Commercial banks and thrifts added $12.2 billion of agency single-family MBS to their investment portfolios during the fourth quarter of 2014, according to a new Inside MBS & ABS ranking and analysis of call-report data. Banks and thrifts held $1.539 trillion of MBS on their books at the end of last year, a slight 0.3 percent increase from the third quarter. Bank/thrift holdings were up 2.2 percent from the end of 2013. Growth in agency mortgage securities was...[Includes two data charts]

Federal Reserve Chair Janet Yellen indicated this week that the central bank ultimately plans on holding few, if any, mortgage-related securities on its balance sheet. It seems unlikely there will be much in the way of actual sales of agency MBS by the Fed, which leaves run-off as the method of choice to drain the central bank’s portfolio. Delivering her semi-annual Humphrey-Hawkins testimony this week on Capitol Hill, the Fed chief said the FOMC intends to adjust its monetary policy during its normalization process mostly by changing its target range for the federal funds rate and not by actively managing its balance sheet. “The primary means of raising the federal funds rate will be to increase the rate of interest paid on excess reserves,” Yellen said. She also noted...

With the jumbo MBS market slow to rebound, Redwood Trust has put an increased emphasis on agency mortgages, its commercial mortgage business and risk-sharing transactions with the government-sponsored enterprises. On the residential side, Redwood has continued to work on issuing jumbo MBS, but the real estate investment trust usually finds better execution in whole-loan sales. Redwood obtained approval as a seller to the GSEs at the end of 2013 and completed $4.0 billion in conforming mortgage correspondent business last year. During the fourth quarter, Redwood delivered...

Fannie Mae and Freddie Mac reduced their combined mortgage investment portfolio by 13.7 percent last year by focusing on less-liquid assets. The two government-sponsored enterprises still had $821.7 billion of mortgages and MBS on their books at the end of the year. Freddie reported that it sold $16.5 billion of less-liquid assets such as unsecuritized mortgages, multifamily assets and non-agency MBS. At the end of the year, some 59 percent of its portfolio was designated as less liquid, down from 62 percent at the end of 2013. The Federal Housing Finance Agency in 2013 directed...[Includes one data chart]

The European Commission last week requested comments on a framework for simple, transparent and standardized securitization that would apply to issuance in the European Union. A number of other non-U.S. regulators are considering similar proposals, prompting MBS and ABS participants in the U.S. to call for coordination among international regulators. The EC said its priority is to create a sustainable market for high-quality securitization without repeating the mistakes made before the financial crisis. “A high-quality EU securitization framework will promote further integration of EU financial markets, help diversify funding sources and unlock capital, making it easier for banks to lend to households and businesses,” the EC said. The European regulator stressed...

A handful of nonbank mortgage companies reporting substantial losses during the fourth quarter weighed down industry-wide mortgage banking income, according to a new Inside Mortgage Trends analysis of earnings reports. A diverse group of 31 mortgage lenders that includes the biggest players in the market earned a combined $3.227 billion on their mortgage banking operations during the fourth quarter. That was down 8.2 percent from the group’s $3.516 billion during the third quarter. The fourth quarter was...[Includes one data chart]

Only one lender accounted for more than 10 percent of the single-family mortgage volume completed by Fannie Mae and Freddie Mac in 2014: Wells Fargo. The bank also dominates deliveries to Ginnie Mae and originations of jumbo mortgages. Wells had $180.89 billion in mortgage originations in 2014, accounting for 14.6 percent of total mortgage originations, according to Inside Mortgage Finance. The bank’s share of mortgage originations declined from 18.9 percent in 2013 as refinance activity slowed and nonbanks made efforts to compete for production and servicing. Officials at Wells said...

Ocwen Financial – once deemed the fastest-growing residential servicer in the nation – is now facing huge shrinkage and is undergoing what some analysts and investment bankers are now calling a managed or “controlled” liquidation. The questions facing investors and business partners of the company is how fast can Ocwen shrink and what will be left for shareholders other than a pile of cash. “This could be...

CashCall recently started offering loans that do not meet qualified mortgage standards. The lender’s “NQM” program targets borrowers who cannot qualify for agency financing. The minimum credit score is 680 and CashCall is flexible in determining ability to repay, including the use of cash flow from investment accounts. Home Loan Servicing Solutions announced this week that no non-agency mortgage-backed security investors have ... [Includes two briefs]

Securitization was still the dominant method to fund new home mortgage production in 2014, but Wall Street got a run for its money from portfolio lenders. A new Inside MBS & ABS analysis reveals that 70.5 percent of residential mortgages originated last year were funneled into mortgage securities. That was down from 78.5 percent in 2013 and represented the lowest mortgage securitization rate since 2006. Delivering eligible loans into new Fannie Mae, Freddie Mac and Ginnie Mae securities is...[Includes one data chart]