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...

Moody’s Investors Service is working to correct errors it made when rating a significant number of interest-only tranches on non-agency MBS dating back to at least 2015. At the end of August, Moody’s placed ratings of IO tranches from 953 MBS on review. While such reviews generally indicate whether an upgrade or downgrade is possible, the rating service said it wasn’t sure which direction ratings would go for many deals included in the review. The effort covers...

Private-label issuance all but disappeared since the recession and is finally expected to make a comeback, but lenders and aggregators will have a host of new requirements to meet. One firm is planning to help the industry navigate today’s landscape by offering a solution aimed at non-agency MBS readiness for new and old issuers. Clayton Holdings announced last week that it designed a program to help lenders and aggregators with their due diligence by understanding and preparing to comply with the new rules surrounding securitizing these non-agency assets. The firm hopes...

Fannie Mae and Freddie Mac appear poised to go ahead with their plans to structure future credit-risk transfer debt offerings as real estate mortgage investment conduits to expand the investor base. “No significant concerns have been raised to date, and, provided that the market continues to respond favorably, we expect to conclude our feedback period soon,” said Fannie. Back in May, the government-sponsored enterprises announced...

Partly to comply with liquidity cover ratio requirements imposed in the wake of the financial crisis, U.S. banks ramped up their holdings of high-quality liquid assets. But once they got compliant, many of them shifted their asset allocations more to agency MBS and U.S. Treasuries, according to researchers at the Federal Reserve. This could have implications for the U.S. central bank’s massive balance sheet over the long haul, they added. As of Jan. 1, 2015, large banks in the U.S. have needed...

A former employee of Standard & Poor’s Rating Services beat fraud charges alleging she loosened S&P’s rating methodology for commercial MBS to generate business for her employer. However, she was found liable of the lesser charge of negligence for failing to disclose the change. In his initial Aug. 29 decision, Administrative Law Judge James Grimes of the Securities and Exchange Commission’s administrative court said that while Barbara Duka did change the firm’s rating methodology for CMBS, he found no evidence that she intended to manipulate, deceive or defraud investors. Rather, Duka, manager of S&P’s CMBS rating group, did...

Mortgage lenders harvested a landmark crop of purchase-money mortgages during the second quarter, fueled partly by continuing growth in the first-time buyer segment, according to a new ranking and analysis by Inside Mortgage Finance. An estimated $307.0 billion of purchase loans were originated in the second quarter, up a stunning 49.8 percent from the first three months of the year. That was the highest quarterly volume for purchase-mortgage lending since the third quarter of 2006. Purchase loans accounted for 67.5 percent of the estimated $455.0 billion in first-lien mortgage originations during the April-June cycle, the highest such share since at least 2003. First-time buyers contributed...[Includes three data tables]

An affiliate of Bayview Asset Management issued a $230.0 million non-agency mortgage-backed security this week largely stocked with seasoned mortgages, including one non-qualified mortgage. DBRS and Fitch Ratings placed AAA ratings on Bayview Mortgage Fund IVc Trust 2017-RT3, without putting much emphasis on the non-QM. Non-QMs had accounted for 2.1 percent of a $125.82 million MBS from Bayview that priced in July and 1.0 percent of a $208.13 million deal it priced in April. The sponsor of the deal will retain...

Redwood Trust is preparing to issue its first non-agency mortgage-backed security backed by “expanded prime” mortgages. In the second quarter, Redwood acquired approximately $240.0 million of such mortgages, which have somewhat looser underwriting standards than what’s typically seen in the jumbo MBS market. Clayton Holdings reviewed 417 mortgages for the planned issuance, according to documents filed Aug. 30 with the Securities and Exchange Commission. The total unpaid principal balance of the loans wasn’t disclosed. The deal will include...