FHA and VA borrowers took on slightly greater payment obligations in 2016 than they have in previous years, according to a new analysis and servicer ranking by Inside FHA/VA Lending. The average debt-to-income ratio for FHA loans securitized in Ginnie Mae mortgage-backed securities last year was 40.4 percent, up about half a percentage point from 2015. The average VA DTI ratio nudged up slightly to 38.3 percent. Average credit scores in the FHA program drifted slightly lower, while climbing 1.9 points for VA loans. The differences in credit quality between the two programs remained substantial: the VA attracts borrowers with higher credit scores and lower DTI ratios who take on larger loans. Some 36.3 percent of VA loans backing Ginnie MBS issued last year had credit scores of 740 and up, while just 13.2 percent of FHA loans fell in that category. Meanwhile, 67.1 percent of FHA loans had ...

The secondary market for bulk agency mortgage servicing rights is beginning to pick up a decent head of steam, but one factor is holding it back from a full-throttle: worries about prepayment speeds. “We’ve had one month of low prepayment numbers,” said Mark Garland, president of MountainView Servicing Group, Denver. “A couple of more months would be better.” According to investment bankers who work the market, although rates have been on a steady climb since the November election – the yield on the benchmark 10-year Treasury is...

The average daily trading volume in agency MBS increased to $229.8 billion during January, the second best reading of the past year, and a sign that liquidity is improving, thanks in part to higher interest rates. According to figures compiled by the Securities Industry and Financial Markets Association, the January reading was better than the daily trading averages posted for the past four years, which ranged from a low of $178.0 billion in 2014 to a high of $222.8 billion in 2013. Agency trading volumes peaked...

The need to preserve liquidity and transparency in the existing to-be-announced market was an important component of the Mortgage Bankers Association’s newly-released plan for housing finance reform, according to Deutsche Bank Securities. Jeana Curro, research analyst with Deutsche, said a handful of provisions in the MBA’s latest proposal stand out as improvements from the industry group’s previous ideas on how to reform Fannie Mae and Freddie Mac. She agreed...

Conventional mortgage originations held steady during the fourth quarter of 2016, but the government-insured market saw a noticeable downturn, according to a new Inside Mortgage Finance ranking and analysis. Production of conventional mortgages that fit under the purchase limits for Fannie Mae and Freddie Mac actually edged up 1.3 percent from the third quarter, hitting an estimated $322.0 billion. That was the sector’s strongest three-month origination volume since the second quarter of 2013, when lenders pumped out $363.0 billion of conventional-conforming loans. Jumbo mortgage originations were...[Includes two data tables]

Production of single-family MBS at Fannie Mae, Freddie Mac and Ginnie Mae declined substantially in January, according to a new Inside MBS & ABS analysis and ranking. Mortgage lenders delivered a total of $134.21 billion of single-family loans into agency MBS issued during the first month of 2017, down 15.6 percent from December’s gross new issuance. The residential mortgage industry recorded...[Includes two data tables]

The Federal Reserve’s Open Market Committee, as expected, held the line on interest rates this week at its first meeting of 2017, but still presumably stayed on track for multiple increases later in the year. What’s new is a recent resurgence of talk about how the central bank will shrink its massive balance sheet and its huge portfolio of agency MBS and debt, perhaps as early as next year. “In view of realized and expected labor market conditions and inflation, the committee decided to maintain the target range for the federal funds rate at 1/2 to 3/4 percent,” the FOMC said. It added that committee members expect that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate. The Fed will...

Societe Generale has agreed to pay $50 million to the Department of Justice to settle civil charges alleging it misled investors by promoting and selling securities backed by badly underwritten mortgage loans. According to the DOJ, the French bank made false representations regarding SG Mortgage Securities Trust 2006-OPT2, a $780 million debt issue it organized more than 10 years ago. As part of the settlement, SocGen admitted that many of the loans in the deal were improperly underwritten and should not have been securitized. For example, the bank admitted...

In 2016, retail sales conducted over the Internet boomed while traffic at America’s shopping malls remained tepid, raising new concerns about CMBS deals where the collateral includes a troubled “anchor” tenant. According to figures compiled by Morningstar, roughly $49 billion of CMBS transactions are backed by regional malls. When the anchor closes, it raises all sorts of concerns about whether the entire mall will be able to survive. (Earlier this year, Sears and Macy’s separately announced they will close a total of 218 stores.) “As online shopping, the diminishing importance of department stores, and store closures all contribute...

There will likely be a notable increase in the issuance of mortgage-backed securities backed by newly originated nonprime mortgages, according to Fitch Ratings. As many as eight firms are looking to join Lone Star Funds in issuing rated deals, though issuance isn’t expected to get anywhere near the levels seen in the run up to the financial crisis. Some $999.5 million in nonprime MBS was issued in 2016, according to the rating service. “Fitch estimates those figures could double in 2017, and ...