Residential MBS production continued to gain speed in the second quarter of 2015 while non-mortgage securitization remained strong, according to a new Inside MBS & ABS analysis. A total of $419.42 billion of single-family MBS and non-mortgage ABS were issued during the second quarter, an increase of 21.2 percent from the first three months of the year. It was the strongest new issuance total since the third quarter of 2013 and marked the fifth straight quarterly increase since the market hit a cyclical low at the beginning of last year. Most of the gain came from the agency MBS sector, which totaled $352.73 billion in new issuance, a gain of 29.7 percent from the first quarter. All three agencies posted hefty gains, with the biggest coming at Ginnie Mae, where new issuance jumped 46.7 percent to hit $120.36 billion. A lot of Ginnie’s growth is coming from an unusual surge of refinance activity, which accounted for ... [ charts]

A handful of former top executives in the mortgage departments of Goldman Sachs and Credit Suisse have launched Shelter Growth Capital Partners and hope to eventually purchase and then securitize mostly residential loans that don’t meet parameters of the qualified mortgage test. According to marketing materials provided to select originators and then passed on to Inside MBS & ABS, the Shelter Growth (or SG Capital) conduit will focus mostly on A-minus quality loans. A preliminary loan menu distributed this spring states that SG will purchase 30-year mortgages with FICO scores as low as 620. Loan amounts will range from $150,000 to $1 million. It also will finance consumers who went through a foreclosure as recently as two years ago. The coupons on the offering grid range from 5.75 percent to 9.00 percent. According to the marketing materials, SG Capital requires that all the mortgages be ...

An increase in short-term interest rates will have an outsized impact on commercial MBS among structured finance assets, according to Moody’s Investors Service. In a report released last week, the rating service said higher interest rates will be credit negative for existing deal performance and new issuance for commercial MBS and largely neutral for residential MBS and most ABS sectors. As interest rates rise, Moody’s said term default risk on loans backing new issue commercial MBS will increase because the loans’ debt service coverage ratios will be lower than the DSCRs at the time of origination of loans in outstanding deals. “Rates on loans backing new conduit deals will increase, thereby reducing DSCR in relation to a given property’s cash flow,” the rating service said. “New conduit deals are typically backed by loan pools that were originated no more than ...

Clean-up calls executed by U.S. Bank on Ginnie Mae real estate mortgage investment conduits in recent years have caused problems for some investors, but industry analysts suggest that overall, the risk agency MBS investors face from clean-up calls is limited. Analysts at Performance Trust Capital Partners, an investing firm, warned recently that U.S. Bank has made about $53 million in profit the past three years by completing clean-up calls on Ginnie REMICs where the bank was the trustee. On Ginnie REMICs, trustees are allowed to complete clean-up calls when the outstanding balance on the security falls to less than 1.0 percent of the aggregate of the original class principal balance for the security. When executing a clean-up call, the trustee pays off the investors in the MBS at par. On Ginnie deals where U.S. Bank has completed clean-up calls, the REMICs have generally been trading at ...

Single-family rental securitizations appear to be performing well, according to analysts at Morningstar Credit Ratings, with few signs of trouble on the horizon. “Vacancy rates generally remain low, cash flows remain sufficient to cover bond obligations, and … the recently released May property-level data for the single-borrower, single-family rental asset class shows performance in line with its recent history,” the rating service said in a new report. Overall, monthly retention rates remain in the mid-70s to low-80s. Also, “delinquency rates are slightly higher from their April levels but remain mostly low.” Lease expirations are generally rising across SFR securitizations, Morningstar said, but vacancy rates have remained relatively flat month-over-month. “Although delinquency rates rose slightly across most transactions, the number of tenants past due on their payments remains low,” the analysts said. Elsewhere, so far, ...

The U.S. Conference of Mayors has joined a growing number of entities urging the Department of Housing and Urban Development, Fannie Mae and Freddie Mac, and certain major banks to stop selling distressed and nonperforming mortgages to Wall Street investors. Rather than sell pools of NPLs to private-equity firms, hedge funds and other speculators, sell them to qualified nonprofits for the purpose of saving homes from foreclosure and creating affordable housing, the group stated in a resolution co-sponsored by 17 mayors. The mayors point to a joint study issued recently by the Center for Popular Democracy and the ACCE Institute. The study said most NPL pools are auctioned off at steep discounts to hedge funds and private-equity firms. “Although Fannie and Freddie have been unwilling to offer principal reduction to struggling homeowners, they often offer steep discounts when they ...

Ginnie Mae securitized $6.6 billion of VA jumbo loans in the first three months of 2015, up 15.9 percent from the prior quarter, according to an Inside FHA/VA Lending analysis of Ginnie Mae data.Jumbo loans – single-family mortgages with loan amounts exceeding $417,000 – comprised 18.7 percent of total VA originations in the first quarter. VA jumbo originations outpaced FHA jumbo production, which totaled $2.8 billion in the first quarter, up 17.0 percent from the prior quarter, according to the Inside Mortgage Finance database. VA jumbos in Ginnie mortgage-backed securities issued in the first quarter included modified VA loans as well as those originated in Alaska, Guam, Hawaii and the U.S. Virgin Islands. Wells Fargo ranked first among securitizers of VA jumbos in the first quarter, with $1.3 billion in production. Second-ranked Freedom Mortgage conveyed $652.7 million in ... [ 1 chart ]

Neither of the credit-rating industry’s perennial market leaders – Standard & Poor’s and Moody’s Investors Service – managed to claim a top spot during the first quarter of 2015, according to a new Inside MBS & ABS ranking. Fitch Ratings ranked as the top player in rating the bigger non-mortgage ABS market. The company rated 43 ABS issued during the first quarter that represented 64.2 percent of total issuance by dollar amount. The company rated all eight credit-card ABS issued in early 2015, along with most of the student-loan deals. Fitch raised...[Includes two data tables]

Proposed credit card ABS disclosure requirements from the Securities and Exchange Commission could compromise commercially sensitive proprietary issuer information and prove too burdensome for issuers, according to the Structured Finance Industry Group. The industry group this week unveiled an alternative card ABS format that was endorsed by both its issuer and investor members. The three-part disclosure “would provide more information on more metrics” than either of two options proposed by the SEC. Last year, the SEC adopted...

The single-family rental securitization business is fueling investor purchases of homes and causing problems for communities, according to a new survey and report by consumer advocates. The California Reinvestment Coalition called for a number of reforms for the single-family rental industry. “This conduct has had a measurable, negative impact on communities,” the CRC said. “It has transferred wealth from homeowners to Wall Street denizens and is transforming America from a homeownership society to a renter-ship society.” The CRC based...