New issuance of MBS backed by income-property mortgages during the second quarter rebounded from a lull in early 2017, according to a new analysis by Inside MBS & ABS. A total of $51.03 billion of commercial mortgages were securitized in the second quarter, a gain of 12.1 percent from the first three months of 2017. That brought year-to-date commercial MBS issuance to $96.54 billion, 12.4 percent ahead of the pace set in 2016. But CMBS production was...[Includes one data table]

Flagstar Bank priced its first post-crisis jumbo MBS this week and other big banks could start issuing deals this year, according to industry analysts. Since 2010, the main issuers in the fledgling jumbo MBS market have been nonbanks, with banks content to hold jumbos in portfolio. In recent years, the only bank to issue prime non-agency MBS has been JPMorgan Chase, which has packaged jumbos with some mortgages eligible for sale to the government-sponsored enterprises in its deals. The $443.8 million Flagstar Mortgage Trust 2017-1 follows...

A recent ruling by the Supreme Court of the United States affirmed a three-year statute of repose for certain securities-related lawsuits. The ruling will likely limit the claims that can be brought by investors in faulty MBS and ABS. The case of California Public Employees’ Retirement System v. ANZ Securities involved an attempt by CalPERS to opt out of a class-action lawsuit against securities underwriters and file a separate claim in a timeframe beyond a three-year limitation. In a 5-4 decision at the end of June, the Supreme Court affirmed rulings by lower courts that determined that CalPERS’ action was untimely under the three-year statute of repose in the Securities Act of 1933. The majority opinion written by Justice Anthony Kennedy said...

Fannie Mae and Freddie Mac shareholders claimed that recently unsealed government documents support their contention that the main goal of the Treasury Department’s quarterly sweep of the government-sponsored enterprises’ earnings was to keep the two GSEs in conservatorship. Officials from Treasury have consistently said that the sweep was designed to prevent the two mortgage giants from collapsing. But the latest batch of 33 confidential emails and memos released under court order in the case of Fairholme Funds vs. United States seems to illustrate otherwise. The documents were unsealed...

With inflation weakening and continuing to lag behind the Federal Reserve Open Market Committee’s 2 percent target, the Fed this week surprised no one and unanimously decided to leave the federal funds target rate unchanged at 1.00 percent to 1.25 percent. The U.S. central bank also indicated it will likely begin to gradually unload its enormous balance sheet “relatively soon,” which market participants and observers read as sometime this fall – probably with an announcement in September, with run-off set to begin in October. In terms of its portfolio, the FOMC said...

Loans collateralized by multifamily properties experienced the biggest increase in the delinquency rate among commercial property types during the month of June, rising 133 basis points to 4.10 percent, according to a new CMBS report from Moody’s Investors Service. But it may not be as bad, sector-wise, as it appears at first glance. “The difference was due mainly to two newly delinquent loans, both multifamily portfolios in the MLMT 2007-C1 transaction,” explained Kevin Fagan, a vice president and senior analyst with the ratings service. “Assuming these loans were current, the multifamily delinquency rate for June would be 2.57 percent.” Delinquency rates increased...

A new source of risk for residential MBS has emerged in the wake of Wells Fargo’s recent decision to hold back significant funds from MBS transactions to cover potential litigation expenses resulting from investor claims. In its latest report, Moody’s Investors Service warned that trustee holdbacks, such as Wells Fargo’s action, have a negative effect on the MBS transactions. Such actions reduce, at least temporarily, the funds available to pay interest and principal to bondholders, the rating agency said. Last month, Wells Fargo notified...

JPMorgan launched a new index this week aimed at connecting with clients looking to invest in Fannie Mae, Freddie Mac and Ginnie Mae MBS. The company said it is the first institutional agency mortgage index built on individual security valuations. The index, referred to as MAX, is billed as a “contemporary and comprehensive” benchmark of the agency MBS market. It combines 30-year, 15-year and 20-year MBS in an index that the bank says contains more than 400 aggregates that cover almost 85 percent of the agency market. And because it updates from the sixth business day of the month instead of the 15th, as most other indices do, JPMorgan said the MAX reduces a number of tracking errors. “Agency MBS is...

A number of lenders have experienced a sharp decline in refinance volume without a meaningful increase in purchase-mortgage originations, according to Jonathan Corr, president and CEO of Ellie Mae.

Large banks continue to dominate the business of servicing Fannie Mae and Freddie Mac home loans, but a group of hard-charging non-depository institutions are gaining ground. A new Inside The GSEs analysis of Fannie and Freddie mortgage-backed securities disclosures shows that total single-family MBS outstanding actually declined slightly, by 0.1 percent, during the second quarter. This was due to a 0.3 percent drop in Fannie MBS servicing – the figures do not include servicing of whole loans held by the enterprises – while the Freddie market grew 0.3 percent. Some 46.2 percent of Fannie/Freddie MBS servicing was held by banking organizations with more than $100 billion in assets. That included four of the top five GSE servicers and seven of the top 10.