Two more long-running legacy MBS lawsuits were resolved last week after defendants Goldman Sachs and Deutsche Bank separately agreed to settle with plaintiffs. The NECA-IBEW Health & Welfare Fund, a union pension fund in Decatur, IL, is seeking preliminary court approval of a $272 million settlement with Goldman Sachs on behalf of entities that purchased MBS issued by defendant GS Mortgage Securities and which Goldman underwrote. If approved, the settlement would put...

Investors have a lot more to worry about these days than the collateral damage stemming from problems in Greece and China and a bumpy U.S. stock market. Ratings analysts indicate some new energy-related risks – most notably earthquakes near “fracking” sites and a plunge in the price of oil – have emerged as potentially significant challenges to investors in real estate and to mortgage lenders. Analysts at Standard & Poor’s said in a recent client note that earthquakes in proximity to fracking sites introduce a unique risk factor into the investment equation for those with a stake in real estate located in affected regions. “In particular, determining whether or not earthquake coverage is...

Potential issuers of non-agency mortgage-backed securities looking to loosen underwriting standards on loans to be included in MBS are getting tough feedback from rating services. Fitch Ratings said last week that non-qualified mortgages with weak income documentation would likely face a “double penalty” compared with a similar non-QM that meet the documentation standards set for QMs. Non-QMs with “alternative documentation” included in non-agency MBS would ...

Issuance of jumbo mortgage-backed securities has slowed somewhat this summer, with a lack of consensus from industry participants on whether it’s worth participating in the market. Barclays Capital, which helps fund jumbo MBS activity, said the deals offer about 50 basis points of option-adjusted spread compared with agency MBS. Analysts at Barclays said newly-issued jumbo MBS are attractive for investors less concerned about liquidity. Officials at Anworth Mortgage Asset Corp ...

The monitor of a $2.0 billion settlement involving Ocwen Financial revealed last week that the nonbank was found to have failed another metric under the settlement. However, the monitor noted that Ocwen has worked to address many of the issues that have dogged the company over the past year. The monitor re-tested Ocwen on a number of metrics under the settlement due to concerns that were raised about the integrity of the servicer’s internal review group ...

The FHA will not issue a new case number for any FHA-to-FHA refinance if the current mortgage has a repair or rehabilitation escrow account in FHA Connection. The change, which is one of several updates to FHA Single Family Policy Handbook 4000.1, applies only to FHA streamline refis. It aims to ensure that escrow funds of the mortgage being refinanced are properly applied as well as conform to system requirements. The updated sections become effective on Sept. 14, 2015. Another change clarifies that the payoff statement for the mortgage being refinanced is the only document required when calculating the maximum mortgage amount for simple refi transactions. In addition, guidance for loan-to-value limits for cash-out refis has been updated to clarify that the 85 percent LTV restriction applies only to cash-out refis. HUD also noted that appraisers have flexibility in regards to when inspections should ...

All three mortgage production channels saw solid gains in originations from the first quarter to the second quarter of 2015, but correspondents had the best of it. Correspondent lenders generated an estimated $132 billion of new mortgages during the second quarter, according to a new Inside Mortgage Finance ranking and market analysis. That was up 26.9 percent from the first quarter, a few clicks faster than the overall 23.6 percent increase in production volume. The correspondent share edged...[Includes four data tables]

Real estate investment trusts that focus on the MBS market saw the value of their holdings slump again during the volatile second quarter of 2015. Top mortgage REITs reported a fair market value of $249.10 billion for their single-family MBS holdings as of the end of June. That was down 5.6 percent from the previous quarter, and it was the group’s lowest MBS portfolio valuation since the fourth quarter of 2011. The decline came...[Includes one data table]

Standard & Poor’s ranked as the most active rating service in the non-mortgage ABS market at the midway mark in 2015, but came in last in the non-agency MBS sector. S&P provided ratings on $63.55 billion of non-mortgage ABS issued during the first half of the year, or 60.3 percent of total issuance. That was off slightly from its 64.1 percent market share for all of last year. The company has gotten more active in rating credit card deals, but has lost some of its share in vehicle finance and business loan ABS. Fitch was...[Includes two data tables]

The application of capital requirements to MBS and other structured finance products in the coming years will likely trump any typical collateral analysis investors currently consider, according to analysts at Standard & Poor’s. In a report published late last week, the analysts said global capital requirements have the potential to become impediments to providing financing via securitized products. “Of particular investor focus recently are...