High guarantee fees and loan-level pricing adjustments charged by Fannie Mae and Freddie Mac are not enough to counteract lingering MBS investor mistrust and draw private players back into the housing finance market, according to a top industry official. “The Federal Housing Finance Agency seems to believe that by raising costs for loans purchased or guaranteed by the government-sponsored enterprises, they can lure private sector capital back to the mortgage market ...

Vintage prime adjustable-rate mortgages went delinquent at a rate 30 percent higher when they were securitized privately, according to an economist with the Federal Reserve System. The study was based on mortgages originated in 2005 and 2006, at the height of the aggressive underwriting in the non-agency mortgage market. “We find that private-securitized loans perform worse than observably similar, non-securitized loans, which provides evidence for adverse selection ...

Use of a deal agent in new non-agency mortgage-backed securities will help convince large investors to return to the market, according to industry participants. The benchmark non-agency MBS in the works with help from the Treasury Department will include a deal agent, according to Michael Stegman, counselor to the Treasury on housing finance policy. At a talk this week hosted by the Financial Services Roundtable and CoreLogic, Stegman noted that Treasury continues to ...

The latest jumbo mortgage-backed security from Two Harbors Investment is set to have the lowest credit enhancement levels of any deal issued this year, according to an analysis by Inside Nonconforming Markets. Strong performance and underwriting characteristics along with repeat issuance appears to have helped decrease credit enhancement requirements for the transaction. The $241.06 million Agate Bay Mortgage Trust 2015-3 received a preliminary AAA rating ... [Includes one data chart]

Mortgage brokers played an increasingly important role in the conventional conforming market during the first quarter of 2015, according to a new Inside Mortgage Trends analysis of mortgage-backed securities issued by Fannie Mae and Freddie Mac. Mortgage brokers were responsible for $23.8 billion of single-family mortgages securitized by the two government-sponsored enterprises during the first three months of this year. That was up 16.0 percent ... [Includes two data charts]

The GSEs aren’t completely committed to adopting new credit scoring models just yet, but it is on their radar. When asked about the possibility of alternative credit scoring, spokesmen for both Fannie Mae and Freddie Mac pointed to the 2015 Conservatorship Scorecard which stated that they will be assessing the feasibility of alternate credit score models and credit history in loan-decision models. Housing and Urban Development Secretary Julian Castro, who spoke at a credit access symposium in Washington last week, said that the FHA is exploring new ways to determine the creditworthiness of consumers to increase access to mortgage lending. Housing industry leaders in attendance said Fannie Mae, Freddie Mac and other mortgage lenders could increase access....

Mortgage and asset securitization started 2015 with improving issuance volume and a chance to reverse last year’s paltry output. A total of $335.1 billion of residential MBS and non-mortgage ABS were issued during the first three months of 2015, according to a new Inside MBS & ABS analysis. That was up 7.7 percent from the fourth quarter of 2014, and it was a big 34.3 percent jump from the first quarter of last year. The first quarter of 2014 was...[Includes two data charts]

A little known lender called Angel Oak Mortgage Solutions hopes to fund $540 million of product this year and generate the industry’s first nonprime non-agency MBS of the “new era” with financing provided by Nomura. According to industry officials who have viewed investor materials issued by the company – a copy of which was provided to Inside MBS & ABS – Nomura has even agreed to provide “gestation repo” warehouse credit to the privately held originator. One source who claims to have knowledge of the arrangement said...

Concerns about how borrowers will be impacted by a change in servicers go beyond mortgages in non-agency MBS. Analysts at Moody’s Investors Service warn that the decentralized servicing models used for consumer loan ABS issued by Springleaf Holdings and OneMain Financial face significant risks in the event that servicing needs to be transferred. Both Springleaf and OneMain originate consumer loans at local branches, where they conduct certain servicing operations and collections. The decentralized model can help boost originations and loan performance, though there are risks for investors in consumer ABS with decentralized servicing. “As long as the originator maintains the customer relationship and local presence, this ‘high-touch’ model can help...

FirstKey Lending and B2R Finance are vying to be the first issuer of a multi-borrower single-family rental securitization. The activity follows 16 single-borrower single-family rental transactions that have been issued since November 2013. The first presale report on a multi-borrower single-family rental transaction was published March 31 by Kroll Bond Rating Agency. The $240.79 million FirstKey Lending 2015-SFR1 is set to receive a AAA rating with credit enhancement of 37.75 percent on the senior tranche, according to the rating service. FirstKey is owned by affiliates of Cerberus Capital Management. On April 1, Fitch Ratings published...