A new tax policy proposed by the Internal Revenue Service in April aimed at corporate “earnings stripping” tax avoidance maneuvers could cause significant problems for the MBS and ABS markets, according to industry participants. The proposed rule from the IRS under Section 385 of the Internal Revenue Code of 1986 would treat related-party debt as equity, aiming to reduce internal restructurings at foreign corporations by establishing new taxes. The Structured Finance Industry Group’s Tax Policy Committee submitted...
The non-agency MBS market shriveled up and nearly blew away in the second quarter of 2016 as new issuance totaled only $6.96 billion, according to an Inside MBS & ABS analysis. New production tumbled 17.0 percent from the first quarter of the year, which failed to top the $10 billion mark in issuance. The second-quarter total was the lowest output since the end of 2013, when just $6.11 billion of new non-agency MBS was produced. While there was a stiff decline in re-securitization activity from the first quarter, scratch-and-dent securitizations of nonperforming, re-performing and other dinged-up assets increased...[Includes two data tables]
The secondary market for mortgages with TRID mortgage-disclosure errors has stayed fairly constant the past few months, but there are new signs the business is getting a bit long in the tooth. According to interviews with investors and brokerage firms involved in the scratch-and-dent market, the auction of mortgages with disclosure problems (of all varying degrees) continues, but fewer sales are closing. Mid America Mortgage, Addison, TX, one of the most active buyers in the space, said...
MBS prepayment speeds are likely to climb higher because of falling mortgage interest rates, but industry analysts are undecided about how big a factor borrower burn-out will be. The Mortgage Bankers Association said its refinance loan application index climbed to 2575.9 in the week ending July 1, its highest level since early 2015. The index fell last week to 2295.8. The average interest rate on a 30-year, fixed-rate conventional conforming mortgage fell...
Progress Residential is preparing to issue a new single-family rental security that will lead to the payoff of a $473.2 million deal issued by the firm in 2014. The payoff will mark the first time a single-family rental security has prepaid, according to industry analysts. The planned Progress 2016-SFR1 is a single-borrower single-family rental securitization that was initially planned to be backed by a $657.27 million loan secured by mortgages on 4,068 rental homes, according to ratings by Kroll Bond Rating Agency, Moody’s Investors Service and Morningstar Credit Ratings. A portion of the proceeds will fund the prepayment of Progress 2014-SFR1. The deal issued...
The average daily trading volume in agency MBS totaled $212.6 billion in June, a slight decline from the month prior, according to the Securities Industry and Financial Markets Association. Still, that’s a far cry better than the low established back in December of 2015 when the reading came in at $149.2 billion. June’s performance came...
A New Mexico jury handed the Securities and Exchange Commission a split verdict in a 2008 financial crisis-related lawsuit against two senior executives of the now-defunct Thornburg Mortgage who were accused of fraud and misrepresenting the financial condition of the company. The jury found for defendants Larry Goldstone, former Thornburg CEO, and Clarence Simmons, former chief financial officer, on half of the counts but failed to reach a verdict on the most significant charges based on fraud and lying to the company’s outside auditors. In the lawsuit, the SEC alleged...
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