Demand in the secondary market for credit risk could help increase issuance of prime non-agency mortgage-backed securities, according to industry analysts. A significant number of investors at the ABS East conference last week said deals across the MBS and ABS markets have been oversubscribed, with the supply of new issuance in recent months seen as insufficient. The conference was produced by Information Management Network in Miami Beach. Peter Sack, a managing director at Credit Suisse, said...

Originations of adjustable-rate mortgages increased by 40.5 percent from the first quarter of 2017 to the second, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $59.0 billion of ARMs were originated in the April-June cycle, with a number of major banks and nonbanks posting solid gains. Chase was...[Includes one data table]

Ginnie Mae’s inadequate response to the rapid increase of nonbank issuers may make it difficult for the agency to identify issuer problems in time to prevent default, warned the Department of Housing and Urban Development’s inspector general in a recent audit report. Specifically, the IG report said the agency failed to implement policies and procedures for managing issuers in a timely manner and tried to supervise them without a written default strategy. Furthermore, the report claimed Ginnie did not promptly assess and address the risks posed by nonbanks. Ginnie Mae questioned the findings, contending it “has done a more than credible job adapting to the new environment” despite the pressure on its resources. Ginnie’s issuer base had changed dramatically over the last couple of years as many banks either left or reduced their exposure in the FHA market for fear of being slapped with a ...

Wells Fargo recaptured its crown as the leading VA jumbo securitizer, pushing Penny Mac back to second place even as the market dropped further in the second quarter. The volume of VA jumbo loans securitized during the second quarter declined by 5.2 percent from the prior quarter and by 11.8 percent during the first half of 2017 compared to the same period last year. VA jumbo mortgage originations were off by 4.3 percent from the first quarter, according to an analysis by Inside FHA/VA Lending affiliate Inside Mortgage Finance. Agency-jumbo production sagged in the second quarter but the results were not uniform. Fannie Mae production was up 6.5 percent from the prior quarter, while FHA jumbo securitization gained 7.2 percent during the period. At the same time, VA jumbo securitization was down 5.2 percent to $7.4 billion from $7.8 billion, while Freddie Mac saw a hefty 27.8 percent drop in ... [Charts]

A Ginnie Mae crackdown on abusive VA refinancing could be positive for housing finance reform, according to a Washington research organization. In a recent analysis, the Cowen Washington Research Group said Ginnie’s effort to rein in lenders that are engaging in churning might benefit those who are trying to revamp Fannie Mae and Freddie Mac. “We expect Ginnie Mae will succeed in curbing prepayment speed on VA mortgages,” wrote Jaret Seiberg, a financial services and housing policy analyst with the Cowen Group. “The crackdown is positive for government-sponsored enterprise reform as it should restore the spread between Ginnie and Fannie/Freddie MBS.” According to Seiberg, GSE reform advocates could potentially use the spread to pay for a housing finance bill that includes a government guarantee on the resulting MBS. Acting Ginnie Mae President Michael Bright has pledged to ...

After a couple of slow weeks, there appears to be renewed interest among investors looking to buy mortgage servicing rights, but in certain markets caution is being expressed regarding properties where hurricane damage might be an issue. In mid-September, Fannie Mae issued a bulletin temporarily suspending servicing transfers involving properties located within designated disaster areas. A week after the Sept. 13 bulletin was issued, Fannie clarified to market participants that the bulletin was meant as guidance and not a firm directive or prohibition on MSR transfers. According to Incenter Mortgage Advisors, Denver, some sellers of Fannie receivables “elected...

The mortgage servicing market maintained its steady growth pattern during the second quarter of 2017, inching up 0.7 percent to $10.430 trillion, according to new Federal Reserve data. That was the biggest number for mortgage debt outstanding since the first quarter of 2011, when the market stood at $10.439 trillion. Most of the growth has been in Fannie Mae, Freddie Mac and Ginnie Mae servicing but portfolio holdings of whole loans are also on the upswing. There was...[Includes two data tables]

The supply of outstanding residential MBS in the market continued to grow at a measured pace during the second quarter of 2017, thanks to the robust single-family MBS machines at Fannie Mae, Freddie Mac and Ginnie Mae. A total of $6.675 trillion of single-family MBS was outstanding as of the end of June, according to a new Inside MBS & ABS analysis. That was up 0.8 percent from the end of March, and it represented a record 64.0 percent of outstanding single-family mortgage debt. The Federal Reserve this week reported that home loan debt outstanding rose 0.7 percent to $10.430 trillion during the second quarter. All the MBS growth was...[Includes three data tables]

MBS and ABS investors have more cash than they know what to do with, according to participants at the ABS East conference sponsored by Information Management Network this week. “Liquidity is strong across the spectrum and probably the best we’ve ever seen for structured products,” said Scott Levy, a senior managing director at Guggenheim Securities. He noted that three years ago, some of the securities the firm was involved with had 15 investors; now, similar deals might have 70 investors. “There’s a lot of demand and a lot less supply,” Levy added. More than 4,100 people registered...

Issuance of non-agency MBS backed by newly originated home loans remains well below levels seen before the financial crisis. While new regulations have stopped some pre-crisis loan types from being originated, industry participants suggest that other major factors are also limiting the supply of loans available for MBS. Chris Helwig, a managing director at Amherst Pierpont, noted that banks are competing for prime jumbos and holding them in portfolio, and many borrowers who previously might have received subprime mortgages opt for FHA loans. “All that is left for non-agency MBS is...