Last week, the Consumer Financial Protection Bureau issued its long-awaited rule banning mandatory arbitration in consumer financial contracts. The industry concern is that, if left intact, the rule could lead to a rash of litigation impairing liquidity in the secondary markets and limiting consumer access to credit as companies seek to pull back on their risk exposure. The final rule prohibits “covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action concerning the covered consumer financial product or service.” It further requires...
Although reform of the government-sponsored enterprises is highly unlikely this year, community lenders went to Capitol Hill this week, testifying that equal opportunity in the secondary market and preserving the cash window are sacred tenets that cannot be compromised. At a GSE reform hearing late this week, Sen. Mike Crapo, R-ID, chairman of the Senate Banking Committee, called small lenders “fixtures in their communities” with local knowledge and expertise. “As we prepare to reform the system we must understand how small lenders access the market,” he said. Many community lenders access...
Since the introduction of the single-security effort, pricing differences between Fannie Mae and Freddie Mac MBS have just about been eliminated, thanks in part to prepayment speeds converging. A paper recently published by the Urban Institute found that back in 2012 and 2013, Freddie’s 3.0, 3.5, and 4.0 percent coupons traded at more than a $0.30 discount to Fannie Mae’s. But, by 2014 and 2015 that number narrowed to about $0.15, and by early 2017 the pricing differences had largely come together. The authors called...
The jumbo mortgage-backed security market is set for a significant boost as Flagstar Bank will issue MBS. Since 2015, only one bank has issued jumbo MBS: JPMorgan Chase. Other issuers have all been nonbanks as banks have largely opted to retain jumbos in portfolio instead of issue non-agency MBS.Some details about the planned Flagstar Mortgage Trust 2017-1 were revealed this week in documents filed with the Securities and Exchange Commission ...
Policymakers should make a number of changes to regulations to entice investors to buy new non-agency mortgage-backed securities, according to officials at Pacific Investment Management Company. PIMCO was a major investor in pre-crisis non-agency MBS. “Unlike the complexities of government-sponsored enterprise reform, a few minor, straightforward changes – some of which can be done through regulation, not legislation – can be made to bring private capital back to the market ...
Only fixed-rate mortgages were included in prime non-agency mortgage-backed securities issued in the second quarter of 2017, according to an analysis by Inside Nonconforming Markets. It was the third quarterly interval since the first quarter of 2016 that adjustable-rate mortgages and loans with interest-only features were excluded from prime/jumbo MBS. And in the first quarter of 2017, ARMs accounted for less than 1.0 percent of total prime non-agency ... [Includes two data charts]
Loans from more than 100 lenders are in the latest jumbo mortgage-backed security from Redwood Trust but most of the lenders contributed such a small volume of loans to the issuance that they weren’t identified by rating services. Only two lenders have consistently provided more than 5.0 percent of the dollar volume in jumbo MBS Redwood has issued this year: First Republic Bank and Quicken Loans. Loans from First Republic account for 19.6 percent of the $485.25 million ...
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