Fannie Mae – and perhaps, Freddie Mac – over the past few years have been quietly extending servicing advances to a handful of large nonbank specialty servicers, but it now appears that market might be shifting to Wall Street. Late last month, Green Tree Servicing signed a $1.2 billion servicing advance facility with Barclays Bank, a 12-fold increase from a previous agreement the nonbank had. Barclays is...
The Basel Committee on Banking Supervision recently proposed replacing credit ratings with loan-characteristic metrics for determining capital requirements on bank holdings of residential MBS and commercial MBS. Federal regulators in the U.S. note that the proposal is preliminary and any changes to U.S. capital requirements will go through a notice and comment process separate from the BCBS’ activity. The current standardized approach established by Basel for determining capital requirement riskweights prescribes the use of external credit ratings for residential MBS and commercial MBS, among other holdings by banks subject to capital requirements. “While acknowledging that credit rating agencies play an important role in financial markets and that external credit assessments provide valuable information that may assist in the analysis of credit risk exposures, the hard-wiring of external credit assessments into standards, laws and regulations may often lead...
MBS investors this week continued to bid up the price of agency product in the wake of rock-bottom oil prices and economic fears about Asia, Europe and any oil-producing nation that relies too heavily on the energy sector. According to figures compiled by MBS Quoteline, at one point this week investors were paying 105.10 for Fannie Mae MBS with a coupon of 3.5 percent. Back in October the bid on the Fannie 3.5 was a mere 101.83. “Who would pay 105...
The U.S. non-agency MBS space is looking more inviting these days, even though progress is painfully slow and there remains plenty of room for improvement, analysts at Fitch Ratings have concluded in a report out this week. The Fitch analysts said that the underwriting of residential mortgages has improved dramatically since the financial crisis, with recent vintages demonstrating the best performance on record so far. “New legislation has completely eliminated...
New MBS and ABS issuance last year was down 34.4 percent from 2013, largely due to a huge decline in agency single-family MBS production, according to a new Inside MBS & ABS analysis. A total of $1.145 trillion of residential MBS and non-mortgage ABS were issued during 2014, the lowest annual production volume since 2000. Last year got off to a very slow start, with just $517.0 billion in new issuance through the first six months of 2014, before gaining pace during the second half. Total issuance fell 4.8 percent from the third to the fourth quarter. Agency MBS remained...[Includes three data charts]
The Securities and Exchange Commission uncovered a number of compliance issues at the credit rating services in 2013, according to a report released by the federal regulator at the end of December. However, compliance is improving compared with previous exams conducted by the SEC. In exams covering rating activity in 2013, the SEC found issues ranging from conflicts of interest to adherence to policies for reviewing credit ratings to the use of affiliates or third-party contractors. The SEC didn’t single out any of the rating services other than to note whether an issue occurred at one of the big three rating firms or at one of several smaller rating services. For example, the SEC said...
Ocwen Financial’s massive exit from the agency servicing market is expected to be a multi-year phase-out complicated by its past regulatory problems and a weak market for legacy product, according to industry advisors. If the company follows through on its promise to exit all segments of the agency market – Fannie Mae, Freddie Mac and Ginnie Mae – it will wind up selling a hefty $182.51 billion of residential mortgage servicing rights, based on third quarter survey numbers submitted to Inside Mortgage Finance. At Sept. 30, the nonbank serviced...
Fannie Mae and Freddie Mac saw a modest decline in production of new single-family mortgage-backed securities at the end of 2014, but a rally in refinance lending softened the thud. The two government-sponsored enterprises securitized $179.38 billion of single-family MBS during the fourth quarter of last year, according to a new Inside Mortgage Finance analysis of loan-level data. That was down 2.1 percent from the third quarter of 2014. But the GSEs securitized...[Includes three data charts]
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