When interest rates take an unexpected dive – as they did in the first quarter – it can wreak havoc on servicing assets as banks and nonbanks try to calculate a fair market value for their residential receivables. According to interviews conducted by Inside Mortgage Finance and based on a compilation of values by Piper Jaffray, certain megabanks assigned some of the lowest values in years to their portfolios during the first quarter of this year. Bank of America, for instance, which usually ranks third among all servicers, assigned...[Includes one data table]

Kroll Bond Rating Agency warned recently that it might refuse to rate certain non-agency mortgage- backed securities subject to the TRID mortgage disclosure rule until the CFPB issues formal guidance.The rating service said it’s currently unclear whether certain corrections of errors under the bureau’s integrated disclosure rule will subject non-agency MBS investors to assignee liability. This is an issue that the Structured Finance Industry Group continues to work on, with SFIG also stressing that formal guidance from the CFPB is necessary. “In instances where these violations go un-corrected by an originator, KBRA believes the risks associated with TRID-eligible loans, in material concentration, become more significant and that KBRA may consider additional credit enhancement, applying a rating cap, or declining ...

Fannie Mae and Freddie Mac are not conducting loan-level reviews for compliance with the CFPB’s integrated disclosure, and that threatens investors in the pair’s future credit-risk transfer transactions with the possibility of some modest losses because of lender compliance violations, according to a recent report from Moody’s Investor Service. “We expect overall losses on these transactions owing to TRID violations to be fairly small, despite our expectations that the frequency of violations will be high, at least initially,” analysts at the rating service said. “Furthermore, lender representations and warranties and the government-sponsored enterprises’ ability to remove defective loans from the transactions will likely mitigate some of these losses.” Damages for TRID violations are less significant for a securitization transaction compared ...

Two rating services published reports in recent days stressing that non-agency MBS with loans subject to TRID mortgage disclosures can be rated, even when the loans have TRID violations. The reports are part of an industry effort to deal with the rule that combines disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act that was promulgated by the Consumer Financial Protection Bureau and took effect in October. Kroll Bond Rating Agency and Morningstar Credit Ratings published separate reports in the past week stating expectations that TRID will have a “limited” impact on non-agency MBS investors. A number of other rating services have made similar statements since TRID took effect, though that has done little to spur issuance. Only one non-agency MBS with TRID loans has been issued...

The nation’s largest MBS-investing real estate investment trust, Annaly Capital Management, this week agreed to buy the third largest player in the market, setting off speculation among analysts and investors that the “mREIT” sector could be in for a healthy dose of consolidation. The New York-based Annaly said it would buy Hatteras Financial Corp., Winston-Salem, NC, for roughly $1.5 billion in cash and stock. At year end, Annaly ranked...

Over the past two years, PHH Corp. has lost $64 million on its mortgage business and now that Merrill Lynch has given notice that it wants to end some of its private-label contracts with PHH Mortgage, the nonbank’s future is beginning to look cloudier. Moreover, analysts and investors who follow the company wonder whether PHH’s private-label model – the bread and butter of its origination business – is fixable in the modern era of mortgage banking. Meanwhile, all of this is happening at a time when management hopes to sell the company, or at least field offers for some of its key assets, including a $226 billion servicing portfolio. The bad news for PHH started...

The flow of home loans covered by private mortgage insurance into new Fannie Mae and Freddie Mac mortgage-backed securities fell by 11.5 percent during the first quarter of 2016, according to a new Inside Mortgage Finance analysis and ranking. That decline mirrored the 11.6 percent drop in purchase-mortgage securitization from the fourth quarter by the two government-sponsored enterprises. A slight uptick in refinance activity partly offset the slide in purchase-mortgage business. Private MIs do...[Includes two data tables]

Over the past year, The Blackstone Group has been aggressively expanding into many facets of the mortgage business and is now ready to make what might be considered a bold move: investing and originating in residential loans that don’t meet the qualified-mortgage test. But just how big might Blackstone get? That’s hard to say at this point. A source inside the company, who spoke under the condition his name not be used, confirmed...

Falling mortgage rates helped spur a modest increase in refinance activity during the first quarter of 2016, but not enough to offset a slowdown in other parts of the securitization market, according to a new Inside MBS & ABS analysis and ranking. A total of $318.34 billion of residential MBS and non-mortgage ABS were issued during the first three months of the year, a 3.6 percent decline from the fourth quarter of 2015. It was the lowest amount of new issuance since the second quarter of 2014 and put the market 8.1 percent behind the level reached in the first quarter of last year. Non-mortgage ABS issuance was...[Includes three data tables]

The Association of Mortgage Investors last week urged the Consumer Financial Protection Bureau to address ongoing issues raised by the so-called TRID mortgage disclosure rule. “The recent evidence is that the rule, while extremely well-intentioned, has resulted in a climate of legal uncertainty and is chilling private investment in the U.S. mortgage market,” Chris Katopis, executive director of the AMI, wrote to CFPB Director Richard Cordray. The rule took effect...