Defying the expectations of most industry analysts, investors have bid up the price of agency MBS over the past two weeks, pushing values into nosebleed territory. According to figures compiled by MBS Quoteline, the price of the Fannie Mae 3.50 percent bond recently reached 104.4. “This week and last week we saw new highs,” said Joe Farr, director of sales and marketing for the company. And that has made...

Wall Street analysts are generally projecting a year of stability for most asset classes in the consumer ABS space for 2015, despite a few more losses and an anticipated increase in interest rates. The one exception might be subprime auto. Analysts at Standard & Poor’s Ratings Services cited a favorable overall environment characterized by a strengthening economy, healthy consumer credit fundamentals, and robust structural protections in ABS transactions. “We expect...

A coalition of global securities-market regulators proposed criteria late last week to assist the financial industry’s development of “simple, transparent and comparable” securitization structures. The proposed criteria from the Basel Committee on Banking Supervision and the International Organization of Securities Commissions would apply to many types of MBS and ABS. The extent of involvement by the Securities and Exchange Commission regarding the proposed criteria is unclear. The SEC declined to comment on the proposal and the Bank for International Settlements wouldn’t reveal the members of the taskforce that worked to develop it. However, the SEC is a member of IOSCO and the agency noted that standards issued by IOSCO become the benchmark against which an IOSCO member’s regulatory practices are assessed. The BCBS and IOSCO said...

Two real estate investment trusts that have focused their efforts on residential MBS recently announced plans to enter the commercial MBS market. The moves come as issuance of residential MBS has been subdued since the financial crisis while issuance of commercial MBS activity has been soaring in recent years. PennyMac Financial Services announced this month that it formed PennyMac Commercial Real Estate Finance. The business will focus on loans that finance multifamily and other commercial real estate with a typical value of under $10 million. PennyMac said it plans for its REIT, PennyMac Mortgage Investment Trust, to acquire and securitize the commercial mortgages. “The opportunity in this market is...

A federal bankruptcy judge last week ruled against increasing Lehman Brothers’ reserves for residential MBS claims. The ruling by Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District of New York was a setback for investors and trustees who asked the court in August to increase Lehman’s current reserves of $5 billion to $12.1 billion in a bid to force the defunct investment bank to repurchase legacy MBS., according to a Barclay’s Research report. The lawsuit against Lehman alleges...

The number of issuers offering jumbo mortgage-backed securities will increase in 2015, according to analysts at various rating services, but total issuance volume isn’t expected to grow by much compared with this year. Attracting investors willing to purchase AAA tranches of jumbo MBS remains a key obstacle. Some $5.4 billion in jumbo MBS were issued during the first three quarters in 2014, according to Inside Nonconforming Markets, including $3.1 billion in the third quarter ...

A savings bank that focuses on subservicing has been the most active servicer of loans in jumbo mortgage-backed securities since 2013, according to Fitch Ratings. A number of rating services view the firm, Cenlar, as a strong servicer with good prospects for continued growth. Last week Fitch affirmed its RPS2 rating for Cenlar as a servicer of prime mortgages that demonstrates “high performance in overall servicing ability.” Fitch said that since 2013, Cenlar has added ...

Credit Suisse appears to be close to issuing a jumbo mortgage-backed security with some loans sourced from Five Oaks Investment. Stonegate Mortgage announced an expansion of its offerings of non-agency mortgage products last week. The lender is offering adjustable-rate mortgages with loan-to-value ratios as high as 90 percent and no requirement for mortgage insurance. The loans can have balances as high as the conforming loan limit ... [Includes three briefs]

The Inspector General of the Department of Housing and Urban Development has announced a $300 million recovery from an earlier settlement between SunTrust Mortgage and the Department of Justice, Consumer Financial Protection Bureau, the HUD Office of the Inspector General, and 50 state attorneys general. The settlement resolved allegations of violations of FHA requirements in a joint complaint filed on June 14, 2014, by federal and state enforcement agencies. The suit against SunTrust alleged misconduct related to the origination and servicing of single-family residential mortgages. The problem loans were uncovered during a routine OIG review of targeted FHA-insured loans. According to the suit, as an FHA direct endorsement lender, SunTrust certified poorly underwritten loans for FHA insurance from January 2006 through March 2012, despite its knowledge of ...

Ocwen Financial’s dry spell of acquiring nonperforming FHA loans out of Ginnie Mae mortgage-backed securities pools ended in early December with the nonbank servicing giant buying $253.1 million of delinquent product. Speculation, however, is mounting that Ocwen may not be long for the Ginnie Mae business, at least as a servicer. Ocwen’s disclosure of the “early” FHA buyouts came 11 days after it sold to an undisclosed buyer. In the first quarter, the company engaged in $646 million of early buyouts (EBO) and followed up with a $490 million EBO deal in the second quarter. However, EBO volume fell to zero in the third quarter. The December acquisition came in one fell swoop raising cautious, short-term expectations at Ocwen. “We expect to execute more such purchases in the next few months, as long as market conditions are favorable,” said Chief Investment Officer John Britti. As fast as it had ...