New issuance of residential MBS slipped modestly during the second quarter of 2012 despite a strong start in the securitization of deeply underwater Fannie Mae and Freddie Mac mortgages. A total of $378.04 billion of single-family MBS were issued during the second quarter, down 3.4 percent from the first three months of 2012, according to a new Inside MBS & ABS analysis. On a year-to-date basis, the market was still 30.5 percent ahead of issuance during the first half of 2011. The second quarter ended on a strong note. Total MBS production increased 12.5 percent from May to June, including a pickup in...

Credit Suisse last week issued its second non-agency MBS backed by prime jumbo loans, structuring slightly higher credit-enhancement levels than those seen on Redwood Trust jumbo deals. As was the case with its first jumbo MBS of 2012, the new Credit Suisse transaction (CSMC Trust 2012-CIM2) is backed largely by loans from the investment portfolio of MetLife Home Loans, which shut down its primary market originations activity early this year. The insurance company will continue to provide reps and warranty guaranties on MetLife loans, which accounted for 85.2 percent of the $425.1 million mortgage...

In an unusual move, the federal judge overseeing the Federal Housing Finance Agency’s massive legal action against many of the nation’s biggest MBS issuers has granted a defendant the right to appeal her denial of its motion to dismiss. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted permission to UBS Americas to go over her head to the U.S. Court of Appeals for the Second Circuit. UBS hopes the appellate court will reverse...

The gap between the performance and liquidity of Fannie Mae and Freddie Mac MBS continues to widen and a proposal to make their securities interchangeable is gaining traction among stakeholders. But unless a workable valuation solution is found, bridging that gap between the two government-sponsored enterprises will remain nearly impossible, said the Mortgage Bankers Association. Pricing differences between Fannie and Freddie have grown...

Leading Senate Democrats and Republicans have been moving cautiously to advance legislation to expand the Home Affordable Refinance Program, although industry observers say the odds are long the measure will see meaningful Congressional action before the legislative clock runs out. Senate Banking Committee Chairman Tim Johnson, D-SD, and Sen. Richard Shelby, R-AL, the committee’s ranking member, have been working on an agreement to ensure that the proposed amendments to the legislation in a markup would be strictly narrowed to making changes to HARP. However, Shelby is pushing to permit any provision on housing finance to be considered...

When it comes to modifying non-agency mortgages, early loan modifications greatly increase the rate of success, and principal reductions are the most effective type of loan mod, according to a new study by the MBS strategy group at Amherst Securities Group. “Modification activity has undergone a dramatic reshaping over the past few years, which has dramatically improved modification success,” the study said. “In particular, payment reductions are much larger now, and that is...

Roughly 27 percent of outstanding Ginnie Mae MBS pools are eligible for the FHA’s revised streamline refinancing program, which could translate to $36 billion in new annual Ginnie Mae issuance, according to a report from Barclays Research. Barclays analysts estimated that about $293.0 billion of Ginnie Mae’s $1 trillion-plus 30-year loan pools were originated before May 2009. About 79 percent of the collateral backing these pools are FHA loans, which suggests that as much as $232.0 billion could qualify...

Relatively few repurchase demands on mortgage loans backing non-agency MBS were resolved during the first quarter of 2012, according to a new Inside MBS & ABS analysis of disclosure filings made by 34 securitizers. The securitizers reported that a total of $29.03 billion of loans were in some stage of the process following demands that the mortgages be repurchased because of breaches of representations and warranties by the originator of the loans. But of that amount, some $28.62 billion – 98.6 percent of total activity – were classified...(includes one data chart)

The Securities and Exchange Commission is coming down the home stretch in a project that has raised jitters in the MBS and ABS market: a review of the credit rating process for structured finance transactions that will conclude with reform recommendations for Congress. Embedded in the Dodd-Frank Act was a provision authored by Sen. Al Franken, D-MN, that requires the SEC to study potential conflicts of interest in issuer-pay and subscriber-pay compensation models used in the credit rating process. Franken originally proposed that the SEC be required to create a process through which a new government entity would assign...

The Department of Housing and Urban Development is looking for ways to expand the FHA’s home renovation program to accommodate real estate-owned properties even as the mortgage industry urged HUD to open the program to investors. Acting FHA Commissioner and Assistant Secretary for Housing Carol Galante said HUD is considering use of the 203(k) Rehabilitation Loan program to ease FHA’s huge inventory of foreclosed properties. HUD’s REO inventory has dropped from a peak of 68,997 foreclosed properties in March 2011 to 29,692 in February. As of May 27, the inventory was ...