The long-awaited correction in MBS prices was put on hold this week with the news that the Federal Reserve isn’t ready to hike interest rates anytime soon. Moreover, now there’s a growing belief among some economists and mortgage market watchers that the central bank may not raise interest rates at all this year. And there’s even a school of thought that suggests the yield on the benchmark 10-year Treasury bond might hit 1.0 percent before it reaches 2.0 percent. As Inside MBS & ABS went to press this week, the 10-year was...

The Urban Institute is warning against Fannie Mae and Freddie Mac putting all of their eggs into one credit-risk transfer basket. The CRT programs at the two government-sponsored enterprises have relied heavily on structured debt notes sold to capital market investors – Freddie’s Structured Agency Credit Risk and Fannie’s Connecticut Avenue Securities – as well as reinsurance. Although the influx of private capital is a good thing, Karan Kaul, research associate with UI, said...

A proposed rule issued by the Federal Reserve in March could increase costs and reduce securitization activities, according to industry participants. The Fed’s proposed single-counterparty credit limits for large banking organizations were required by the Dodd-Frank Act. The Fed proposed single-counterparty credit limits for domestic and foreign bank holding companies with $50.0 billion or more in total consolidated assets. The Fed first issued...

Although Fannie bragged about the size of the CIRT deal, it did not identify its counterparties.

The mortgage industry and secondary-market investors continue to struggle with uncertainty over the degree of liability for errors in complying with the Consumer Financial Protection Bureau’s integrated-disclosure rule, commonly known as TRID. Many hope the pending TRID 2.0 rulemaking expected from the CFPB this July will clarify and resolve the exasperating ambiguity and at least let industry participants and investors know exactly where they stand and what risks they are taking on. One of the most important areas for investors is contractual liability. “Under most mortgage loan purchase agreements, there is a representation and warranty for absolute compliance [or] a signed agreement saying that you’re only liable for material violations,” said Richard Horn, a Washington, DC, attorney. Speaking at this week’s American Bankers Association conference, the former CFPB official said, “But whatever the agreement, you still have contractual liability for the loans that you sell, so keep that in mind.” Civil liability is...

Late this week we were hearing reports about one mortgage cooperative that was trying to strike a deal with one of the GSEs regarding pricing breaks for its members...

Lone Star Funds is preparing to issue a $161.71 million nonprime mortgage-backed security that will close next week. COLT 2016-1 Mortgage Loan Trust received an A rating from DBRS and Fitch Ratings. The deal marks the first nonprime MBS backed by new originations to receive a rating since the financial crisis. It will also be the largest post-crisis nonprime MBS issued to date, topping a $150.35 million MBS from Angel Oak Capital Advisors in December. Officials at Fitch Ratings said ...

A $412.66 million jumbo mortgage-backed security planned by a unit of JPMorgan Chase received high marks from rating services save for the representations-and-warranty framework on the MBS. Presale reports on JPMorgan Mortgage Trust 2016-1 were published last week, with AAA ratings from DBRS, Fitch Ratings and Moody’s Investors Service. Some 15 lenders contributed to the planned MBS, led by New Penn Financial with a 19.7 percent share, Primary Capital Mortgage ...

Ginnie Mae securitization of rural home loans got off to a wobbly start in the first quarter of 2016 as securitization volume fell 13.8 percent from the prior quarter, according to an Inside FHA/VA Lending analysis of Ginnie data. Approximately $3.9 billion in loans with a USDA guarantee were securitized during the first three months, with the top five issuers accounting for $2.1 billion of mortgage-backed securities produced by the segment during the period. USDA securitization volume dropped 9.2 percent year over year. Top USDA issuer Chase Home Finance accounted for $1.2 billion of securitized rural housing loans, while PennyMac, in distant second place, finished the quarter with $378.5 million. Wells Fargo ($294.0 million), Pacific Union Financial ($122.8 million) and Amerihome Mortgage ($102.2 million), in sequential order, comprised the rest of the top five issuers. Pacific Union climbed over ...

The ABS allows the following mortgage firms to service the assets: Nationstar, New Residential, Select Portfolio Servicing, Specialized Loan Servicing and Walter Investment Management.