In the wake of the Federal Reserve’s announced end to its multi-part quantitative easing program, look for private investors to face a number of challenges when it comes to increasing their share of the MBS market, concluded a white paper by the Mortgage Bankers Association. The MBA paper, issued late last week, noted there is no single player waiting in the wings able to pick up the slack when the Fed relinquishes its role as the dominant purchaser of agency MBS. “Many of the potential private investors face...

Recent court rulings in Washington, DC, and Nevada allowed foreclosures brought by homeowner associations over unpaid dues to extinguish mortgage liens, increasing the risk of loss for investors in non-agency MBS and single-family rental securitizations, according to Moody’s Investors Service. Although both jurisdictions are relatively small in the grand scheme of things, other courts could adopt the same interpretations, the rating service said. Nevada has already seen some 1,000 similar cases, and more homeowner and condo associations are like to bring similar lawsuits. In Nevada, the court decided...

Fannie Mae and Freddie Mac are testing parts of the new common securitization platform and are expected to have the system largely built in 2015. But the GSEs have a lot of work to do building interfaces for their systems to work with the new platform while the joint venture that’s running the CSP won’t be functional for several years, according to two recent Federal Housing Finance Agency reports.

Fannie, Freddie Conforming Loan Limits Mostly Unchanged for 2015. The Federal Housing Finance Agency this week said that conforming loan limits for Fannie Mae and Freddie Mac in 2015 would remain at current levels in most markets. For much of the country, the conforming loan limit for one-unit properties will remain at $417,000. The loan limits are established under the terms of the Housing and Economic Recovery Act of 2008 and are calculated each year.

Together, Fannie Mae and Freddie Mac in October posted a combined decline in the volume of single-family mortgages securitized, according to a new Inside The GSEs analysis. Fannie and Freddie issued $63.1 billion in single-family mortgage-backed securities in October, a 1.5 percent decrease from September. On a year-to-date basis, October’s MBS issuance dropped an even steeper 50.6 percent.

The development of a common securitization platform for Fannie Mae and Freddie Mac and the progression of a single government-sponsored enterprise security remains an “important priority” for the Federal Housing Finance Agency over the next year, according to the FHFA. The GSE conservator noted in its “2014 Performance and Accountability Report” and the FHFA’s revised “Strategic Plan: Fiscal Years 2015-2019,” both issued last week, that the project is proceeding with deliberate speed. “Most of the software needed for the platform’s core functionality has been put...

Bank and thrift holdings of non-mortgage ABS hit a record $184.16 billion at the end of September, according to a new Inside MBS & ABS ranking and analysis. That represented a significant 7.6 percent increase in bank ABS investment in just one quarter. But the sharp increase in industry holdings was fueled by a massive acquisition of credit card ABS by TD Bank, the U.S. operation of the Canadian-based Toronto-Dominion Bank. TD Bank reported...[Includes one data chart]

The odds are stacked against auto loan ABS issuers being able to significantly lower the amount of credit risk they have to retain in securitizations under the recently adopted risk-retention rule. That’s mostly because of the strict underwriting criteria for underlying loans to qualify for the exemption from the requirement, according to a new ABS research report from Moody’s Investors Service. “Under the final risk-retention rule of the Dodd-Frank Act, auto loan ABS issuers can reduce the financial interest they must retain in their transactions through a qualifying automobile loan (QAL) exemption,” explained report authors Jeffrey Hibbs, assistant vice president, and Henry Chen, an associate analyst. Issuers can put...[Includes one data chart]

Two large banks got a break recently as the Securities and Exchange Commission agreed to grant penalty relief to one bank while a New York federal judge dismissed certain claims against the second bank because they were overly speculative. In the first case, the SEC cleared the way for Bank of America to close a $16.7 billion global settlement after SEC commissioners voted to waive additional sanctions that would have taken effect when the settlement is entered into court, according to a report by Bloomberg. The commission agreed...

The most significant blockages to the return of a healthy and sustainable non-agency residential MBS market in the United States are low volume issuance, regulation, weak AAA demand and missing structural reforms, according to top market professionals. “What’s holding back the recovery?” asked Rui Pereira, managing director at Fitch Ratings, during a panel discussion at a residential MBS reform symposium sponsored by the Structured Finance Industry Group and Information Management Network in New York City earlier this month. “Other sectors have rebounded and we’re starting to see new asset classes emerge. And yet, we’re seeing very little momentum in our market. So the question is, what’s stalling the RMBS recovery?” In the run-up to the discussion, Pereira polled...