Legacy non-agency MBS issued before the financial market collapse in 2008 continue to spawn millions in lawsuits. In the Southern District of New York, Commerzbank AG, as an RMBS investor, recently sued Deutsche Bank, HSBC, Wells Fargo and the Bank of New York Mellon in their capacities as MBS trustees on deals that inflicted approximately $1.88 billion in losses on the German bank. Commerzbank claimed it suffered $750 million in losses related to BNYM’s alleged failures ...

The performance risks posed by a new breed of alternative-documentation mortgages are likely much lower than the mayhem caused by reduced-documentation mortgages originated before the financial crisis, according to Moody’s Investors Service. While most lenders verify the borrower’s income and assets used to qualify for mortgages, some non-agency lenders are willing to originate loans with less than full documentation. Lenders allowing for alt-doc underwriting typically ...

Issuers of Ginnie Mae mortgage-backed securities pushed a record $435.80 billion of government-insured loans through the program during 2015, according to a new Inside FHA/VA Lending analysis and ranking. Last year’s total Ginnie MBS issuance topped the previous record of $429.50 billion issued during 2009. The $435.80 billion total for 2015 includes securitization of FHA home-equity conversion mortgages and other single-family loans guaranteed by FHA, the VA, and the Department of Agriculture rural housing program from Ginnie pool-level MBS data that are not truncated. Production in 2015 hit its high-water mark in the third quarter with $128.23 billion in issuance, and then fell 18.0 percent in the final three months of the year. Purchase mortgages continued to account for most Ginnie business in 2015, 58.0 percent of the agency’s forward-mortgage securitizations. But a huge factor in the ... [ Charts ]

Interactive Mortgage Advisors is auctioning off $3.02 billion in Ginnie Mae residential mortgage-servicing rights for an undisclosed client. According to IMA, the seller is a “well-known, independent mortgage banker with very strong net worth and well-versed in servicing transfers.” The loans are being sub-serviced by LoanCare. The MSR package consists of 17,989 loans – FHA (15,288) and VA (2,610) – with an average loan size of $168,886. The yield on the underlying mortgages is 4.069 percent. The service fee is 0.2917 percent. An estimated 8.92 percent of all loans in the deal are delinquent. Approximately 3.07 percent of the loans are either in bankruptcy or in foreclosure. The top states in the transaction are Texas, which accounted for 11.4 percent of all loans; California, 9.6 percent; Florida, 8.1 percent; and New York, 5.8 percent. The deadline for ...

The first rated securitization backed by nonperforming Home Equity Conversion Mortgage loans contains strong, credit-positive features that outweigh the credit risk associated with nonperforming loans, according to a Moody’s Investors Service analysis. The effect of some of these positive features on the performance of Nationstar HECM Loan Trust 2015-2, however, depends on whether Nationstar Mortgage remains as servicer for the transaction, said the rating agency. Nationstar has a servicer rating of B2/Stable from Moody’s and is also the transaction’s sponsor. Nationstar issued NHLT 2015-2 in November 2015 and by the end of December, the first remittance report showed strong initial performance. Credit enhancement to the Aaa (sf)-rated notes increased by 1.69 percent in the first month of operations, Moody’s noted. “As long as Nationstar continues to be the ...

In the end, 2015 produced a solid, if unspectacular, supply of new agency single-family MBS and non-mortgage ABS after peaking in the second quarter of the year. A total of $1.498 trillion of single-family MBS and non-mortgage ABS were issued in 2015, a 28.1 percent increase from the year before, according to a new Inside MBS & ABS analysis. But 2014 ranked as the weakest year since the financial meltdown, and the 2015 output was the fourth lowest in the 21st century during a period of historically low interest rates and steady economic growth. Most components of the market slowed...[Includes three data tables]

The Department of Justice announced in December that a structured finance supervisor at RBS Securities pleaded guilty to participating in a multi-million dollar securities fraud scheme and is cooperating with the government’s ongoing investigation. Adam Siegel was co-head of U.S. ABS, MBS and commercial MBS trading at RBS between 2008 and 2014. The U.S. Attorney’s Office in the District of Connecticut said Siegel admitted that he and others conspired to increase RBS’s profits on trades of residential MBS and collateralized loan obligations at the expense of customers. “His crime included...

Four nonprime MBS backed by newly-originated residential loans came to market during the last four months of 2015, but none of deals were rated, a situation that could change in the new year. In a recent interview with Inside MBS & ABS, John Hsu, head of capital markets for Angel Oak Capital, said his company hopes to get a rated deal done in 2016, believing such a milestone would help move the nascent market forward. “We need...

Exams by the Securities and Exchange Commission in 2015 uncovered a number of problems at rating services large and small, according to a report released by the SEC at the end of December. However, the firms weren’t identified by name because the exams aren’t public. The report is a laundry list of findings involving the 10 nationally recognized statistical rating organizations, six of which are involved in the MBS and ABS markets. The findings came from exams that focused on activities in 2014. Offending rating services generally were referred to solely based on their size, with Fitch Ratings, Moody’s Investors Service and Standard & Poor’s referred to as “larger” rating services and the other companies referred to as “smaller” rating services. The SEC said...

A case in bankruptcy court regarding the priority of payment provisions for collateralized debt obligations could have broad ramifications for derivatives transactions at the heart of the structured finance industry, according to the Structured Finance Industry Group and other industry groups. In late December, SFIG filed an amicus brief in Lehman Brothers Special Financing v. Bank of America, which is being heard in U.S. Bankruptcy Court for the Southern District of New York. The Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association filed a separate brief, making points similar to those raised by SFIG. LBSF is suing...