A sharp increase in recent months in the volume of mortgages eligible for sale to the government-sponsored enterprises being placed in non-agency MBS is exposing investors to higher potential losses than deals backed solely by prime jumbo loans, according to Kroll Bond Rating Agency.

The average daily trading volume in agency MBS fell to $215.2 billion in March, the lowest reading of the year and the worst showing since August of 2017, according to figures compiled by the Securities Industry and Financial Markets Association.

The performance and returns offered by credit card ABS differ significantly by the type of firm issuing the deal, according to a recent analysis by Moody’s Investors Service.

The Department of Veterans Affairs home-loan guaranty program continued to account for most of the growth in the Ginnie Mae servicing business during the first quarter of 2018, a new Inside FHA/VA Lending analysis reveals. Total Ginnie mortgage-backed securities outstanding rose to $1.940 trillion as of the end of March, including multifamily MBS and securities backed by FHA reverse mortgages. Some $1.795 trillion of that amount was traditional single-family mortgages, a 1.1 percent increase from the end of last year. The forward-mortgage Ginnie market grew by 7.3 percent over the past 12 months. The amount of VA loans in Ginnie pools was up 13.1 percent from March 2017, nearing the $600.0 billion mark. By comparison, the FHA segment of the Ginnie market was up 4.7 percent from a year ago, hitting $1.085 trillion. Loan performance generally improved in both the ... [Charts]

Ginnie Mae is considering a tiered rating system to ensure that all participants in its mortgage securities program have sufficient liquidity and capital to meet their counterparty obligations. The agency is still fleshing out the idea of an “A-tier” issuer, which would likely develop into a policy in the near future, said Michael Bright, executive vice president and chief operating officer, during a recent interview with Inside FHA/VA Lending. “An A-tier issuer would be [a company that] has gone above and beyond in helping put together for us a risk management and liquidity plan that does not rely on liquidity providers, and whose defect and cure rates are low,” he explained. Such issuer/servicers also would be well capitalized. Ginnie is developing the metrics for such a system, as well as incentives for the A-tier issuers, Bright said He added that top-rated firms would be eligible for “concierge services” from the ...

New non-agency MBS encompass a variety of different servicer strategies on how they advance payments for delinquent loans, with mixed impact on investors, according to rating services.

Full third-party due diligence reviews were completed on only 20.0 percent of the loans being pooled by Flagstar Bank into a new non-agency mortgage-backed security. Rating services delivered mixed assessments of the due diligence sampling rate, which could set a standard for the market. The $704.1 million Flagstar Mortgage Trust 2018-2 is scheduled to close at the end of the month. DBRS, Fitch Ratings, Kroll Bond Rating Agency and Moody’s Investors Service all ...

The steamship that is the nonbank share of the mortgage servicing market showed no signs of changing course in the early months of 2018, a new Inside Mortgage Finance analysis reveals. [Includes two charts.]

The latest update on the single security may signify the next step in GSE reform, according to analysts with Wells Fargo Securities. In late March, the Federal Housing Finance Agency announced that the uniform mortgage-backed security collateralized by Fannie Mae and Freddie Mac loans will launch on June 3, 2019. The framework for housing-finance reform has evolved over time to building on the successful elements of the current market instead of disrupting it, said analysts Vipul Jain, Anish Lohokare and Randy Ahlgren. They noted that the single security seems to be leading toward a single MBS label with catastrophic insurance underwritten explicitly by the government.

Pershing Square Holdings, one of the largest speculators in Fannie Mae and Freddie Mac common stock, is doubling down on its investment in the two government-sponsored enterprises by taking a different tack: Instead of increasing its positions in the common, it’s been buying up the junior preferred as well.