Less than $1 million separated Fitch Ratings and DBRS in the ranking of top rating agencies serving the non-agency MBS market in the first quarter of 2017, a new Inside MBS & ABS analysis reveals. Fitch was on top, although both companies had equal shares (36.5 percent) of the market. Kroll Bond Rating (21.7 percent) and Moody’s Investors Services (17.5 percent) ranked third and fourth. S&P Global was the least active rater of non-agency MBS with just an 11.5 percent share. A significant share of non-agency MBS are issued...[Includes two data tables]

The Structured Finance Industry Group called for an appeals court to enforce industry-established payment priority provisions in a significant case involving Lehman Brothers’ collateralized-debt obligations and a bankruptcy filing. Lehman Brothers Special Financing Inc. v. Bank of America N.A. centers on a “flip clause” included in 44 CDOs issued by the failed investment bank. SFIG noted that a flip clause redirects or reprioritizes cash flow upon bankruptcy, and is often incorporated in securitizations that include swaps. “As is common in the market, in structuring these transactions, the parties bargained...

The Federal Reserve took some pointed criticism on Capitol Hill this week over its handling of monetary policy since the end of the Great Recession, including its support of the housing and mortgage markets through its unprecedented quantitative easing programs. “I don’t think the added gross domestic product growth we’ve had over the last 90 months will be proven to have been worth ballooning the balance sheet from $900 billion to $4.5 trillion,” Rep. French Hill, R-AR, said during a hearing this week by the House Financial Services Subcommittee on Monetary Policy and Trade. He also said...

Wells Fargo fell a notch as PennyMac raced to the top to become the leading VA jumbo securitizer for the first quarter of 2017 – a period in which VA jumbo loan securitization took a sharp nose dive. The volume of VA jumbo loans securitized during the first three months plunged 36.8 percent, compared to the meager 2.0 percent decline seen in the fourth quarter. The drop reflected a 32.9 percent drop in jumbo mortgage production during the first quarter, along with similar large drops in virtually every product segment in the mortgage market, according to an analysis by Inside FHA/VA Lending affiliate Inside Mortgage Finance. The agency jumbo market was down 39.1 percent from the fourth quarter despite the bump up in high-cost loan limits to $636,150, an increase of $10,650 that became effective in January. All components of the agency jumbo market took big hits in the first quarter, including ... [ Charts ]

Issuance volumes in various MBS and ABS sectors are generally below pre-crisis levels and liquidity in the markets is adequate, according to an analysis by the Financial Industry Regulatory Authority. But the structured finance sector hasn’t flourished as the corporate bond market has in recent years, according to FINRA. The non-governmental regulator of broker-dealers based its analysis in part on data collected by its Trade Reporting and Compliance Engine, which tracks trades in a variety of asset classes. The analysis was completed by FINRA’s Office of the Chief Economist. “Market liquidity [for MBS and ABS] seems...[Includes one data table]

The development of a deal agent for new non-agency MBS has spanned years, with industry participants working toward the best way to compensate the new transaction party, among other issues. A deal agent would have a fiduciary duty to investors, oversee enforcement of representations and warranties, and monitor various participants in a security. The new role is significant because some major investors say that after suffering major losses on MBS issued before the financial crisis, a deal agent is required for them to buy new securities. Clayton Holdings was...

Securitization rates appeared to rebound strongly in the first quarter of 2017, with an estimated 79.5 percent of primary-market mortgage originations finding their way into a variety of MBS, according to a new Inside MBS & ABS analysis. That’s up from a 69.1 percent securitization rate for all of 2016 and, if it keeps up for the rest of 2017, it would be the highest mark since 2013. In the fourth quarter of 2016, the rate was 72.7 percent. Both new MBS production and primary-market originations were...[Includes one data table]

If you’re a mortgage banker hoping to issue Ginnie Mae securities, now may be a good time to apply: the list of pending applications is extremely short, as are the wait times. According to Gregory Keith, senior vice president and chief risk officer for the agency, there are now just nine pending applications, with two of those being circulated for final approval. Moreover, according to figures provided to Inside MBS & ABS, final approvals granted to banks and nonbanks have been...

Investors in nonprime MBS may be more vulnerable to fraudulent or defective mortgages compared to prime transactions because of deficiencies or inadequacies in the related representation-and-warranties frameworks, according to a new report from analysts at Moody’s Investors Service. “The collateral backing these transactions is riskier than the loans in post-crisis prime jumbo RMBS, which also generally use stronger frameworks,” the report said. For starters, “Transactions in the re-emerging non-prime RMBS sector are...

Marketplace lender Social Finance – a mortgage originator with a track record in securitizing consumer and student loans – has filed for a state bank charter in Utah and is also pondering selling stock to the public. For now, the privately held technology-centric firm isn’t saying much about its plans, including the initial public offering. One source familiar with the company’s mortgage operation said SoFi recently hired one executive away from a larger player by dangling the IPO and stock options. To date, there has been...