With the Federal Reserve acquiring a significant portion of new agency MBS issuance, the aggregate MBS holdings of banks and thrifts continued to decline in late 2013, according to a new ranking and analysis by Inside MBS & ABS. Commercial banks and savings institutions held a total of $1.507 trillion of residential MBS in portfolio as of the end of last year, newly-released call-report data reveal. That was down 0.4 percent from the end of the third quarter and marked the industry’s fifth consecutive quarterly decline. Bank and thrift MBS holdings fell...[Includes two data charts]

Researchers at the Federal Reserve determined that, contrary to “the prevailing view in economics literature,” quantitative easing initiatives by the Fed over the past few years had an impact on the pricing and yields for agency MBS. In a new study, Fed analysts Diana Hancock and Wayne Passmore found that the central bank’s purchases of Treasury securities and agency MBS since 2008 lowered MBS yields and mortgage interest rates by more than what would have been suggested by changes in market expectations alone. Hancock and Passmore said...

Bank and thrift MBS holdings fell by 4.6 percent during 2013, and by the end of the year, they were down 7.8 percent from the all-time high of $1.634 trillion reached at the end of March 2012.

The capital markets risk-sharing transactions completed by Fannie Mae and Freddie Mac in the past year are seen by some as a model for reform of the government-sponsored enterprises. However, the GSEs are taking on significantly more risk in the transactions than the non-agency first-loss requirements contemplated in legislation pending in Congress. Analysts at Barclays Capital project that after Congress approves mortgage-finance reform legislation, it would take at least 10 years to transition smoothly to a new system. Bills in Congress contemplate a five-year transition timeline, but raising enough private capital to fund the new system in that timeframe could be difficult. Industry analysts predict...

Mortgage-industry veteran John Robbins has launched a new mortgage cooperative that plans to bundle mortgages for sale into the secondary market and eventually form a conduit through which it hopes to securitize non-QM loans. “We’re going after best execution,” Robbins told Inside MBS & ABS. Of course, the venture – aptly titled The Mortgage Collaborative – is...

The private student-loan sector continues to slowly improve, but defaults and delinquencies are still at elevated levels compared to the period before the financial crisis, according to a new report by analysts at DBRS, based on data from deals that closed between 2002 and 2007. Quarterly gross defaults, as measured as a percentage of loans in repayment, slipped from 1.07 percent in the third quarter of 2013 to 1.00 percent in the fourth quarter. Similarly, the percentage of gross defaults as a percentage of the original pool balance declined from 0.55 percent to 0.50 percent. “Defaults have remained...

The GSE chief credited Fannie’s strong performance to a wide array of factors, including improving home prices and lower delinquencies, but also tighter underwriting standards which have created a pristine book of business for the company.

In what’s claimed to be the third-largest settlement of a class-action suit by investors in non-agency MBS, Royal Bank of Scotland agreed to pay $275 million in cash. Investors led by the New Jersey Carpenters Vacation Fund claimed that RBS did not disclose that loans included in Harborview MBS that it sold failed to meet the deals’ underwriting guidelines. The settlement is awaiting approval by U.S. District Judge Harold Baer in U.S. District Court for the Southern District of New York. Separately, the remains of Lehman Brothers settled...

Stakeholders continued to express concern over certain provisions in a draft model law that would be used as an overlay to, rather than a replacement of, existing state foreclosure laws. While many provisions of the current draft of the Home Foreclosure Procedures Act are right on track, several other provisions would raise the cost of lender compliance and make the origination and servicing of residential mortgages more difficult, warned stakeholders. “Sensible reform of the foreclosure process should not include...

According to responses from real estate agents involved in 1,401 transactions in January, some 45 percent of purchase mortgages with private MI experienced a delayed closing. And 42 percent of FHA purchase mortgages experienced a delay in closing.