A dispute involving the liquidation of a vintage collateralized-debt obligation has the potential to upend standard practices and confidence in the securitization industry, according to the Structured Finance Industry Group. Senior investors in Taberna Preferred Funding IV – a $673.3 million CDO issued in 2005 – are seeking to force a liquidation of the deal via bankruptcy. The bankruptcy is being pursued by a group of investors identified as Opportunities II Ltd., HH HoldCo Co-Investment Fund, L.P., and Real Estate Opps Ltd. The investors appear to have purchased senior tranches of the CDO only in recent years. SFIG filed...

Most rated residential MBS in regions affected by Hurricanes Harvey and Irma have limited exposure that will mitigate the losses resulting from the devastation, according to rating services. Residential MBS rated by Moody’s Investors Service, including securities backed by single-family rental properties, have minimal exposure to the storm-affected counties of Texas and Louisiana thereby easing the losses due to reduced property values, rising delinquencies and longer foreclosure and liquidation timelines, the rating agency said. The analysis is...

Three non-agency mortgage-backed securities issuers were preparing to issue deals around the time that Hurricane Harvey hit the Gulf Coast and Hurricane Irma made landfall in Florida. Deals from the issuers include mortgages on properties in the disaster areas, prompting inspections and an emphasis on the representations and warranties included with the MBS. An affiliate of Shellpoint Partners is set to issue a $323.38 million deal on Sept. 29. According to Kroll Bond Rating Agency ...

The Milken Institute – a nonpartisan think tank – established a new policy team last week to work on issues involving housing finance reform. Eric Kaplan was named director of Milken’s Housing Finance Program. He was a managing partner at Ranieri Strategies and continues to chair the Structured Finance Industry Group’s RMBS 3.0 effort. Michael Milken and Lewis Ranieri will co-chair a new Housing Advisory Council, which will inform the work of the team led by Kaplan ... [Includes two briefs]

Rapid, aggressive refinancing of VA loans has made a comeback with some issuers using strategies to mask the practice and avoid possible penalties, including expulsion from the Ginnie Mae program, according to a top agency official. Responding to concerns raised by Sen. Elizabeth Warren, D-MA, Michael Bright, acting Ginnie Mae president and chief operations officer, said a joint Ginnie Mae/VA lender-abuse task force is analyzing monthly data and developing additional policy measures to deal with the problem. Bright confirmed the resurgence of inappropriate streamline refinancing in Ginnie securitization pools in recent weeks and has promised to crack down on the questionable practice. The problem surfaced last year when Ginnie Mae noticed unusually fast prepayment speeds in its mortgage-backed securities, particularly MBS backed by VA loans. Ginnie found that certain lenders and ...

Redwood Trust has seen strong demand from borrowers and correspondent lenders for its “expanded prime” program that the aggregator introduced last year. The real estate investment trust’s Choice products allow for somewhat looser underwriting than the super-prime mortgages that have dominated the jumbo market after the financial crisis. The Choice program was introduced in April 2016. Volume has increased relatively quickly and could top $1.0 billion this year. Officials say...

The growing reliance on nonbanks could pose a risk to the government housing agencies, according to a recent study by the Urban Institute’s Housing Policy Center. Just four years ago, banks originated 70 percent of new mortgages, the researchers noted. But in 2017 nonbanks are originating 60 percent of all new mortgages and 76 percent of loans destined to be securitized by Ginnie Mae. UI called...

New issuance of agency single-family MBS rose for the fifth straight month in August, including an unexpected boost from refinance activity, according to an Inside MBS & ABS ranking and analysis. Fannie Mae, Freddie Mac and Ginnie Mae issued $120.10 billion of single-family MBS last month, a 6.9 percent climb from July’s total. August represented the second biggest month of 2017 but fell short of the $134.21 billion issued back in January. At that point, the MBS market was digesting a strong wave of refinance loans that quickly deteriorated over the following months. But the agencies saw...[Includes two data tables]

Redwood Trust worked for years to revive the jumbo MBS market by issuing deals with super-prime mortgages. Now, the firm is shifting its focus somewhat to “expanded prime” mortgages that have slightly looser underwriting standards. The $316.49 million Sequoia Mortgage Trust 2017-CH-1 is the first MBS from Redwood to deviate from super-prime standards. The deal received preliminary AAA ratings this week from Kroll Bond Rating Agency and Moody’s Investors Service. The average combined loan-to-value ratio of the mortgages in the MBS is...

Although Fannie Mae, Freddie Mac and Ginnie Mae have all granted consumer forbearance on homes damaged by this season’s hurricanes, servicers must continue to make payments to MBS investors in most circumstances, a situation that could affect thinly capitalized nonbanks. In particular, smaller privately held nondepositories that became Ginnie issuers this decade could face some financial headwinds, depending on how heavily concentrated their business has been in the Texas Gulf region and south Florida. As Inside MBS & ABS went to press late this week, it was...