With time ticking toward a Dec. 24 compliance date, issuers of commercial MBS continue to try to develop structures that will meet risk-retention requirements. Richard Jones, a partner at the Dechert law firm, warned that the industry is “in trouble.” In an analysis published this month, he wrote, “We as an industry don’t have a scalable solution to the problem. We … do not know what this will cost, who will pay for it, and to what extent this is an existential risk to commercial real estate capital formation as it has been conducted for the past 25 years.” He noted...

A $1.98 billion non-agency MBS issued by JPMorgan Chase Bank in April prompted interest from a wide variety of industry participants, but other big banks appear unlikely to issue similar deals, according to analysts at Moody’s Investors Service. Moody’s was one of the firms to place AAA ratings on Chase Mortgage Trust 2016-1. The deal was unique in that 74.0 percent of the 5,353 mortgages in the MBS were eligible for sale to the government-sponsored enterprises. And it was...

The long-awaited correction in MBS prices was put on hold this week with the news that the Federal Reserve isn’t ready to hike interest rates anytime soon. Moreover, now there’s a growing belief among some economists and mortgage market watchers that the central bank may not raise interest rates at all this year. And there’s even a school of thought that suggests the yield on the benchmark 10-year Treasury bond might hit 1.0 percent before it reaches 2.0 percent. As Inside MBS & ABS went to press this week, the 10-year was...

The Urban Institute is warning against Fannie Mae and Freddie Mac putting all of their eggs into one credit-risk transfer basket. The CRT programs at the two government-sponsored enterprises have relied heavily on structured debt notes sold to capital market investors – Freddie’s Structured Agency Credit Risk and Fannie’s Connecticut Avenue Securities – as well as reinsurance. Although the influx of private capital is a good thing, Karan Kaul, research associate with UI, said...

Ginnie Mae securitization of rural home loans got off to a wobbly start in the first quarter of 2016 as securitization volume fell 13.8 percent from the prior quarter, according to an Inside FHA/VA Lending analysis of Ginnie data. Approximately $3.9 billion in loans with a USDA guarantee were securitized during the first three months, with the top five issuers accounting for $2.1 billion of mortgage-backed securities produced by the segment during the period. USDA securitization volume dropped 9.2 percent year over year. Top USDA issuer Chase Home Finance accounted for $1.2 billion of securitized rural housing loans, while PennyMac, in distant second place, finished the quarter with $378.5 million. Wells Fargo ($294.0 million), Pacific Union Financial ($122.8 million) and Amerihome Mortgage ($102.2 million), in sequential order, comprised the rest of the top five issuers. Pacific Union climbed over ...

The supply of single-family home loan debt in early 2016 grew for the fourth consecutive quarter to hit $10.008 trillion, its highest level in three and a half years, according to Federal Reserve data released late last week. The first-quarter gain was a modest 0.2 percent from the end of last year, and a 1.5 percent increase from March 2015. But the servicing market is a slow-changing glacier, and steady increases over the past year are another indicator that the mortgage market has largely recovered from the housing recession. Most of the gain came...[Includes two data tables]

Seneca Mortgage Servicing LLC, which entered the business just three years ago, has decided to outsource the monthly processing of loans to Nationstar, a sign that private-equity firms are no longer so enamored with the returns generated by mortgage servicing rights. According to a statement issued by Nationstar, it will service all of Seneca’s $50 billion portfolio and any rights Seneca might obtain going forward. Moreover, it will take control of the firm’s Depew platform in upstate New York. No terms were disclosed. However, according to interviews with servicing advisors, Seneca – whose backers include The Blackstone Group, EJF Capital and Arbor Commercial Mortgage – may not be...

A $161.71 million MBS planned by Lone Star Funds backed by newly originated nonprime mortgages received an A rating this week from DBRS and Fitch Ratings. The deal is the first post-crisis nonprime MBS to receive a credit rating and it will be the largest post-crisis nonprime MBS issued to date. The rating services stressed that while the mortgages originated by Lone Star’s Caliber Home Loans are generally nonprime, the underwriting on the loans is relatively strong. However, Fitch said it capped the rating at A due to the limited nonprime performance of Caliber and Hudson Americas, the asset manager for the MBS. “As more post-crisis non-prime performance is established while upholding appropriate controls, Fitch will consider...

Fannie Mae plans to start issuing MBS backed by single-family, fixed-rate re-performing mortgages later this year. This week, the government-sponsored enterprise detailed some of the types of loans that will be included in the planned issuance. Both loans that cured on their own and mortgages that received a modification will be eligible for the new RPL securitization program. Among other factors, the mortgages must have been performing for at least six months. Loans modified via the Home Affordable Modification Program will be eligible for the MBS along with loans modified through the GSE’s proprietary mod programs. A number of different loan types will be excluded...

The so-called TRID-lock seen in the jumbo MBS market since October appears to be easing as both Redwood Trust and JPMorgan Chase have come to market with deals that include some loans with compliance problems. Before this week, only one jumbo MBS included mortgages subject to TRID, a deal from Two Harbors Investment in March. Many industry participants blamed...