In the past few years, efforts facilitated by the Treasury Department and the Structured Finance Industry Group have helped develop standards for a deal agent in non-agency MBS. The concept took a major step forward last week when SFIG published a draft deal-agent agreement. However, the agreement didn’t delve into the specifics about how a deal agent would be compensated and industry participants have a wide range of opinions on the issue. A lawyer involved with the creation of the deal agent standards said...

The mortgage securitization rate jumped significantly higher during the third quarter of 2016, spurred by a bigger market share for Fannie Mae and Freddie Mac. A total of $416.5 billion of relatively newly-originated mortgages were included in single-family MBS issued during the third quarter, according to a new Inside MBS & ABS analysis. That figure, which excludes modified loans and most mortgages aged more than three months, represented 71.2 percent of the $585.0 billion of first-lien mortgages originated during the period. During the second quarter, the securitization rate was...[Includes one data table]

Fitch Ratings edged out Standard & Poor’s as the most active rating services in the non-mortgage ABS market during the first nine months of 2016, a new Inside MBS & ABS analysis and ranking reveals. Fitch also was the top rating service in the more subdued non-agency MBS market. The company rated some $10.80 billion of non-agency MBS, or 64.8 percent of the total market, which includes a substantial volume of unrated private deals. DBRS (37.2 percent market share) and Moody’s Investors Service (34.5 percent) were...[Includes two data tables]

Real estate investment trusts that invest in agency MBS could be in for some turbulence on their book values in the coming quarters if rates continue to rise – as they have since the November election. As Inside MBS & ABS went to press, most analysts had come to the same conclusion: that publicly traded mortgage REITs have underperformed most financial stocks, including nonbank lender-servicers such as Ocwen Financial, PHH Corp. and Walter Investment Management Corp. Then again, investing in so-called mREITs has never been...

This week, for only the first time this year and only the second time in the last decade, the Federal Reserve raised interest rates by 25 basis points, a move widely expected by market participants. What captured more attention was an upward adjustment of the Federal Open Market Committee’s so-called “dot plot,” suggesting that the U.S. central bank anticipates possibly raising rates three times during each of the next three years. Last year at this time, the FOMC raised...

A New York appellate court this week denied Credit Suisse’s motion to dismiss claims made by NY Attorney General Eric Schneiderman in relation to the creation and sale of MBS to investors. In a majority decision, the New York Supreme Court held that the AG’s claims of securities fraud and persistent fraud or illegality are not time-barred, finding that the claims under the state Martin Act and Executive Law are governed by the six-year statute of limitations rather than the three-year limitations found in Section 214(2) of the state’s Civil Practice Law and Rules (CPLR). As of March 21, 2012, the parties entered...

Social Finance, a nonbank that started offering mortgages in 2014, is preparing to issue a $168.79 million jumbo mortgage-backed security, according to presale reports. It will be the first jumbo MBS from SoFi, which originated all of the mortgages backing the deal. While SoFi started operations in 2011 as a peer-to-peer or marketplace lender, Fitch Ratings noted that its funding strategy has evolved to more traditional sources, such as banks and other large financial institutions ...

A new nonprime MBS from an affiliate of Lone Star Funds has two significant distinctions: it’s the first post-crisis nonprime MBS backed by new originations to receive a AAA rating and it’s the largest post-crisis nonprime MBS backed by new originations. COLT 2016-3 Mortgage Loan Trust received AAA ratings from DBRS and Fitch Ratings. “Over the past year, Fitch has become more comfortable with the operational risk of the issuer through extensive due diligence results, multiple ...

The Structured Finance Industry Group released the fifth edition of its RMBS 3.0 green papers last week, featuring a draft deal-agent agreement and proposed bondholder-communication protocols. The green paper effort to revive the non-agency mortgage-backed securities market started in 2013 and now totals 400 pages. “That’s a lot of work for an industry that apparently doesn’t exist,” Richard Johns, SFIG’s executive director, said last week at the trade group’s annual ...

Proposals aimed at reviving the issuance of non-agency mortgage-backed securities have done little thus far to get volumes anywhere near the levels seen before the financial crisis. Industry participants suggest that there are a number of factors beyond proposed standards from trade groups that are limiting issuance. The American Securitization Forum started its effort to revive the non-agency mortgage-backed security market in 2009. The first post-crisis jumbo MBS backed by newly originated ...