterprises will release second-quarter results and all eyes will be on the line item that reveals the net gain or loss from their derivatives, the instruments the two use to hedge their MBS positions. In the first quarter of this year, Freddie posted...

Lenders originating agency mortgages are seeing plenty of demand in the secondary market, according to panelists at the California Mortgage Bankers Association’s Western Secondary Market Conference this week in San Francisco. “Capital is searching for a home,” said Rob Branthover, a managing director at Mortgage Industry Advisory Corp. He noted that many investors are focusing on agency mortgages. Mike Duncan, a senior hedge manager at Compass Analytics, said...

Troubled waters are ahead for mortgage servicers as 12 of the 27 largest rated shops experienced portfolio declines in the first quarter of 2016, according to Fitch Ratings. Fitch data showed modest portfolio declines for the five banks and seven nonbanks, ranging from less than 1 percent to a little more than 6 percent. Nonbanks, totaling 17, outnumbered the banks. Statebridge Co. experienced...

The Sixth U.S. Circuit Court of Appeals overturned a lower court decision that had cleared Freddie Mac of charges that it misled investors about its involvement in the subprime mortgage market. The lawsuit was filed in 2008 by the Ohio Public Employees Retirement System, which claimed Freddie made false public financial statements that hid its exposure to risky loans. The fund alleged that it lost more than $27.2 million as the value of Freddie stock plummeted. OPERS said...

Look for the Federal Reserve to repeat last year’s performance and raise interest rates one quarter of one percent in December, according to some supporters and critics of the U.S. central bank, enabling the Fed to say it did, in fact, lift interest rates this year. During its meeting in Washington, DC, this week, the Fed once again, as expected, opted to hold rates unchanged and did not tip its hand about a future move, although some market participants came away with the impression an increase in September is a little more likely than had been the case after the central bank’s last meeting. The Federal Reserve’s Open Market Committee last raised...

Marketplace lender Social Finance is preparing to issue a $480.55 million ABS backed by unsecured consumer loans, its second such deal to date. So far, 10 of its 12 securitizations have used student loans as collateral. According to a report by DBRS, SCLP 2016-2 consists of $425.88 million of class A notes and $54.67 million of B notes. The package is expected to price early next week, but at press time no information was available regarding the coupons. The class A notes received...

Two Harbors Investment announced this week that it will discontinue its mortgage conduit and securitization operations. The real estate investment trust was the top issuer of jumbo mortgage-backed securities in the first half of 2016, with $628.8 million in volume, according to Inside Nonconforming Markets. Five Oaks Investment also announced that it will stop jumbo conduit activities on Aug. 1. Hatteras Financial, a third jumbo conduit related to a REIT, recently pulled ...

Pricing for new jumbo mortgage-backed securities has improved recently, prompting Redwood Trust to issue a new transaction relatively quickly. Redwood issued its first jumbo MBS of the year, a $344.89 million deal, in early June. While the company issued an average of one jumbo MBS per month in 2013, the real estate investment trust has largely shifted to whole-loan sales of jumbos in recent years due to better pricing for such transactions. At an investor conference ...