Three separate issuers of jumbo MBS shopped deals in the past week, giving a jolt to a market that has been somewhat subdued since the end of the first quarter. Industry analysts suggest that while liquidity for new jumbo MBS remains limited, the deals can be a good investment. Redwood Trust is set to issue a somewhat unusual $337.08 million jumbo MBS, Credit Suisse is preparing a deal and Five Oaks Investment issued a $251.27 million security this week, according to rating reports and filings with the Securities and Exchange Commission. At the end of October, Two Harbors Investment issued...

A recent settlement between DBRS and the Securities and Exchange Commission suggests that in the years following the financial crisis, the rating service didn’t dedicate enough resources to reviewing ratings on outstanding non-agency MBS. The SEC found that between April 2009 and February 2011, DBRS employed only one analyst who was principally responsible for the majority of surveillance tasks for the firm’s outstanding ratings for non-agency MBS and real estate mortgage investment conduits. DBRS had more than 5,000 applicable ratings outstanding in that span. The SEC added...

The Federal Home Loan Banks appear to be eyeing a bigger share of the government-backed lending market with the announcement of a new servicing-release option for FHA, VA and rural housing loans sold into the Mortgage Partnership Finance program. The addition of a servicing-released option from Nationstar Mortgage, a top-10 mortgage servicer, to an already existing servicing-retained execution will give participating lenders greater flexibility in pricing and selling government-backed mortgages they have originated into the secondary market, said Matt Feldman, president of the Chicago FHLB. Previously, program participants were required...

The Structured Finance Industry Group released its latest “RMBS 3.0 Green Paper” this week as part of an effort to revive the non-agency mortgage-backed security market. The nearly 300-page paper focuses on model representations and warranties for non-agency MBS backed by new originations. SFIG detailed 39 model reps and warrants, adding to eight other model reps and warrants that were previously released by the trade group. About half of the latest model reps and warrants ...

Issuance of jumbo mortgage-backed securities started to pick up speed in November after a slow start to the fourth quarter of 2015. Redwood Trust plans to issue a $337.08 million jumbo MBS with a number of unique characteristics, according to presale reports. Sequoia Mortgage Trust 2015-4 will be backed by 15-year fixed-rate mortgages, 75.5 percent of which were originated by UBS Bank. Kroll Bond Rating Agency noted that this will be the first post-crisis deal to include ...

Facing the possibility of a potential False Claims Act lawsuit, PHH Corp. is reconsidering its participation in the FHA mortgage insurance program. Though PHH’s FHA segment represents only 3 percent of its mortgage volume over the past 12 months, the company will proceed cautiously as it evaluates the risk-adjusted return of FHA products and programs, said Glenn Messina, PHH president and chief executive.Ranked 50th among FHA lenders as of June 30, 2015, PHH expects more regulatory challenges in 2016 as well as rising compliance costs, said Messina during a third-quarter earnings call. In its latest quarterly filing, PHH disclosed receiving a subpoena from the inspector general of the Department of Housing and Urban Development for documents related to, among other things, FHA loan origination and underwriting practices. Like several other FHA lenders, PHH is ...

The Federal Home Loan Bank System is seeking to boost its share of government-backed lending and the Ginnie Mae market with a new servicing-release option for FHA, VA and rural housing mortgages that are sold into the Mortgage Partnership Finance program. The new feature adds to an existing servicing-retained execution in the MPF Government Mortgage-Backed Securities program. The current servicing-retained component requires participating lenders to service loans they originate and sell into the MPF conduit. The servicing-release option from Nationstar Mortgage, a top-10 mortgage servicer based in Dallas, will provide lenders with greater pricing flexibility so they can become more competitive in the communities they serve, said Matt Feldman, president of the Chicago FHLB. Only FHLBank members that are participants in MPF can use the government MBS program. In order to ...

Nationstar Mortgage is looking to enhance its FHA and VA lending and increase the recapture rate for the two loan products, according to the company’s top executives. In its third-quarter earnings call, Nationstar CEO Jay Bray told analysts the company has initiated targeted marketing efforts for refinancing opportunities for FHA and VA borrowers. In the third quarter, Nationstar’s overall origination segment increased funding to nearly $5 billion and raised its recapture to 28 percent. The company has reported profitability for five consecutive quarters and posted $50 million in earnings. Servicing profitability improved for the third quarter to 3.6 basis points, a 57 percent improvement from the prior quarter. In addition, the company generated strong cash flows of $172 million during the period. Ranked 17th among the top FHA lenders in the third quarter, Nationstar originated ...

FHA to Unveil FY 2015 MMIF Audit Results. On Nov. 16, the FHA will release its 2015 annual report to Congress, a document that historically has included the results of the annual actuarial audit of the Mutual Mortgage Insurance Fund, or MMIF. Early in the day, Ed Golding, principal deputy assistant secretary for the Department of Housing and Urban Development’s Office of Housing, is scheduled to brief reporters on the report and take questions. As reported by Inside FHA/VA Lending, the reduction in the annual mortgage insurance premium earlier this year has put the MMIF on an accelerated path to recovery. But whether the ensuing increase in FHA production – which translates into additional premiums – will be enough to get the fund back to its statutory 2 percent capital reserve ratio remains ...

Thanks to declining interest rates and higher prepayment speeds in the third quarter – especially on Ginnie Mae receivables – several publicly traded nonbanks were forced to write down the asset value of their mortgage servicing rights, causing millions of dollars in red ink. According to a review by Inside Mortgage Finance of the earnings statements of six nonbanks, the combined servicing markdown was an ugly $448 million. The group includes Nationstar Mortgage, Ocwen Financial, PennyMac Financial Services, PHH Corp., Stonegate Mortgage and Walter Investment Management Corp., the parent of Ditech Financial. Walter took...