The average daily trading volume in agency MBS declined to $202.4 billion in February, one of the worst readings over the past six months, according to figures compiled by the Securities Industry and Financial Markets Association. In January, volume was a bit healthier at $229.8 billion, but that was before concerns began to mount about President Trump’s business agenda and how successful the new White House might be in rolling back regulations – financial and otherwise. As Inside MBS & ABS went to press this week, fears were...
Observers of the subprime auto ABS market are raising concerns as delinquencies rise above peaks seen during the financial crisis as lenders have loosened underwriting standards in search of market share. According to Fitch Ratings’ index of subprime auto ABS, 60+ day delinquencies on loans backing the securities hit 5.45 percent at the end of 2016. Delinquencies were up from 4.70 percent at the end of 2015 and 41 basis points higher than the peak for the sector in 2009. The index tracks an outstanding balance of $38.6 billion from 149 transactions. There were 21 active shelves in the index, up from 12 active issuers in 2010. “Smaller lenders along with recent new entrants are...
Housing finance reform, especially if it weakens mortgage underwriting standards, could have a negative impact on private-label MBS as well as the government-sponsored enterprises’ credit risk-transfer transactions, according to a newly published report from Moody’s Investor Services. Analysts said that various reform proposals could reduce the influence that Fannie Mae and Freddie Mac have in the market and likely increase credit risk in new MBS in the short-term. Combined with a rising interest rate environment, such reform could have a credit-negative effect. Loan origination processes and the kinds of loans produced could become...
Last year was a decent enough year for the student loan sector, and so far this year, the space is looking dramatically more robust, according to analysts at the DBRS ratings service. New issuance so far in 2017 is more than twice that from the same period last year, with volume exceeding $4.5 billion, according to Jon Riber, a senior U.S. ABS ratings analyst at DBRS. “There are...
Wells Fargo, Deutsche Bank and the Royal Bank of Scotland have agreed to pay investors $165 million to resolve allegations of misrepresenting the quality of mortgage loans underlying securities issued by now-defunct subprime lender NovaStar Mortgage. The agreement was announced last week subject to approval by Judge Deborah Batts of the U.S. District Court for the Second District of New York, according to a report by Reuters. At issue is $7.7 billion in residential MBS delivered into various trusts and sold to investors, including pension funds, prior to the housing crash. A multi-employer union pension plan led by the New Jersey Carpenters Health Fund filed...
There have been scattered reports that some lenders and brokers are still chasing quick-turn refis aided by secondary market investors offering to buy and securitize those loans.
The Department of Veterans Affairs is considering possible solutions, including new regulation or policy changes, to address the ongoing problem of aggressive refinancing of VA purchase loans. Certain lenders and mortgage brokers apparently are still soliciting VA purchase loans for streamline refinancing despite Ginnie Mae’s effort to stop the practice and help mortgage-securities investors get full return on their investments. Ginnie Mae issued...
Although 2017 is expected to be a down year for originations, Freedom Mortgage – already a top-10 ranked lender – is poised for growth via mergers and acquisitions and is pondering deals for both servicing rights and other shops. Company CEO and founder Stanley Middleman told Inside Mortgage Finance bluntly: “We’re shopping.” Although Middleman declined to name any targets, he said...
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