Now that interest rates have stopped falling – at least, for now – the servicing acquisition market has shifted into high gear with talk of a steady stream of both flow and bulk transactions through the remainder of 2015. “This could turn out to be one of the best quarters of the year for sales,” said Mark Garland, president of MountainView Servicing Group, Denver. “If it’s not the best, it could be close.” Tom Piercy, managing member of Interactive Mortgage Advisors, noted...

Institutional investors are beginning to have major doubts about certain mortgage stocks, reducing their positions in companies such as PHH Corp. and Ocwen Financial as they struggle to present convincing evidence that better days are ahead – especially with 2016 just months away. Ocwen, in particular, has been savaged by investors over the past 18 months, its share price falling from an all-time high of $60 to $5.66. This past summer, Ocwen’s share price stabilized somewhat before getting clobbered early this week after disclosing that it expects to post a loss for all of 2015. For many investors it has...

Commercial banks and savings institutions reduced their holdings of non-mortgage ABS again during the second quarter, according to a new Inside MBS & ABS analysis of call reports. Banks and thrifts held $147.55 billion of non-mortgage ABS as of the end of June, a 5.1 percent decline from the previous quarter. The banking industry’s aggregate ABS portfolio has been shrinking steadily since the end of 2013 and was down 15.2 percent over that period. Banks shed...[Includes two data tables]

Ginnie Mae this week revised its requirements for participating MBS issuers seeking approval of changes in their business status as a result of mergers, change of ownership or control, transfer of assets or a negative turn in their dealings with regulatory agencies. The agency decided to update the guidance because of the increasing number of requests from issuers, according to Ginnie Mae President Ted Tozer. The requests are getting more complex as well, he said. The agency’s Mortgage-Backed Securities Guide has been updated...

Jumbo MBS issued since 2010 have better tail-risk protection than deals issued before the financial crisis, according to analysts at Moody’s Investors Service. Provisions addressing tail risk aren’t uniform, however, with some differentiation among issuers. Tail risk occurs when only a few loans remain in an MBS, with activity on the loans subjecting investors to potentially unexpected losses. The risk is particularly pronounced for jumbo MBS as the average loan amount on many deals tops $700,000, and many of the transactions include loans with balances above $1.5 million. In a report released late last week, Moody’s noted...

Lenders and investment banks are working to increase the issuance of ABS backed by loans from marketplace lenders. Attracting investors to the new asset class has proved somewhat difficult, however, and a recent court decision has put the business model of some marketplace lenders in limbo. Howard Altarescu, a partner and co-head of the global finance business unit at the law firm of Orrick, Herrington & Sutcliffe, noted marketplace lending started with internet-based lending platforms, including Lending Club and Prosper Marketplace, that matched individual investors looking to lend small capital amounts to borrowers in need of consumer loans. He joined other experts during a webinar on the topic hosted this week by the Securities Industry and Financial Markets Association. Altarescu said...

The Securities and Exchange Commission has charged three MBS traders with fraud for inflating the prices of MBS they bought from and sold to investors. Former traders Ross Shapiro, Michael Gramins and Tyler Peters allegedly defrauded customers to illegally generate millions of dollars in revenue for their ex-employer, Nomura Holdings International. As senior traders with Nomura’s residential MBS desk since 2009, the brokers arranged trades between customers, meaning that each would buy MBS from one customer and resell them for profit to another customer. As head trader, Shapiro arranged MBS and manufactured housing ABS trades. According to the SEC, the traders’ illicit pricing took place...

Freddie Mac’s Structured Agency Credit Risk deals and Fannie Mae’s Connecticut Avenue Security transactions have accounted for about 90 percent of risk transfers by the two government-sponsored enterprises. But the Federal Housing Finance Agency is pushing the GSEs to test new structures. FHFA said in a recent report that its longer term goal for the STACR and CAS products is for the GSEs to transition from debt issuance to credit-linked notes. That structure would be similar to enterprise debt issuances, but a trust would issue the note instead of the GSE. Principal and interest payments on the STACR and CAS debt issuances are...

Industry trade groups are calling for the withdrawal of a proposed servicing rule that would set new deadlines for filing FHA insurance claims and penalize lenders with termination of insurance coverage if they failed to comply. Banks, independent mortgage lenders and credit unions warn that FHA’s proposed changes to its claims regulations could result in higher interest rates, credit restrictions and lenders exiting from the FHA program. Such effects could be magnified in the hardest hit housing markets, particularly in states that have long foreclosure timelines or older housing stock. The FHA proposal addresses...

New issuance of single-family agency MBS dropped sharply in August as production slowed across the board at Fannie Mae, Freddie Mac and Ginnie Mae. A new Inside MBS & ABS analysis reveals that the three agencies produced $109.34 billion of single-family MBS during August, a 15.1 percent decline from July’s level. August 2015 was the slowest month since March, though it was 20.2 percent higher than a year ago. Freddie posted...[Includes three data tables]