Issuers of jumbo mortgage-backed securities offered investors variety in two deals that closed last week and an MBS planned for next week. Separate jumbo MBS from WinWater Home Mortgage and FirstKey Mortgage were issued on Feb. 27. The $372.36 million WinWater Mortgage Loan Trust 2015-2 included two non-qualified-mortgages. Debt-to-income ratios above 43 percent caused the two loans to be deemed non-QMs, according to Standard & Poor’s ...

Strong investor demand continues to make whole-loan sales more profitable than securitization, according to Redwood Trust officials. “Throughout 2014, whole-loan buyers provided better pricing and execution for our jumbo home loan sales versus securitization,” said Brett Nicholas, president of the real estate investment trust, during the company’s fourth-quarter earnings call. He said Redwood expects strong demand for jumbo loans in the first part of ...

Moody’s Investors Service started using new criteria to rate prime non-agency mortgage-backed securities at the end of February. As part of the new criteria, the rating service is allowing non-agency MBS issuers to have access to the tool used to estimate Moody’s initial calculation of triple-A stress loss for a potential security. Moody’s Individual Loan Analysis model, known as MILAN, will be the main quantitative tool for collateral analysis by ...

Most mortgage lenders reported solid increases in refinance originations during the fourth quarter of 2014, but the faltering purchase-mortgage sector still accounted for most of their business. A new Inside Mortgage Finance ranking and analysis reveals that refinance originations increased by 16.9 percent from the third to the fourth quarter. Based on securitization figures from Fannie Mae, Freddie Mac and Ginnie Mae, refi activity rose by a more modest 14.0 percent, although these data trail the primary market by one or two months. Meanwhile, purchase-mortgage originations were...[Includes five data charts]

The bid price for “flow” mortgage servicing rights is beginning to soften, having fallen from the peaks seen in the summer of 2014, according to both investors and certain advisors running the deals. But if a buyer of flow product is looking for bargains, it’s not likely to happen anytime soon. In other words, prices have drifted down, but are hardly cheap. In fact, a handful of sources contend that Nationstar Mortgage – one of the most active flow buyers of the past year – has ceased...

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...