Production of structured finance deals backed by agency single-family pass-through securities fell sharply during the fourth quarter of 2014, according to a new Inside MBS & ABS analysis. Fannie Mae, Freddie Mac and Ginnie Mae issued a total of $44.41 billion of real estate mortgage investment conduits during the fourth quarter, down 25.5 percent from the previous period. Ginnie and Freddie, the most active agency REMIC issuers for the year, were responsible for most of the decline. On a year-to-date basis, Fannie production was...[Includes one data chart]

With interest rates at exceptionally low levels in recent years, borrowers have been reluctant to choose adjustable-rate mortgages. For those opting for ARMs, hybrids remain the most popular, according to results from the annual ARM survey recently released by Freddie Mac. ARMs accounted for 4.6 percent of the $921.72 billion in mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae in 2014 ... [Includes one data chart]

2014 wasn’t a great year for mortgage origination volume, but the market rallied from a dismal start to finish on a more positive note, according to a new Inside Mortgage Finance market analysis and ranking of top loan producers. Mortgage lenders originated an estimated $1.24 trillion in new home loans during 2014. That figure, which includes home-equity lending, was the industry’s lowest annual output since year 2000, when total originations barely topped the $1 trillion mark. Mortgage production fell a hefty 34.4 percent from 2013 levels, including a modest 1.4 percent drop in the fourth quarter of 2014. The soft fourth-quarter volume was...[Includes two data charts]

Sales of mortgage servicing rights by big banks will continue to be driven by the desire to reduce the handling of delinquent mortgages – not by Basel III capital requirements, according to analysts at Moody’s Investors Service. Nonbank servicers that have grown in recent years often cite Basel capital requirements as a significant factor in bank sales of MSRs. Warren Kornfeld, a senior vice president at Moody’s, noted that Bank of America, Citigroup and JPMorgan Chase were active sellers of MSRs in recent years. “We believe the sales were primarily motivated by their desire to reduce credit-impaired servicing volume,” he said. Under Basel III, banks face...

Real estate investment trusts focused on the residential mortgage market had a stellar year in 2014, returning 19.4 percent to investors, a nice comeback from the year before when performance was measured at negative 12.7 percent. According to figures compiled by the National Association of Real Estate Investment Trusts, commercial financing REITs fared a bit worse, returning 14.5 percent compared to a mouth-watering yield of 41.8 percent in 2013. But now both sectors face...

Ginnie Mae plans to launch a performance-measuring tool, Issuer Operation Performance Profile (IOPP), to enable issuers to see how they stack up to the agency’s standards and make improvements. The agency did not specify a launch date but said the tool will be available “in early 2015.” It will be used to compare an issuer’s operations and defaults with those of its peers, along the lines of FHA’s compare ratio for lenders in Neighborhood Watch. The issuer scorecard is...

Mortgages included in jumbo mortgage-backed securities in 2014 showed some shifting characteristics while maintaining strong underwriting overall, according to a new analysis by Inside Nonconforming Markets. Looser underwriting on jumbo mortgages has largely been at the fringes: some MBS have included a cluster of mortgages with combined loan-to-value ratios of 80 percent, a few borrowers with credit scores below 680 and ... [Includes one data chart]

Redwood Trust, Credit Suisse and Two Harbors Investment are working on separate jumbo mortgage-backed securities that will be issued next week. The deals vary slightly by issuer, including some non-qualified mortgages in Redwood’s deal and sunset provisions on representations and warranties on Credit Suisse’s jumbo MBS. Redwood’s $338.80 million Sequoia Mortgage Trust 2015-1 is set to receive AAA rating with credit enhancement of 7.25 percent ...

Standard & Poor’s surveillance of seasoned non-agency mortgage-backed securities backed by jumbo mortgages and Alt A loans played a factor in the $77 million settlement the rating service reached this week with regulators. The Securities and Exchange Commission and state attorneys general for New York and Massachusetts largely focused their settlement with S&P on ratings for commercial MBS. Just $1.0 million of the settlement concerned surveillance of non-agency MBS ...

The half-percent annual premium reduction the FHA announced recently will likely enable the agency to reclaim the high loan-to-value segment of the mortgage market from Fannie Mae and Freddie Mac, according to analysts. Speaking with some originators that have been looking at the best way to securitize high LTV loans, Deustche Bank securities analysts said the lower FHA annual premium would put pressure on the government-sponsored enterprises to lower the cost of their guarantees. “The grapevine has anticipated for months that [g-fees] have little chance of going up and more chance of going down,” the analysts said. “But the specific risk triggered by the FHA move is that the cost of credit will now drop for high-LTV conventional borrowers.” Even before the FHA policy shift, private mortgage insurers have been pressuring the Federal Housing Finance Agency to ...